Federal prosecutors unveiled charges Thursday that placed Enron Corp. founder and former chairman Kenneth Lay at the center of a conspiracy to manipulate the company's books in the frenzied weeks before its scandalous collapse.
He returned the punch with an unusual and aggressive public declaration of innocence, speaking at length at a news conference and taking questions from reporters after entering a not guilty plea.
"I firmly reject any notion that I engaged in any wrongful or criminal activity," Lay said, adding that his failure to prevent the company's bankruptcy did not equate to a crime. "Not only are we ready to go to trial, but we are anxious to prove my innocence."
Lay was escorted to federal court here in handcuffs 2 1/2 years into a methodical investigation that has produced charges against some of his once most highly trusted lieutenants. Prosecutors have aggressively pursued the one-time friend and contributor to President Bush, and this week's action made Lay the 30th and highest-profile individual charged.
Prosecutors contend Lay, his hand-picked protege and former Enron CEO Jeffrey Skilling, and the company's former top accountant Richard Causey were among principal operators of a wide-ranging scheme to deceive the public, shareholders, government regulators and others.
A federal indictment unsealed Thursday alleged that Skilling spearheaded the scheme until he abruptly quit in mid-August 2001, less than four months before Enron imploded. Lay resumed as CEO upon Skilling's departure and "took over leadership of the conspiracy," the indictment said.
In 11 counts of conspiracy, securities fraud, bank fraud and other charges, prosecutors allege Lay not a CEO blithely unaware of wrongdoing by his minions, as he has maintained. The indictment alleged Lay intensified his oversight of Enron's day-to-day operations and "took control" of a conspiracy to keep Enron's ever-growing financial crises hidden in the bowels of the company.