BY ERIN ARCHERD
The crowd was decidedly international in flavor at Tuesday night’s “Enron from the Inside” discussion, sponsored by the Heyman Fellowship Program. Heyman Fellow Leo Wise ’03, a member of the Department of Justice’s Enron Task Force, detailed prosecutorial tactics in a presentation replete with images and graphics shown to the jury.
Wise spent his years at HLS working in a range of federal government positions, both over the summer and through clinicals during the school year. He clerked for a year in the Eastern District of Pennsylvania.
During an internship at the Department of Justice after graduation, Wise was part of the tobacco litigation task force. From that position he was able to make the contacts that would find him his second job in the DOJ, this time with the Enron Task Force. He counseled students to use networking as a way of finding out about jobs.
“Both of the jobs I got were not advertised,” Wise said. “I think that’s incredibly important, not to limit your job search, but to seek other positions.”
He also advised student to ask summer and internship employers if there is any full time employment available.
“When I left [the DOJ] before my clerkship, I made it very clear I intended to apply to the department through the honor’s program.”
A week before he started his clerkship, he got a call from his boss saying she’d got him the job.
“People think the government is rigid, but you can take initiative.”
He turned an informational lunch session with a member of the Enron Task Force into an offer of employment.
“They had to find a place to hire me, so they went to the fraud office, which tries cases in all jurisdictions. They hired me and detailed me to the taskforce. I’d actually applied to the fraud section and gotten rejected because I didn’t have enough experience, but because I’d said to this person at lunch ‘I want to work for you,’ it got me in.”
Wise joined the task force in July 2005 and from July till February his work was completing investigations, pretrial motions, and legal research and writing.
“An enormous part of your job is running investigations. Prosecutors play a significant, if not central role. It’s very different from the DA’s office.”
He was involved in investigating and interviewing several witnesses, and was given responsibility for Ken Lay’s largest charge of insider trading. He sought responsibility early on.
“It’s very important to be clear that you want responsibility. When I joined the tobacco task force I asked for a witness. I got work that other junior attorneys had turned down because they thought they weren’t prepared, and I wasn’t either. I was so petrified that I was going to make an ass of myself in front of the other lawyers. You just have to swallow that.”
The Enron task force even followed his recommendations to not bring charges against certain high level employees.
“One of the defendants was such a lousy lawyer, that when she said she didn’t understand that what she did was wrong, I believed her.”
The team produced a 60-page indictment that charged a variety of frauds, and spent four months at trial. There were 6 attorneys on the task force that brought charges against CEOs Jeff Skilling and Ken Lay.
“The juniors coupled with seniors on the more substantive interviews. I handled the Skilling cross.”
Many of their witnesses were high level executives that had already plead guilty of fraud. Wise believes that the defense had an ambitious case in trying to argue that a witness was committing perjury.
Wise brought in examples of the graphics, or “demonstratives,” that the prosecution showed the jury. These ranged from handwritten memos that memorialized illicit side agreements, timelines of giant personal stock sales, graphs to show how money had been shifted around to create a rosier picture to stockholders, and combinations of data that Wise described as “metaphor and effective use of the original document.”
In one example, Wise produced an internal company document characterizing three companies as “troubled assets.” The same document when released to the public described these same companies as Enron’s “largest assets.”
Another chart showed a timeline detailing when Skilling had begun to try selling off his stock in the company.
“Skilling gave 9/11 as an excuse, but he didn’t tell SEC that he tried to sell 200,000 shares on 9/6. We had him on tape. On the stand, he claimed he didn’t remember, but it couldn’t be clearer.”
Sometimes the prosecution chose to use personal information in order to show that the top executives were willing to bend the rules to meet their needs. In one example, Skilling claimed that he’d had a couple of dates with a woman whose company had received a $500,000 contract from Enron. As if that weren’t bad enough, the prosecution had evidence that he had bought the women a condo as well as written her a series of $10,000 checks.
“Turns out he’d backdated one of the checks to avoid gift tax,” Wise added. “At the beginning of his testimony my boss had gotten Skilling to agree that the most important part of his testimony was his word. At the end, he reminded him, ‘Mr. Skilling we both agreed the most important part of your testimony today was your word.'”
Ken Lay’s attorney tried to explain Lay selling $70 million of stock back to the company as a means of satisfying margin calls to the company. A series of graphics converted stock sales to extravagant checks Lay was writing for things like cruises and interior decoration.
One graphic showed a day in which there was a margin call of 483,000 and personal stock sales by Lay of $4 million.
At one point in his testimony Lay said, “Rules are important, but they should not – you should not be a slave to rules either.” The prosecution had the quote up on a board in about 20 minutes and it sat in the courtroom for the rest of the day.
Wise felt that the courtroom testimony of victims was critical to the success of the trial.
“The idea of ‘The Market’ as a nameless victim is wrong. Numerous people stood up and spoke. Savings can be recovered, but the loss of things like health insurance was devastating and it caused a cascade of effects across their lives.”
After his formal presentation, Wise took questions from the audience. He highlighted the importance of the FBI as experts on the evidence; suggested that the defense might have done better if Skilling and Law would have admitted to at least some level of non criminal responsibility; and said that clinical work, clerkships, and grades were three of the top indicators used in evaluating candidates to the DOJ.
One student asked if the jury understood the complexity of the charges.
” The antecedent question is ‘Are the charges complex?'” answered Wise. “We focused on the lies they told the public. There wasn’t a reason to explain market-to-market accounting. The team leadership pruned the case down…It was a charging decision. We chose to focus on misrepresentation to the public.”
Wise ended his presentation with an eloquent statement about his white-collar prosecutorial work.
“I cannot imagine working for the other side. If I were to do criminal defense, I would rather do violent crime…The white-collar criminals I prosecute, they lie and cheat and steal and victimize people.”