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Enron Judge Cautions Against Gossip in Skilling, Lay Trial

As the trial for former Enron Corp. founder Kenneth Lay and CEO Jeffrey Skilling draws closer, U.S. District Judge Sim Lake signaled he plans to let the opposing parties put on their respective cases -- without a lot of innuendo and gossip. The case, which is scheduled to begin Jan. 30, will exclude tapes from ex-Enron traders joking about stealing money from California grandmothers, and it will not include former CFO Andrew Fastow's apparent penchant for viewing pornography on his company computer.

However, Lake agreed on Thursday to allow ex-Enron trader Timothy Belden and former Enron counsel Richard Sanders to testify for the prosecution about Skilling's alleged involvement in manipulating the California wholesale power market in 2000 and 2001. Belden, who was the former chief of trading for Enron Power Marketing in Portland, OR, pleaded guilty in October 2002 to a charge of conspiracy to commit wire fraud relating to power trading schemes (see Daily GPI, Oct. 18, 2002). Belden has been cooperating with the Enron Task Force and has not been sentenced.

According to a brief by the prosecution, Sanders' testimony is sought because of a meeting he had with Skilling in June 2001, which apparently also related to schemes to manipulate the California energy market. The brief indicated Sanders talked with Skilling on the same day Skilling gave a speech in California "urging that the problems in California were market-driven and a result of poor deregulation."

Lake also ruled on several motions favoring the defense team, which include allowing a group of expert witnesses to help objectively explain to the jury its version of what happened at Enron. The ruling is considered significant because the defense team has argued the jury pool, selected from the Houston area, will be prejudiced against the former Houston-based Enron executives.

Lake cautioned the defense team, however, on attempts to bring in information concerning pornography, which apparently was found on Fastow's office computer. Lake said the material was not relevant to the case, and he said he almost certainly would not allow any testimony concerning soliciting prostitution, extramarital affairs or the use of illegal drugs.

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