Former Enron CEO Lay Defends Image Through Web Site

NEW YORK – People sell everything from antique china to chihuahuas on the Internet, but former Enron Corp. chief executive Kenneth Lay's legal defense team wants Web surfers to buy his credibility.

Like media-savvy Martha Stewart and HealthSouth Corp.'s Richard Scrushy before him, Lay has set up a Web site designed to bolster his image as his trial is set to begin in Houston on conspiracy and fraud charges.

In a trial set to start on Jan. 30, government lawyers are expected to paint Lay and former Enron CEO Jeffrey Skilling as men who lied to cover up a massive fraud that led to the collapse of the power trading giant.

But a check of his Web site, http://www.kenlayinfo.com, reveals an extensive list of community awards and service. For example, Lay was named "Father of the Year" by local community group and the then-mayor of Houston once declared a "Kenneth Lay Day."

His association with local churches is mentioned as well as links to various political organizations, including a stint as Houston finance committee chairman for George Bush for President in 1988.

"We're proud of him," Michael Ramsey, Lay's attorney told Reuters. "He's got a long record of civic responsibility and charitable work."

Attorneys for Lay and Skilling have asked that the trial be moved to Phoenix or Denver because of strong bias against the defendants in the company's home town of Houston. About 80 percent of the potential jury members indicated in questionnaires they held negative views of the defendants.

The bankruptcy filing of Enron in 2001 was the largest ever at the time, and came after it was revealed that the company's bookkeeping hid billions of dollars in debt.

The decision to put up a Web site in July 2004 was made by Lay's legal defense team as part of their strategy to "get everything in the public as soon as possible" in an effort to combat media spin, Ramsey said.

Also posted on the site are court filings made by Lay's lawyers, footage from press conferences and the text of speeches that Lay has made since his arrest. But unlike similar sites, it has no link to an e-mail address for Lay.

Using the Internet as part of an accused corporate criminal's public relations strategy is relatively new. Ramsey has been practicing law for 40 years and said this was the first time he had used a Web site for a client.

"It appears that the rules of defending high-profile business persons accused in white-collar crimes are being rewritten," Ross Albert, a partner at Morris, Manning & Martin in Atlanta, who worked as an attorney at the Securities and Exchange Commission, said. "Under the old rules, you didn't say anything publicly."

He added that putting up a Web site is also a cost-effective means of communicating with the public. "Web sites cost almost next to nothing when you are talking about a $20 million defense effort," Albert said.

Martha Stewart, the former chief executive of media company Martha Stewart Living Omnimedia Inc. (MSO) who served five months in federal prison for lying about a suspicious stock sale, used now-defunct Web site marthatalks.com during her trial to post letters, and receive e-mail feedback from supporters or detractors.

While in jail, Stewart sent dispatches from Alderson Federal Prison camp that were posted on her site. The site received millions of hits, and is credited with helping soften her image.

Former HealthSouth chief executive Richard Scrushy also took his case to the public on the Internet on his still functioning site called "Setting the record straight" at http://www.richardmscrushy.com

A jury in Birmingham, Ala. acquitted Scrushy in June 2005 of all criminal charges in connection with a $2.7 billion accounting fraud he was accused of directing at the company that runs rehabilitation hospitals and surgical centers.

But some legal experts question the effectiveness of Web sites in a white-collar defense and said Scrushy's victory had little to do with his publicity campaign on the Web.

"It's a scatter-shot strategy," said Pamela Bucy, a law professor at the University of Alabama, who specializes in white-collar crime. "You don't know if you are reaching potential jurors or even generically altering public opinion."

Bucy said that Scrushy's acquittal had nothing to do with his high profile outside the courthouse but with the way the case was tried.

"The government has a very high burden of proof," Bucy said. "If it meets that burden, none of this stuff will matter."