Lay surrenders to authorities

The indictment contains 11 criminal counts, including securities fraud, wire fraud and making false and misleading statements.

Lay appeared at the FBI office in Houston just after 6 a.m. CT (7 a.m. ET). He was later led away to the federal courthouse in Houston with his hands cuffed behind his back. He told reporters he will be talking to the press after his indictment is unsealed later Thursday.

"I have done nothing wrong, and the indictment is not justified," Lay said Wednesday through his spokesman.

Michael Ramsey, Lay's defense lawyer, denounced the charges during a press conference Thursday morning and vowed to push for a speedy trial.

Enron filed for bankruptcy Dec. 2, 2001 after investigators found it had used partnerships to conceal more than $1 billion in debt and inflate profits. The company once ranked as the country's seventh largest.

Several former Enron executives, including former Chief Financial Officer Andrew Fastow, have pleaded guilty and agreed to cooperate with the government. Fastow was sentenced to 10 years in prison.

Former CEO Jeffrey Skilling pleaded not guilty this year to fraud, insider trading and lying about Enron's finances.

His brainchild
Lay, 62, guided Enron for years, shaping the once-obscure pipeline company into a world-leading energy trading concern.

The Houston-based company's collapse was the first of several high-profile scandals at some of the country's top corporations, among them WorldCom, Global Crossing, Adelphia Communications and Tyco International.

By indicting Lay, prosecutors have finally reached the highest, if not the final, rung at the fallen energy giant.

While details of the charges are not yet publicly known, prosecutors are expected to focus at least part of their case on assurances Lay gave, in the months leading up to Enron's fall, to employees about the company's financial health at the same time that he was quietly unloading his own Enron stock.

In recent days, as rumors spread that an indictment was near, Lay and his defense lawyers have mounted a public campaign declaring his innocence in the hopes of warding off criminal charges.

Lay and his advisers have argued that he knew nothing of the secret partnerships managed by Fastow and fully believed in the company's long-term viability when he urged employees to hold onto their Enron shares.

Kirby Behre, a former federal prosecutor who is now in private practice in Washington, D.C., said it comes as no surprise that Lay has been charged. "The government seems to have successfully worked its way up the food chain and enlisted the help of senior officers of the company who obviously were cooperating."

But the two-and-half-year lapse between Enron's bankruptcy and the indictment has caused some former federal prosecutors to question the strength of the government's case against Lay.

They said the scope of the indictment would be telling.

"I've been rather skeptical based on how long it has taken and the nature of the charges that have been brought to date [against Enron officials] whether they would ever get to Ken Lay," said Jacob Frenkel, who was once a federal prosecutor and enforcement lawyer at the Securities and Exchange Commission. Frenkel is now a defense lawyer in Washington, D.C.

Fastow seen as key
Both Behre and Frenkel pointed to ex-CFO Fastow as the likely missing link who gave the government the inside information it needed to bring the indictment.

"I don't think Fastow would have gotten the plea offer he did unless he had something to deliver on Ken Lay," said Behre, now a partner in Paul, Hastings, Janofsky & Walker.

Ramsey, the lawyer for Lay, indicated Thursday morning that he too thinks Fastow's cooperation led to the final charges.

"Andy is absolutely a liar and a thief," said Ramsey.

Noting the on-again, off-again negotiations that led prosecutors to cut a plea deal with Fastow's wife, Lea, who was ultimately sentenced to one year in prison for tax evasion, Ramsey suggested that the "enormous pressures" on Andrew Fastow to protect his family will become part of Lay's defense strategy.

He said the documents in the case will prove Lay's innocence. "I don't think that's [testimony from cooperating witnesses is] quite fair but that's the system," said Ramsey.

As for the timing of the indictment, Behre said he was somewhat surprised prosecutors filed charges so soon after a U.S. Supreme Court ruling last week prompted James Comey, the No. 2 official in the Justice Department, to tell prosecutors to be far more specific about charges spelled out in indictments generally.

Behre said he figured the high court ruling would have caused a delay as prosecutors re-worked the indictment to conform with the new mandate. That said, Behre noted that prosecutors can always bring a superseding indictment against Lay later.

Lay's indictment follows the filing of criminal charges against other former high-flying executives, including Bernard Ebbers of WorldCom, Richard Scrushy of HealthSouth and Enron's own ex-CEO Skilling.

To date the federal government has launched 30 separate prosecutions related to Enron's implosion, including a criminal case that brought down auditor Arthur Andersen two years ago and criminal probes of about 20 former Enron employees. Of those, 11 have resulted in convictions or guilty pleas.