Whether Enron Corp. founder Kenneth Lay does any jail time or pays any fines for allegedly violating banking rules now rests in the hands of U.S. District Judge Sim Lake. The case against Lay, who was charged with four counts of personal bank fraud, was completed on Tuesday.

The government alleges Lay obtained $75 million from the Bank of America, Chase Bank of Texas and Compass Bank in 1999. Under agreements with the banks, Lay was not allowed to use certain credit lines from the banks to buy margin stock. Lay testified that he was not aware he was violating terms of the loan agreements he had signed, and he admitted he had used some bank loans improperly. He reiterated his statements during cross-examination Tuesday by prosecutor John Hueston.

Hueston pointed to testimony by Lay’s banker James Shelton, who testified he had warned Lay about federal Regulation U, which prohibits using a credit line to buy stock.

“Mr. Hueston, today I really cannot recall specifically what Mr. Shelton told me,” Lay said. “Mr. Hueston, I know you find this very strange, but Regulation U was not something I carried with me all the time.” Lay said, “I had a lot going on in my life back then. I doubt I read in detail any of these loan documents.”

During closing arguments, Lake asked defense lawyer George Secrest several times to explain how Lay signed documents annually vowing not to use the credit lines to buy margin stock but did so anyway.

“He’s got a stack of documents with a bunch of [sticky notes]” that showed him where to sign the documents, Secrest explained. Lay signed the documents believing they had been approved by his accountant and other people he trusted, Secrest said. “He violated Reg U, but he didn’t commit bank fraud.”

Government lawyer Sean Berkowitz said in his closing statements that Lay misused the credit lines with a purpose.

“Mr. Lay did this for the worst possible reason, because he knew he could get away with it,” Berkowitz said. He reminded Lake that Lay and his staff had several opportunities to explain to the banks involved that some of the credit lines were used to buy stock. Lay, he said, was caught with his hand in the cookie jar. But Lay’s attitude, said Berkowitz was, “I put the cookies back, no harm no foul, and the rule against taking cookies is silly anyway.”

Lake will decide the case without a jury. He plans to render his verdict once the Enron jury, which completed its fourth day of deliberations on Tuesday, has completed the case against Lay and ex-CEO Jeffrey Skilling.

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