updated 2/3/2006 7:36:35 PM ET 2006-02-04T00:36:35

The first government witness in the fraud and conspiracy trial of two former Enron chiefs said Jeffrey Skilling gave misleading information to Wall Street analysts. But he stopped short of saying Skilling or Kenneth Lay explicitly ordered the books cooked.

Future witnesses may provide more accusing testimony as the massive Enron puzzle comes together. Next up for the prosecution is Kenneth Rice, a former Skilling ally who last year told a different jury in a different Enron trial that Skilling lied to analysts. Rice ran a highly touted broadband division that never lived up to its hype.

The lack of smoking guns during the first week of the Lay-Skilling trial shows that the monthslong case, which grew out of one of the most searing corporate scandals in U.S. history, will be a marathon, not a sprint.

“It’s easier to prove if they were extremely flagrant or brazen about what they were saying. But typically that’s not the case in a conspiracy where people are trying to accomplish something in more subtle ways,” said Sam Buell, a former federal prosecutor with the Justice Department’s Enron Task Force who now teaches at the University of Texas School of Law.

Buell said no single witness, even those just below Lay and Skilling in the corporate hierarchy, will be the linchpin of the case. Rather, it will come down to how the puzzle pieces fit together — or don’t.

“There’s been such a long period of buildup and anticipation for this trial that people expected some kind of immediate payoff in instant bombshell revelations, and that’s just not the way criminal trials work,” Buell said.

Enron flamed out in December 2001, leaving thousands out of work and wiping out billions of dollars in investors’ wealth. The government contends Lay and Skilling knew Enron’s success was a facade supported by accounting tricks and fudged finances. The former chief executives deny it, saying investors’ panic at bad publicity killed what was once the country’s seventh-largest company.

In two days of questioning by the government this past week, former investor relations chief Mark Koenig — who pleaded guilty in 2004 to aiding securities fraud by lying to investors — said Skilling gave misleading information to analysts about Enron’s businesses. He also said Lay knew after the fact that Enron kicked up its late 1999 quarterly earnings overnight to match Wall Street expectations.

But Koenig stopped short of saying his former bosses ordered the books be cooked or knowingly hid losses from investors. His cross examination is expected to begin Monday.

Daniel Petrocelli, Skilling’s lead lawyer, said he heard nothing “of consequence” from Koenig, whose cross-examination is expected Monday.

“I’m enjoying this trial,” Petrocelli said outside court, standing beside Skilling.

“I’m not,” Skilling mouthed, pointing at himself.

Testimony from Rice, who pleaded guilty in 2004 to securities fraud, could mitigate Petrocelli’s enjoyment. Among the allegations against Skilling are that he lied to analysts about the capabilities of Enron’s fledgling broadband network in January 2000 to generate Wall Street buzz and inflate the company’s stock price.

In last year’s trial of five former broadband executives, Rice said he, Skilling, and the defendants in that case said the network was up and running when it wasn’t, to dazzle Wall Street.

“Mr. Skilling liked to address issues head-on,” Rice testified last year. “We addressed that concern by lying about the capabilities we already had on our network.”

However, in a January 2000 presentation to analysts, Skilling alternated between saying what the network could do at the time and what it would do in the future. That distinction likely will dominate his cross examination, particularly since Petrocelli had no opportunity to question Rice when he first implicated Skilling last year.

The broadband trial ended with acquittals on some counts and jurors hung on others. Those defendants are to be retried in three separate cases this year.

While both Lay and Skilling appear at ease in court — even laughing or smiling when jurors heard a tape of Skilling calling an analyst a profane name when he expressed frustration at a lack of detail in financial disclosures — each could spend decades in prison if convicted.

Skilling, 52, is charged with 31 counts of fraud, conspiracy, insider trading and lying to auditors. Lay, 63, faces seven counts of fraud and conspiracy.

Both Skilling and Lay sold millions of dollars in stock before the company went bankrupt, but only Skilling is charged with improper stock sales.

A jury of four men and eight women from the Houston area will decide whether they walk free or don prison-issue jumpsuits.

“My fate is in their hands, and we’ll get on to making the case for my innocence,” Lay said after the jury was chosen.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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