Enron Founder Ken Lay Indicted on 11 Counts of Fraud and Conspiracy

On July 7, 2004, a federal grand jury indicted Enron founder and former CEO Kenneth Lay on 11 counts of securities fraud, wire fraud, and making false statements to banks. The indictment charged that Lay repeatedly lied to investors, employees, and federal regulators about Enron’s deteriorating financial condition while enriching himself through stock sales and fraudulent transactions.

Lay’s indictment came approximately five months after former Enron CEO Jeffrey Skilling was indicted on February 19, 2004, on 35 counts of fraud, insider trading, and conspiracy. Together, Lay and Skilling faced charges of orchestrating one of the largest corporate frauds in American history, deceiving investors about Enron’s use of off-balance-sheet partnerships to hide billions in debt and inflate profits.

The indictments represented the culmination of a nearly three-year Justice Department investigation following Enron’s December 2001 bankruptcy. Prosecutors alleged that Lay made false and misleading statements about Enron’s financial performance even as the company spiraled toward collapse, while selling his own Enron stock to avoid personal losses. The charges carried potential prison sentences of decades.

The aggressive criminal prosecution of Lay and Skilling exemplified the brief post-Enron era of executive accountability that followed passage of the Sarbanes-Oxley Act in 2002. Federal prosecutors pursued top executives personally, seeking prison sentences rather than settling for corporate fines. This approach stood in stark contrast to the Justice Department’s response to the 2008 financial crisis, when no major Wall Street CEOs faced criminal prosecution despite fraud on a far larger scale.