Rarely have so many high-profile executives taken so many perp walks - that shameful moment when the handcuffs snap over the cufflinks as cameras record it all.
From "A" as in Adelphia to "Z" as in Zurich Payroll, the charges of corporate fraud have rolled in. In the two years it's been in existence, the US Justice Department's Corporate Fraud Task Force has indicted hundreds of individuals from scores of firms.
Now add Kenneth Lay, who was at the helm of Houston-based Enron in 2001 when it became the largest corporate bankruptcy in American history - the first of the recent multibillion-dollar corporate governance scandals.
For millions of Americans, Mr. Lay's indictment Thursday carried a certain resonance. After Enron, scores of companies were caught falsifying their books, illegally fattening executives' pockets, or lying to shareholders. Some names are familiar, as with Martha Stewart. Others are more anonymous, as with Steven Davis, the director of advertising for "Just for Feet," a shoe retailer in Birmingham, Ala.
While the recent wave of prosecutions - one of the largest in modern corporate history - has certainly changed some business behavior, it's also exposed something more tangible: the financial losses of tens of billions of dollars, and, in many cases, life savings.
"In every city in America, people lost their mutual funds, retirement funds, and 401(k) savings after being told to buy Enron," says Gerald Treece, dean of the South Texas College of Law in Houston. "I haven't met one family that wasn't touched in some way by the mischief over there."
Because this is an election year, the Lay indictment has quickly taken on political overtones. Some view the event as proof that President Bush has followed through on his pledge to crack down on white collar crime - particularly given that the handcuffs were snapped on a former friend and major contributor. (Enron executives contributed more than $600,000 to Bush campaigns, according to the Center for Public Integrity, making the company the second largest contributor to Bush throughout his public career.)
But others see it as a painful reminder to many voters of the money they had lost. In the past, Democratic challenger John Kerry has singled out Enron when he's attacking the administration for its ties to "corporate interests." It didn't help the White House that many television news casts Thursday showed old footage of Mr. Bush enjoying a baseball game with Lay.
Still, the details of the case may not prove too harmful to Bush. The trial itself - if there is one - isn't expected to take place until 2005, well after the election.
"President Bush is not the first president to have associated with folks in the business community who ran afoul of the law," says Kirby Behre, a former federal prosecutor, now a partner at the Washington law firm Paul Hastings. "It is not as if he's been hanging out with Ken Lay for the last three years."
The handcuffing of Lay begins the endgame of one of the most prominent periods of corporate investigations in recent history. In impact, it may rival the era of the savings and loan failures that erupted in the 1980s, for example. In that set of scandals, 800 white collar criminals had been convicted by 1992.
But the scandal was centered in one industry, whereas recent court proceedings have engulfed names such as WorldCom in telecommunications, ImClone in healthcare, and the conglomerate Tyco as well as Enron.
In the1920s, stock market scandals roiled the nation, resulting in the securities regulation of the 1930s. And, because of increased securities fraud in the deregulated environment of the 1980s, the SEC and other regulatory agencies saw their budgets increase.
"We tend to get these sorts of major scandals almost once a decade," says Nancy Rapoport, dean of the University of Houston Law Center and a bankruptcy expert. "We don't seem to learn very much from our mistakes. "But while scandals like the savings and loan scandal were bad, this is worse. It's not necessarily different in kind, but it's slightly different in scale. It affected a broader swath of people."
In additional to new rules governing the accounting industry, the current spate of scandals appears to have, at least for a time, reshaped public opinion of large corporations. According to polls by the Gallup organization, the public's confidence in "big business" was fairly strong during the boom years of the late 1990s, with 30 percent citing strong faith in corporations. By June of 2002 that number had fallen to a low point - 20 percent.
Trust in big business has since begun edging up again, with 22 percent of Americans having strong confidence in June 2003 and 24 percent in May 2004.
For all the visibility of the case, the Lay trial may not have as much impact on corporate behavior as it would have had a year ago. Henry T.C. Hu, a corporate and securities law professor at the University of Texas in Austin, notes that while Lay was certainly the poster child for corporate governance problems in recent years, other big-name individuals have already been convicted - including Andrew Fastow, Enron's chief financial officer, who is serving 10 years in prison, and Martha Stewart, who is about to be sentenced. "The message has already gone out to would-be white-collar criminals," says Dr. Hu.
Even that message, though, may not be as strong as it could be. Ms. Rapoport notes that the problem with criminal penalties is that smart people never expect to get caught or convicted so they are always going to underestimate their risk.
The government hopes to try Mr. Lay with Jeffrey Skilling, Enron's former CEO, and Richard Causey, the company's former chief accounting officer. The charges against Lay are similar to those against the others - in Lay's case, an 11-count criminal indictment charging him with fraud, insider trading, bank fraud, securities fraud, wire fraud, conspiracy, and making false and misleading statements. Lay's lawyer will argue for a separate trial. "We believe Ken Lay should go first," says Mike Ramsey." Lay, in a written statement, proclaimed his innocence.
Lawyers believe getting a conviction could be a challenge for the government. Unlike some other white-collar cases, there is not likely to be a long paper trail. "If there was a smoking gun, he would have been charged earlier," says Mr. Behre.
Instead, much of the case will depend on the testimony of Mr. Fastow, the firm's former treasurer who pleaded guilty and is now facing a 10-year sentence. "Fastow led a life so permeated with deceit and deception that he is going to be torn to shreds on cross examination," says Christopher Bebel, a former US Attorney who specializes in securities law. "The government will not be able to rest its case on his testimony alone."
In addition, Lay will maintain his role was more ceremonial. "He was not in the trenches and was not involved in key decisions on a daily basis, and he's going to be able to use that to his advantage," adds Mr. Bebel.
Yet Mr. Hu says that it's likely the government has compiled a formidable case. "They don't want to be embarrassed by a hung jury so you can be sure they have a lot of evidence suggesting that Ken Lay was not simply an innocent dupe," he says. "They've already sent a great message to corporate America, to would-be criminals, and they don't want to do anything to undermine that."