The judge overseeing the fraud and conspiracy trial of Enron Corp. founder Kenneth Lay and former CEO Jeffrey Skilling declined Monday to dismiss the case based on defense allegations of prosecutorial misconduct.
U.S. District Judge Sim Lake said attorneys for Lay and Skilling failed to substantiate their claims that "deliberate, systematic prosecutorial misconduct" has choked their efforts to prepare for trial.
The judge said at a Dec. 1 hearing that he doubted he would dismiss the charges based on the allegations.
For several months, the defense teams have argued that prosecutors have squashed their trial preparation efforts by making obvious or veiled threats to critical witnesses that they could be indicted or face harsh sentences if they talk to the defense teams.
Prosecutors have denied intimidating anyone.
In September, Lake sent letters to lawyers for witnesses saying they were free to talk to the defense teams without fear of retribution from the government. The letter said witnesses needed no permission from prosecutors to talk to the defendants, that they were free to testify for the defense and they could discuss anything with the defense regardless of plea agreements that may limit such discussions.
It also said Lake was willing to meet with witnesses to discuss any concerns. None took him up on the offer.
Skilling's lead trial lawyer, Daniel Petrocelli, and Michael Ramsey, Lay's lead lawyer, said the judge's assurances haven't broken the witnesses' silence.
But Lake said in his ruling that even if witnesses or their lawyers spurned the defense teams out of fear, the judge's steps to provide reassurance "remedied any harm to defendants."
In a speech last month to Houston business and academic leaders, Lay pleaded with witnesses to come forward on his behalf. "It will only take a few brave individuals who are willing to stand up and say it's time for the truth to come out," Lay told the Houston Forum.
Skilling faces 35 counts of fraud, conspiracy, insider trading and lying to auditors for allegedly conspiring to fool investors into believing Enron was healthy before revelations of hidden debt and inflated profits fueled the company's December 2001 collapse. Lay faces seven counts of conspiracy and fraud alleging he perpetuated the ruse after Skilling abruptly resigned in August that year.
Both have pleaded not guilty.