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San Jose Mercury News (California)
Jul 08, 2004 - 01:00 AM

by John Woolfolk; Mercury News

Indictment bittersweet in California

Reports of former Enron Chairman Kenneth Lay's criminal indictment Wednesday cheered California officials and consumer watchdogs who consider him among the top villains responsible for the state's costly energy crisis in 2000 and 2001.

''It's been a long time coming,'' said California Attorney General Bill Lockyer. In 2001, Lockyer called Enron a criminal enterprise and said he wanted to escort Lay to a cell ''that he could share with a tattooed dude who says, 'Hi, my name is Spike, honey.' ''

Lockyer, who sued the onetime energy giant last month seeking some $2 billion in damages for allegedly unjust energy profits under the state's unfair-competition and commodities-fraud laws, praised federal authorities for their investigation into the Houston company's financial collapse.

The state lawsuit followed release of tapes in which Enron traders boast of Lay's White House influence over energy policy and laugh at the thought of ripping off California grandmothers.

Doug Heller of the Foundation for Taxpayer and Consumer Rights said the reported indictment was bittersweet for California because the charges apparently have little to do with the energy-market manipulation for which the state is still seeking refunds.

''It's like getting Al Capone on tax evasion,'' Heller said. ''I think there will be a real visceral pleasure for Californians to see this mastermind of the deregulation robbery appear in the courts. But it's only cold comfort because the federal government still has not done its work to get our money back.''

The largest California victims of Enron's financial collapse were state pension funds. The state's largest pension fund, the California Public Employees' Retirement System, lost $40 million on direct holdings of 2.7 million Enron shares. CalPERS officials had no immediate response to reports of Lay's indictment.

Gov. Arnold Schwarzenegger's office said he would withhold comment until any indictment is unsealed.

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