Prosecutors eye new targets following Enron victory

WASHINGTON — While the federal government has garnered its biggest victory from the business scandals of recent years with the conviction of former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling, prosecutors may have their sights on a new crop of potential targets.

Newer cases of accounting fraud could bring a fresh set of company executives into prosecutors’ sights, and a probe of at least 15 companies for the timing of stock option grants to their leaders is widening. This week’s revelations concerning Fannie Mae — regulators said the mortgage giant manipulated accounting so that senior executives could collect millions in bonuses — were a reminder that there’s more out there.

“Corporate corruption is not over,” Sen. Carl Levin, D-Mich., who investigated many facets of the Enron tangle, declared Friday.

A four-month-long fraud and conspiracy trial brought guilty verdicts Thursday against Lay and Skilling, who could face double-digit prison sentences. “The victory, and the visibility of the victory, is going to encourage prosecutors to take on more cases that involve very complex financial dealings,” said James Cox, a Duke University professor who specializes in securities law.

For individual executives, there could be more perp walks on the horizon. “Your risks of facing serious criminal and civil sanctions are going up with every successful prosecution by the government,” Cox said.

The Sarbanes-Oxley anti-fraud law born of the 2002 wave of business scandals requires CEOs and chief financial officers to certify in sworn written statements the accuracy of the company’s financial results — with possible prison terms for signing statements they knew to be false.