The Enron Whistleblower's Day in Court

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Jurors literally leaned forward in their seats scribbling notes as whistleblower Sherron Watkins described the last critical weeks in the fall of Enron, as she testified during week seven of the fraud and conspiracy trial of former top executives Ken Lay and Jeffrey Skilling.

Watkins took the witness stand wearing the same purple suit she sports on the website advertising her $30,000 speeches, and weathered the ire of defense attorneys, who implied her testimony was little more than another stop on her book tour, in an often testy afternoon.

Watkins started with the moment she discovered the company was hiding losses. "The math on the spreadsheet didn't add up," says Watkins, a certified public accountant. "This was not just aggressive accounting, but fraudulent accounting."

Shortly after she discovered the accounting errors, CEO Jeff Skilling resigned. "He's a smart man," Watkins said. "The stuff I stumbled across — he knows it," she recalled thinking. "He knows it's bad." She described writing her infamous memo warning that the company was in danger and discussing it with Ken Lay in a 30-minute meeting in his office one week after Skilling left.

One line in the memo quotes an employee as saying, "I wish we would get caught. We're such a crooked company." "I remember he winced when reading it," Watkins said. During her testimony, Lay's face turned dark red.

Lay was skeptical that the fraud she pointed out to him could be problematic, she testified. And after their meeting, Lay continued to tell investors, analysts and employees that everything was fine at Enron. "It was just assumed that I was wrong," Watkins said. "It was a blatant lie."

Kicking off his cross-examination, Lay's lawyer, Chip Lewis, tossed a copy of Watkins book, Power Failure, onto the witness stand. "A housewarming gift," he said. She told him she already had a copy.

Lewis asked if she had committed any crimes while at Enron. "I'm not an expert at that," Watkins said. He pointed out that she sold some of her Enron stock after meeting with Lay — yet the government didn't charge her with insider trading. "I wish I hadn't sold — I don't know whether a crime was committed," she said.

Brian Wice, a Houston attorney and legal analyst during the trial, told TIME: "Her halo was probably knocked askew... but she dusted herself off." Skilling and Lay will get their chance to directly counter Watkins as they are both expected to testify before the end of April.