Enron case comes home to Houston
The first criminal trial of former Enron Corp. executives, scheduled to start in a Houston courtroom next week, will test jurors’ reactions to more than two years of nonstop negative publicity about the demise of the hometown corporate giant.
Lawyers inside and out of the case are fretting about whether Houston-area jurors can hear the evidence with an open mind when the company’s bankruptcy in late 2001 cost thousands of area residents their jobs and their retirement savings. The energy trader eventually rose to become the seventh-largest public company in the nation, according to Fortune magazine, before a disastrous fall from grace that inspired several books and a television movie.
The defendants, Daniel O. Boyle and Sheila K. Kahanek, were not senior executives, and their case involves Byzantine interactions with four former Merrill Lynch & Co. officials in what prosecutors say were bogus deals hatched to help Enron meet profit targets in 1999. The trial, with jury selection scheduled to begin June 7, may be most intriguing as a precursor for the prosecutions of Enron’s top leaders in the coming months.
“Getting a jury to give these guys a presumption of innocence is going to be a Herculean task,” said lawyer Rusty Hardin, who defended accounting firm Arthur Andersen LLP on obstruction-of-justice charges related to its work for Enron in a 2002 trial in Houston. Since that time, Hardin pointed out, even more damaging information about Enron’s operations has been disclosed. The company’s former chief financial officer, Andrew S. Fastow, has pleaded guilty to conspiracy and its onetime chief executive, Jeffrey K. Skilling, has been indicted on 35 fraud and insider trading charges.
Attorneys for Boyle and Kahanek and the four former Merrill executives declined to speak at length about the upcoming case. But defense lawyers and jury experts said the most crucial factor in the trial may be persuading potential jurors to be candid about their attitudes toward corporate America and their feelings about Enron in particular.
Enron is the most prominent of the corporate scandals of the past few years, inducing strong opinions in many people who could possess hidden motives for getting on the jury, said Jeffrey T. Frederick, director of jury research for the National Legal Research Group in Charlottesville. “In this particular case you have to watch out for what’s commonly called a stealth juror . . . someone who’s going in there with an agenda,” Frederick said.
Jurors are not barred from knowing anything about a case beforehand, but they must not have developed firm convictions and must be able to keep an open mind when hearing evidence, legal experts said.
Both prosecutors and defense attorneys in the Enron case are preparing a special questionnaire to help root out bias among potential jurors. Analysts said the questions would likely focus on jurors’ general attitudes about corporate crime and executive pay, as well as whether they or their friends had lost jobs or money as Enron’s stock price plummeted.
Lately, juries in business fraud cases have been the subject of intense news coverage. Defense attorneys for Martha Stewart, in an unsuccessful bid to throw out the verdict, recently attacked the honesty of a juror who voted to convict her. And a judge last month called a mistrial in the case of two former Tyco International Ltd. officials because a holdout juror received a disturbing letter after the New York Post and the Wall Street Journal published her name.
“It’s going to be a difficult task,” jury expert Frederick said of the upcoming Enron jury selection. “I’m not saying it will be impossible.”