The trial of Enron Corp. founder Kenneth Lay and former CEO Jeffrey Skilling is only three weeks old, but Wednesday, U.S. District Judge Sim Lake attempted to speed things along. Defense attorneys last week played nearly eight hours of video and audio recordings of Enron webcasts and analysts conference calls in an attempt to show the jury “context.” However, when another tape was introduced as evidence Wednesday, Lake appeared to have heard enough.

“If you’re going to question him about Shakespeare, you don’t have to start with the invention of the alphabet,” he told Skilling defense attorney Mark Holscher. “I’m tired of hearing statements…Let’s get to some questions.”

The day began with Kenneth Rice, the former CEO of Enron Broadband Services (EBS), in his second day of testimony. The prosecution questioned him on Tuesday, and the defense team led by Holscher went on the attack Wednesday.

Rice testified when Skilling resigned abruptly in Aug. 2001, he still thought Enron was a “great company.” However, Enron had grown from $5 billion to $60 billion in market capitalization in seven years, and in an e-mail to a cousin, Rice wrote that several members of Skilling’s management team were not “cut out to be managers of that kind of company.” In another e-mail to a friend, Rice wrote, “This is best for Jeff, though not the company.”

Rice testified he also told his cousin he planned to step down officially from Enron in October 2001, but “for all intents and purposes, I am already gone.” He told the jury he was “really excited about EBS,” but “the last six months at EBS were not fun. It’s true I was losing my passion.”

Holscher challenged many of Rice’s statements, and questioned his commitment to Enron in early 2001, when EBS was not doing well. Holscher asked Rice if he had “started to check out of Enron” in early 2001 by devoting more time to his hobby of racing sports cars.

“No, I raced cars on weekends,” Rice said.

Asked if anyone had complained about his performance, Rice said, “A number of employees came to me and thought the wheels were falling off Enron broadband and were critical of the way I was handling it.”

The defense is attempting to show Rice did not believe he was guilty of any crime and only agreed to cooperate after the government seized his assets and several other people were indicted.

Rice testified that after he was indicted, he was offered a plea bargain but turned it down. He only decided to agree to the government’s terms when former Dynegy Inc. employee Jamie Olis was sentenced in 2003 to 24 years in prison for Dynegy’s Project Alpha scheme. Olis’ sentence was overturned last November (see Daily GPI, Dec. 22, 2005).

“I knew from the day that I got indicted that I was facing a lot of time, and the sentencing of the Dynegy executive simply reinforced that,” Rice said.

Lake, who appeared more forgiving of the seven-plus hours of video and audiotape played last week for the jury, took the defense team to task several times Wednesday for replaying conference calls.

Holscher, who said he wanted to play a “one hour or so” videotape to provide an “accurate summary of EBS’s capabilities, which [Rice] now contends is incorrect,” Lake questioned why the tape was being show.

“It seems to be a waste of time so far,” Lake said.

Holscher argued the tape is part of the core of allegations in the indictment against Skilling, which indicate he made false statements about the company in analyst meetings. Holscher said he wanted to show the jury that Rice and EBS COO Kevin Hannon (who will be testifying in the future for the prosecution) presented a positive view of the business.

Without presenting the tape, said Holscher, it is “impossible to get a feel of how bullish Mr. Hannon and Mr. Rice were of the business.”

Prosecutor Sean Berkowitz also argued the defense was “trying to have a mini-trial of if Mr. Rice is guilty of what he pled guilty to.”

Lake ruled the defense would not be permitted to replay a one hour, 40-minute presentation to analysts in early 2001 that, at the end of, Skilling makes general comments about EBS. However, he allowed the defense to play the closing statements by Skilling, when he said, “I think we have customers and specific products and services for the marketplace.”

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