While jury deliberates, Lay begins new trial

HOUSTON — Enron Corp. founder Kenneth Lay wasn’t satisfied with federal loan rules that limited his purchase of stock, so he lied on bank forms and used the borrowed money to improperly buy stocks anyway, prosecutors said as his bank fraud trial began Thursday.

“This is a straightforward trial about lying to the banks,” prosecutor Robb Adkins said in a brief opening statement. “Evidence will show Mr. Lay repeatedly and falsely executed forms relied on by banks and required by banks.”

Lay’s attorney, Ken Carroll, said Lay had no motive to violate rules, had collateral to back up the loans and even paid them off.

“If somebody told him he wasn’t doing the right thing with these lines (of credit), he would have fixed them,” Carroll said in response to a question from U.S. District Judge Sim Lake, who is trying the case without a jury.

Carroll declined to make an opening statement immediately following Adkins.

Carroll also suggested many of the documents may have been signed by an automatic signature machine both Lay and his wife, Linda, used, and that Lay’s assistants would have used the machine “if somebody sends him a pile of bank documents and had to be signed in order to get a loan done.”

When Lake asked Carroll if there’s a distinction to be made if the signatures were made electronically, Carroll responded that while it could be a civil or regulatory matter, “It’s not a crime.”

Lay’s federal fraud trial began as jurors were in their first full day of deliberations in the fraud and conspiracy trial of Lay and former Enron Chief Executive Jeffrey Skilling. Lay is charged with six counts in that case, Skilling with 28.

In the new trial, Lay faces four charges — one of bank fraud and three of making false statements.