Behind the Scenes of the Enron Investigation and Trial:
The Case That Almost Wasn't
Kristine Di Bacco, MBA '08
Issue date: 4/30/07 Section: Johnson News
On February 6, 2007, John Hueston, the lead prosecutor in the criminal trial of Enron's former chief executives, Kenneth Lay and Jeffrey Skilling, spoke to a packed room on campus. The event was jointly sponsored by The Johnson School and the Cornell Law School. Mr. Hueston's talk provided a rare and interesting insight (especially for non-lawyers) into the tremendous work and painstaking attention to detail that goes into prosecuting many criminal cases, especially high profile ones.
His talk was also relevant and timely for many first year MBA students, as it came right after the study of Enron's collapse in the first year MLO class. The general theme in the MLO class discussions was that the Enron fraud was the result of a potent mix of critical corporate governance failures and a culture of greed at the company, fostered largely by Lay and Skilling. These same conclusions had been reached by the general public - in fact, prior to the commencement of the trial, Lay and Skilling had already been convicted in the court of public opinion. To the average person on the street, their guilt seemed a foregone conclusion.
From Mr. Hueston's perspective, however, this made the job of the Enron prosecutors much more difficult. They were expected to win. Yet, Mr. Hueston revealed that in the days leading up to the trial, and for much of the trial itself, the prosecutors were doubtful that they would be successful in securing convictions for Lay and Skilling. A criminal court is very different from the court of public opinion, for example: there are (and should be) numerous evidentiary restrictions on what is admissible; prosecutors must prove both the actus reus (the physical act of committing the crime) and mens rea (the deliberate intention to commit the crime), for each and every charge; and, most importantly, guilt must be established "beyond a reasonable doubt", which is a very, very high standard.
Mr. Hueston and his team had been especially concerned that there were few, if any, documents linking Lay and Skilling directly to the fraud - no perfect "smoking gun" to wave in front of the jury. So, in order to establish guilt beyond a reasonable doubt, Mr. Hueston and his team employed a number of alternate strategies. First, they decided to present a simple case for the jury - the prosecution removed some of the case's complexity (especially the accounting details) and framed it as a case about "lies and choices". Second, and most importantly, the prosecution used the cross-examinations of Lay and Skilling to destroy their credibility with the jury (query what would have happened if Lay and Skilling had chosen not to testify, as was their constitutional right…). In particular, Lay's explanation for why he sold so much of his Enron stock in the period leading up to the discovery of the accounting improprieties rung hollow with the jury.
In all, Mr. Hueston's talk was a fascinating insight into how difficult a successful criminal prosecution can be, even when the defendants' actions appear so egregious and they have already been convicted in the court of public opinion.
His talk was also relevant and timely for many first year MBA students, as it came right after the study of Enron's collapse in the first year MLO class. The general theme in the MLO class discussions was that the Enron fraud was the result of a potent mix of critical corporate governance failures and a culture of greed at the company, fostered largely by Lay and Skilling. These same conclusions had been reached by the general public - in fact, prior to the commencement of the trial, Lay and Skilling had already been convicted in the court of public opinion. To the average person on the street, their guilt seemed a foregone conclusion.
From Mr. Hueston's perspective, however, this made the job of the Enron prosecutors much more difficult. They were expected to win. Yet, Mr. Hueston revealed that in the days leading up to the trial, and for much of the trial itself, the prosecutors were doubtful that they would be successful in securing convictions for Lay and Skilling. A criminal court is very different from the court of public opinion, for example: there are (and should be) numerous evidentiary restrictions on what is admissible; prosecutors must prove both the actus reus (the physical act of committing the crime) and mens rea (the deliberate intention to commit the crime), for each and every charge; and, most importantly, guilt must be established "beyond a reasonable doubt", which is a very, very high standard.
Mr. Hueston and his team had been especially concerned that there were few, if any, documents linking Lay and Skilling directly to the fraud - no perfect "smoking gun" to wave in front of the jury. So, in order to establish guilt beyond a reasonable doubt, Mr. Hueston and his team employed a number of alternate strategies. First, they decided to present a simple case for the jury - the prosecution removed some of the case's complexity (especially the accounting details) and framed it as a case about "lies and choices". Second, and most importantly, the prosecution used the cross-examinations of Lay and Skilling to destroy their credibility with the jury (query what would have happened if Lay and Skilling had chosen not to testify, as was their constitutional right…). In particular, Lay's explanation for why he sold so much of his Enron stock in the period leading up to the discovery of the accounting improprieties rung hollow with the jury.
In all, Mr. Hueston's talk was a fascinating insight into how difficult a successful criminal prosecution can be, even when the defendants' actions appear so egregious and they have already been convicted in the court of public opinion.
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