A Houston judge has set the official start date for the plethora of class-action lawsuits against former Enron Corp. executives, banks and law firms for Oct. 17, 2005, nearly four years after the company declared bankruptcy.

U.S. District Court Judge Melinda Harmon issued an order last Tuesday setting the date, squaring with the time period proposed earlier this month by both the plaintiffs and defendants (see NGI, July 14). Arguments concerning the class-action status certifications are scheduled to be done by Nov. 17 and depositions would not begin until after Jan. 10, 2004. All discovery is scheduled to be completed by Dec. 17, 2004.

Harmon will oversee two main cases, although both still need to be certified as class-action lawsuits. One of the lawsuits, led by the University of California, will include Enron shareholders who are suing under federal securities laws. A second lawsuit represents Enron employees or ex-employees who have filed a lawsuit under both federal securities laws and pension fund laws, which claim the losses were caused by fraud.

Whether the massive lawsuits ever make it to trial remains a question, according to court observers, because in most cases, large civil cases often are settled out of court. Earlier this year, Harmon and U.S. Bankruptcy Judge Arthur Gonzalez, who is overseeing the entire Enron case in New York, required both sides to meet with a mediator in June. File briefs concerning the mediation are scheduled to be filed in August.

In related news, former Enron Chairman Kenneth Lay’s attorneys argued before Gonzalez’s court Wednesday that he had done nothing wrong by using some of his company stock to repay millions of dollars in loans from Enron. The argument was part of a motion to dismiss a lawsuit against Lay and his wife Linda by Enron creditors seeking to recover more than $80 million in loans and cash advances the Lays received in 2001.

The lawsuit charges that the Enron creditors are owed the money because he should have known that the stock he used to repay the loans was overvalued or worthless. Lay’s attorneys argued that when Lay used his stock to repay his loans, he used an agreed-upon measuring stick for the stock’s value, which was the price quoted on the New York Stock Exchange. The value used was outlined in his contract.

The lawsuit also charges that the Lays sold two annuity contracts to Enron for $10 million in September 2001, $5.3 million more than they were worth. Creditors’s attorneys argued that internal Enron documents then valued the annuity contracts at only $4.7 million, which granted the Lays a “windfall.”

Finally, attorneys for former Enron CFO Andrew Fastow and his wife, Lea, apparently are trying to have their criminal trials moved out of Houston, according to court documents. A motion in a Houston district court requests that Andrew Fastow’s trial proceed before his wife’s, and includes a footnote indicating that attorneys would seek a change of venue in August. Andrew Fastow faces more than 100 criminal charges concerning his activities while he worked at Enron, while Lea Fastow faces six counts. Both have pleaded not guilty. Lea Fastow’s case is now set to begin Jan. 27, 2004; Andrew Fastow’s case has not been scheduled.

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