Quotes of the Day

What will the overturning of former Wall Street dealmaker Frank Quattrone's conviction for obstruction of justice have on the Enron trial? It has certainly heartened the attorneys who are defending Ken Lay and Jeffrey Skilling, the two former Enron executives facing charges of fraud and conspiracy.

"I think it's a reminder of how dangerous it is that prosecutors can overreact in putting businesses on trial," Skilling attorney Daniel Petrocelli told TIME. "I'm going to be real clear to the jury [in closing arguments] about conduct that is appropriate. You can't try business cases in a criminal courtroom unless you've got real solid evidence that a crime has been committed." Said Lay attorney Mike Ramsey: "Clearly there's got to be a connection between business judgments and specific intent. That bright line is being erased by these prosecutions, and the Supreme Court and the appellate court are having none of it." Enron trial prosecutor Sean Berkowitz declined to offer comment to TIME on the ruling.

In the case of Quattrone, known for leading IPOs for Amazon and Netscape during the dot-com boom, the appeals court said the trial judge erred by instructing jurors that Quattrone did not have to intend or knowingly commit a crime when telling subordinates via e-mail to "clean up" their files during a government investigation of Quattrone's former investment firm. The government argued that Quattrone was e-mailing specifically about subpoenaed documents. The defense said he wasn't. The trial judge told the jury it didn't matter.

The ruling has put more attention on the instructions that Judge Simeon T. Lake ultimately will give to the jury in the Enron trial. "In the Enron trial there's going to be a battle royal over a jury instruction known as deliberate ignorance," says Houston attorney David Berg, author of The Trial Lawyer: What It Takes to Win. " In Lay and Skilling's case it's, 'I didn't know what was going on in the company.' Deliberate-ignorance jury instructions have held a person criminally liable when their denial of knowledge doesn't make sense. But now the judge is going to have to instruct the jury that Skilling and Lay had to know about the criminal behavior that's been alleged against them."

Other recent cases bolster that view as well. The U.S. Supreme Court, in a case directly related to Enron and Quattrone, in May of 2005 voided a witness-tampering conviction of the accounting firm Arthur Andersen LLP by stating that the trial's jury was wrongly told it could convict the firm for shredding documents during the government's investigation of Enron even if Andersen employees believed they were not breaking the law. And Bernie Ebbers, former CEO of WorldCom, convicted last year on fraud charges in the financial collapse of the telecommunications company, is basing his appeal on similar jury instructions. In his trial, Ebbers testified he didn't know fraud was taking place. The jury was told he could be found guilty if he was suspicious of fraud but consciously avoided finding out.

Berg believes the burden of proof has risen for the government. "It gives [the defense] hope because their entire defense is that (a) they were unaware of any criminal behavior, and (b) the company really wasn't in financial trouble. Now the jury is going to have to believe they knew of all the elements of the crimes alleged against them," says Berg.

Not so fast, says Sam Buell, a former member of the government's Enron Task Force that brought indictments against company executives, and now a visiting professor at the University of Texas-Austin. "They're sort of apples and oranges," argues Buell of the Quattrone and Enron cases; the Quattrone case involved blocking a grand jury investigation, while Enron concerns internal accounting fraud. Even in striking down Quattrone's conviction, he noted, the appeals court panel indicated there was enough evidence to convict if jury instructions had been proper.

In any event, all eyes will be on the jury instructions in the Houston courtroom. "These twelve people who decide guilt or innocence are not legal scholars," says Enron trial analyst and Houston attorney Brian Wice. "The only law they take into the jury room is the law Judge Lake gives them."

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• The overturning of a Wall Street dealmaker's conviction could have repercussions in Houston