With most of the journalists and court watchers gone, jurors in the trial of Enron Corp. founder Kenneth Lay and former CEO Jeffrey Skilling begin their third day of deliberations Monday in Houston. However, there is no rest for Lay, who is expected to be back on the stand in a different trial Monday to defend himself against four counts of bank fraud for personal loans he took out from three banks. His fate will be decided not by a jury but by presiding U.S. District Judge Sim Lake.

The government alleges Lay set up $75 million in credit lines from Bank of America, Chase Bank of Texas and Compass Bank in 1999 and signed documents agreeing to not use the money to buy or maintain stock on margin. However, prosecutors allege Lay used the credit lines to buy the margin stock, which is a violation of a federal banking law known as Regulation U, which limits the amount of credit a bank may extend to its customers for buying margin stock. The law was enacted following the stock market crash in 1929 to prevent banks from taking on too much risk.

“As a result of these false representations, the banks extended far greater loans to Lay than they otherwise would,” the indictment reads. The indictment alleges that “in spite of his promises, Lay repeatedly used the lines of credit to buy the stock. The lines of credit were collateralized mainly by artificially inflated shares of Enron stock and were repaid with the same.” Lay was charged with one count of bank fraud and three for allegedly making false statements. Each charge carries a maximum 30-year prison sentence.

The defense contends Lay paid back the $75 million loans to the banks, making it a victimless crime. Prosecutors contend otherwise.

“This is a straightforward trial about lying to the banks,” said prosecutor Robb Adkins in his short opening remarks last Thursday. “Evidence will show Mr. Lay repeatedly and falsely executed forms relied on by banks and required by banks.”

Lake expects the bench trial to conclude early this week. He will not render a verdict until the jury returns its verdict in the Enron trial.

In its closing arguments last week, defense lawyers attempted to convince the eight women and four men on the jury panel that the government’s 28-count indictment against Skilling and the six counts against Lay were not based on facts. Although he did not accuse the prosecution of misconduct, Skilling lawyer Daniel Petrocelli said prosecutors had basically manufactured evidence by bullying witnesses when they failed to find any facts to support their case.

“You can say fraud to your heart’s content,” Petrocelli said. “No matter how many times you say fraud, it does not make it true. There have to be facts, folks… There’s been a lot of rewriting of history over the last few years, and we saw a lot of rewriting in this courtroom.”

Enron Task Force director Sean Berkowitz, who doggedly pursued indictments against the two men for more than four years, had his last chance on Wednesday to convince jurors that Lay and Skilling had lied on the witness stand when they said they had committed no crimes.

“The defendants and their lawyers would have you believe that what you heard is business as usual in corporate America,” said Berkowitz. “If what you heard in these past four months is business as usual, I suggest we all take our money out of the market. They lied to their investors, they omitted critical facts, at times they put their own interests ahead of their investors and they lied to you from the stand. There were a lot of good people at Enron, but there were also a lot of people who committed crimes… It’s not business as usual. Don’t let them fool you.”

Berkowitz said, “This isn’t Hollywood, ladies and gentlemen. We didn’t make this up. They have mocked the case, ladies and gentlemen, and said it was fictional. We make no apologies for what we presented here.”

As he concluded, Berkowitz returned to some of the government’s opening statements four months ago.

“This is a simple case,” he said. “Black and white, truth and lies. The shareholders buy a share of stock…They’re not entitled to much, but they’re entitled to the truth. They’re entitled to be told what the financial health of the company is. They’re entitled to honesty. They’re not entitled to be told ‘you just wouldn’t understand’…The final word goes to you. The final word goes to people like the investors…I submit, ladies and gentlemen, that when you consider all the evidence, you will conclude that these men lied. I’m asking you to send them a message that it’s not all right. You can’t buy justice. You have to earn it.”

Prosecutor Kathryn Ruemmler reminded the jury what was at the heart of the case: Enron investors “lost millions and millions of dollars..There were victims of Enron. Real people. People who didn’t know what was going on inside Enron.” This trial, Ruemmler noted, “is about lies and choices. It’s the lies these men told, and the choices they were willing to take.”

Lay and Skilling put their own needs and desires ahead of the investors, Ruemmler charged.

“Mr. Lay and Mr. Skilling got up on the witness stand and they said there was no fraud at Enron.” Ruemmler then sarcastically reviewed some of the defendants’ testimony, reminding jurors they had, at various times during their testimony, said that “stock sales weren’t stock sales, and incriminating conversations were just misunderstandings. You know that is absurd…flatly absurd…You cannot stretch the common sense or the truth that far. Witness after witness after witness came into this courtroom and said, ‘ I lied’,’ ‘we lied’, ‘I stole’, ‘we stole’.”

In other news, online futures exchange TradeSports.com is leaning toward convictions for both Lay and Skilling in their Enron trial. According to the site, a contract that pays $10 if Skilling is convicted of at least 16 of the 28 counts against him was selling for $6.90 on Wednesday. That puts the odds of conviction at 69%. Contracts to pay if Lay is convicted of at least four of the six charges against him were selling for $6.64, which suggests a 66% chance of conviction.

For those interested in actually seeing the jury render its verdict in the case, the Houston Chronicle reported that the court will issue special passes on Monday. Passes will be handed out in front of the downtown courthouse in Houston beginning at 7 a.m. CST on a first-come, first-served basis. When the announcement is made that jurors have made their decision, only those people with a pass will be admitted to the courthouse. The jurors are deliberating between 8 a.m. and 4 p.m. CST Monday through Thursday.

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