SEC v. Kenneth L. Lay, District of Columbia (Sept. 29, 2003)

UNITED STATES DISTRICT COURT
FOR THE
DISTRICT OF COLUMBIA
__________________________________________
)
UNITED STATES SECURITIES)
AND EXCHANGE COMMISSION,)
)
Applicant,)MISC. NO. 03 1962
)
v.)
)
KENNETH L. LAY,)
)
Respondent.)
__________________________________________)
REPLY OF THE SECURITIES AND EXCHANGE COMMISSION
IN SUPPORT OF ITS APPLICATION FOR ORDER
REQUIRING OBEDIENCE TO SUBPOENA
I.INTRODUCTION
Despite Lay’s concession that he has no Fifth Amendment right to withhold corporate
records from the SEC and the fact that he has produced the same
 documents at issue to parties in
other proceedings, including production to the bankruptcy examiner apparently after
 the SEC
filed this action, Lay continues to withhold corporate records from the SEC.  In light of the
foregoing, Lay’s continued refusal to designate and produce corporate records to the SEC, unless
the SEC “agrees” to his terms, is an outrage and belies his self-serving and disingenuous claim
that he has been fully cooperative with the SEC.  This Court should not permit Lay to continue
this charade.
Lay has demonstrated a frankly whimsical approach to asserting his Fifth Amendment
rights.  Lay initially produced documents to the SEC without invoking the Fifth Amendment. 
Lay later asserted the Fifth Amendment in refusing to testify to the SEC, and selectively invoked

-2-
the Fifth Amendment with respect to documents, withholding some documents and producing
others.  Yet Lay has already produced the same records he has withheld from the SEC to at least
two parties.  Further, just days ago, Lay submitted to questioning by the bankruptcy examiner,
apparently without invoking his Fifth Amendment rights.  Thus, when conditions suit his
purposes Lay talks and provides documents, but when called to answer to law enforcement
authorities, he invokes the Constitution, remaining silent and withholding documents.  By what
logic can Lay claim that he continues to hold a Fifth Amendment right to refuse compliance with
the SEC’s subpoena when he has produced the same documents to others?
Given Lay’s concession on the applicable law, his agreement to submit records for an in
camera review, and his production of the same records to others, the issues for the Court have
narrowed.  Because Lay agrees that he has no Fifth Amendment right to withhold corporate
records from the SEC: (1) he must designate records as either corporate or personal; (2) produce
the corporate records to the SEC; and (3) submit personal records, if any, to the Court for an in
camera review.  Should the Court determine in its in camera review that certain records
designated by Lay as personal are actually corporate records, such records should be produced to
the SEC.  Should the Court determine that certain records are personal, such records should also
be produced to the SEC if the Court finds that Lay waived his Fifth Amendment rights to such
records by producing them to other parties.
II.ARGUMENT
A.Lay Does Not Dispute That He Has No Fifth Amendment Right
To Withhold Corporate Records
There is no dispute regarding the law applicable to corporate records in Lay’s possession. 

1
Lay suggests that it was improper for the SEC to subpoena Lay personally and to
apply the collective entity doctrine to records sought in such a subpoena.  Lay was subpoenaed
while he was still the Chairman of Enron and the collective entity doctrine applies to corporate
records held by individuals regardless of the capacity in which they are served.  Bellis v. United
States, 417 U.S. 85 (1974) (subpoena served on former partner); In re Sealed Case (Government
Records), 950 F.2d 736 (D.C. Cir. 1991) (subpoena served on former government employee); In
re Grand Jury Subpoena, 957 F.2d 807 (11
th
 Cir. 1992) (subpoena served on former Chairman
and CEO).  Further, as made clear in the caselaw cited by the SEC, unrebutted by Lay, the act of
production doctrine set forth in United States v. Hubbell, 530 U.S. 27 (2000) applies solely to
personal records, not, as Lay appears to suggest, to subpoenas served on individuals in their
“personal capacity” without regard to the nature of the records at issue.
2
Lay does not accurately set forth the dialogue between counsel prior to the filing
of the SEC’s motion.  The accurate pre-filing posture is set forth in the SEC’s letter dated
-3-
Lay now concedes that he cannot assert the Fifth Amendment with respect to corporate records. 
Lay does not dispute the well settled law cited by the SEC in its Application that an individual
may not invoke his personal Fifth Amendment privilege to avoid producing the documents of a
collective entity that are in his custody, even if his production of those documents would be
personally incriminating.  Given Lay’s concession, he should be ordered to produce all corporate
records in his possession to the SEC forthwith.
1
B.If Lay Designates The Records As Corporate, And The Court Agrees, Lay Is
Not Subject To Any Risk Regarding His Fifth Amendment Rights   
Despite Lay’s concession that he has no Fifth Amendment right to withhold corporate
records, he continues to withhold them, purportedly because the SEC will not “agree” that such
records are corporate.  Lay’s theory is that without such an agreement the SEC would be free to
later claim that corporate records produced by Lay are personal records, and that production has
waived his Fifth Amendment rights.  Lay’s claim misstates the law and the facts. 
Lay has never designated the records he holds as corporate records, so there is nothing for
the SEC to “agree” to.
2
  And it is not the SEC’s burden to make the initial designation.  A party

September 24, 2003.  SEC Mem, Ex. 4.  The SEC did not request personal records once Lay
invoked his Fifth Amendment rights.  The SEC requested that Lay produce corporate records and
if he wished to continue to withhold personal records to provide a log with sufficient information
for the SEC to determine whether the claim was appropriate.  Lay refused, and tried to extract
conditions on the production of records that would insulate Lay and jeopardize potential future
actions by the government against Lay.  Id.
, SEC Mem, Ex. 5.
3
Should Lay designate any of the records as personal he should submit them to the
Court for an in camera review, a procedure to which he has consented.  See
 infra, section D.
-4-
claiming a privilege bears the burden of proving the privilege is applicable.  As the D.C. Circuit
has held in a similar case, the party asserting the privilege with respect to documents “bears the
burden of proving the nature of the documents and their various contents.” (Government
Records), 950 F.2d at 741 citing United States v. Wujkowski, 929 F.2d 981, 984 (4
th
 Cir. 1991). 
It is not for the SEC to make the initial determination that records held by Lay are corporate or
personal, particularly when it has never seen the documents. While the SEC believes all of the
documents are corporate records, Lay must designate the records he holds as either corporate or
personal.  Corporate records must be produced.
3
 
Lay has not cited to any authority that would permit him to (a) avoid designating records
as either corporate or personal, (b) continue to withhold corporate records that he now concedes
he has no Fifth Amendment right to withhold, and (c) force the SEC to “agree” to conditions on
production.  In the absence of any designation by Lay, he would be able to later argue that the
SEC used his “personal” records, directly or indirectly, in violation of his Fifth Amendment
rights.  The SEC cannot take this risk.  
Conversely, the risk perceived by Lay attendant to the production of corporate records
will be nullified if Lay simply follows the law in this Circuit.  Lay must make the initial

4
Lay apparently agrees, in footnote 4 of his Response, that the government’s use of
the corporate records in any later proceeding will be governed by Braswell v. United States
, 487
U.S. 99, 118 (1988).  Under Braswell, the government may not tell the jury that it was Lay who
produced the records but the government still has the right to use the records against Lay if it
establishes authenticity.  Further, since Lay held a “prominent position” at Enron “the jury may,
just as it would had someone else produced the documents, reasonably infer that he had
possession of the documents or knowledge of their contents.”  Id.
  
5
However, if the Court finds a waiver, such personal records should be produced. 
-5-
designation of each of the records as either corporate or personal.  Because he is willing to
submit to an in camera review he should be ordered to provide the designations and the records
to the Court.  If the Court finds that records held by Lay are corporate records and orders
production of such records to the SEC, Lay will be afforded the protections of a judicial
determination on the classification of the records.
4
  If the Court finds that any records are purely
personal and covered by United States v. Hubbell
, 530 U.S. 27 (2000), and Lay has not waived
his Fifth Amendment rights by producing the same records to other parties, such records need not
be produced to the SEC at this time.
5
 
C.By Producing The Same Records To Other Parties Lay Has Waived Any
Fifth Amendment Rights He May Have Regarding Personal Records
Given Lay’s concession that he has no Fifth Amendment right to withhold corporate
records, the only issue is whether Lay has any right to withhold personal records.  Here, Lay’s
prior production of the same records to other parties, including a production to a party apparently
just days ago, is fatal to his claim of privilege regarding personal records.  Thus, while the SEC
had expressed no desire to obtain Lay’s personal records if he had a legitimate Fifth Amendment
act of production privilege under Hubbell
, the SEC is entitled to personal records given Lay’s
waiver of this privilege.

6
However, Lay did not disclose to the SEC or the Court in its Amended Response
significant details: (1) the identity of the private party to whom Lay disclosed the documents (the
plaintiffs in the class action, where Lay is a defendant); (2) the date of his productions; (3) the
fact that Lay submitted to questioning before the bankruptcy examiner while the SEC’s action
was pending, and did not assert the Fifth Amendment; and (4) Lay’s attempt to protect the
documents from disclosure to others by entering into a “Confidentiality Agreement” with the
bankruptcy examiner.  Clark Dec. at ¶¶ 6-15. 
-6-
Lay cannot rely on Hubbell
 to continue to withhold personal records.  Hubbell applies to
personal records only where the act of production would communicate information about the
existence, custody, and authenticity of the documents.  530 U.S. at 36-37.  In Hubbell
, the Court
noted that the subpoena required the respondent to assist the prosecutor in identifying potential
sources of information and to produce those sources.  Id.
 at 40-42.  The respondent’s act of
producing personal records carried the risk of incrimination.  Indeed, the Court held that
respondent’s act of production led to his indictment by the government.  Id. at 42-43.
In the present case, Lay cannot satisfy the Hubbell
 criteria, including (a) whether the act
of production would communicate custodial information, and (b) whether the act of production
would be potentially incriminating.  As to the first point, Lay has already communicated
information about the existence, custody, and authenticity of any personal records called for in
the subpoena by producing the same records to others.  Amended Response; Declaration of
Charles J. Clark (“Clark Dec.”) at ¶ 11-13, 15 (attached hereto).  In fact, apparently after the SEC
filed this action, Lay took the extraordinary step of producing the same records to the bankruptcy
examiner.  Id.
 at ¶¶ 11-13.  Lay has informed the SEC of these prior productions, so the act of
production of the same records to the SEC would not disclose any new custodial information to
the SEC.
6
  As to the second point, Lay’s act of production to yet another party, the SEC, can
hardly be considered potentially incriminating.  Unlike Hubbell
, Lay’s production to the SEC

7
Four pages of Lay’s Response and six exhibits he has offered relate to allegations
made against Lay by Congress and the media.  The SEC fails to see the relevance of this material. 
The SEC does not dispute that it is fairly obvious that Lay is, as he describes, “a Focus of
Multiple Governmental Investigations” for his conduct while Chairman and CEO of Enron.
8
Lay claims that the SEC’s subpoena was too broad, but the facts are otherwise, as
set forth in the undisputed Declaration of Richard J. Kutchey.  Kutchey Dec. at ¶¶ 7 (Ex. A), 17
(refining subpoena’s scope).  Further, Lay never moved to quash the subpoena on the ground that
it was overbroad.
-7-
would not be the first disclosure by Lay that the documents exist.  Lay certainly cannot have any
bonafide legal concerns attaching to his physical act of producing the subpoenaed records given
the fact that he has now produced them to third parties – the plaintiffs in the class action lawsuit
and the bankruptcy examiner – contemporaneous to his being, in his words, “pulverized” by
Congress and the media.
7
  It is too little too late for Lay to now claim protection for the act of
producing personal records.  In light of Lay’s prior productions, he cannot claim a Fifth
Amendment act of production privilege to withhold personal records under Hubbell
.
8
Lay argues that his prior productions do not constitute a waiver but does not cite to any
applicable authority.  The cases cited by Lay are from other jurisdictions, pre-date Hubbell
, and
deal with prior testimony before the grand jury, not the prior production of documents.  Even if
cases involving prior grand jury testimony were relevant, the law in the D.C. Circuit does not
support Lay’s position.  In Ellis v. United States
, 416 F.2d 791 (D.C. Cir. 1969), a case
reluctantly cited by Lay in a footnote, the court held that a witness waived his Fifth Amendment
rights by testifying before the grand jury.  In so holding the court rejected the Third Circuit’s
analysis in In re Neff
, 206 F.2d 791 (3
rd
 Cir. 1953), the case on which Lay places principal
reliance.  Ellis, 416 F.2d at 805.  The court held that “where a non-indicted witness has waived
his Fifth Amendment privilege by testifying before a grand jury voluntarily and with knowledge

9
The court in Ellis also addressed the point made in Neff that testifying before the
grand jury could not operate as a waiver for trial because the two were separate proceedings.  The
court stated that “this is a ‘mechanical limitation’ that fails to focus on the underlying interests:
whether the witness’s privilege is jeopardized, and the interest of the community in obtaining full
disclosure at criminal trials.”  416 F.2d at 804.  Similarly, in this case, Lay’s privilege is not
jeopardized and the public has an interest in obtaining full disclosure from Lay.  Further, Lay’s
attempt to distinguish Ellis
 because it dealt with a witness not accused or under indictment fails,
since Lay sits in the same shoes.  
-8-
of his privilege, his waiver extends to a subsequent trial based on an indictment returned by the
grand jury that heard his testimony.”  Id.
  While Lay attempts to distinguish Ellis by stating that
Lay’s prior productions were to different parties, this is too fine a distinction.  As the court noted
in Ellis
, a party who volunteers incriminating testimony in response to questions bears no further
risk of incrimination by answering the same questions again.  Id.
 at 802.  By analogy, a party who
produces documents to others, including public proceedings, bears no further risk of
incrimination by his act of producing the same documents to the government.
9
    
Lay’s demonstrated continual flip-flopping regarding the Fifth Amendment demonstrates
his blatant insincerity in asserting the privilege in this case.  Lay did not invoke the Fifth
Amendment in his initial productions to the SEC in response to the subpoena.  Shortly after his
resignation from Enron, Lay’s next production of records pursuant to the subpoena was
accompanied, for the first time, by a Fifth Amendment claim.  Kutchey Dec. at ¶¶ 9, 10, 13. 
Curiously, Lay recently entered into a confidentiality agreement with counsel for the bankruptcy
examiner and produced the same documents sought by the SEC in the instant action.  This
production apparently occurred while this very same subpoena enforcement action was pending
with the Court.  Lay refused to answer questions posed by the SEC based on the Fifth
Amendment, yet days ago submitted to questioning by the bankruptcy examiner.  Clark Dec. at

-9-
¶¶ 6-10.  
Not only does Lay abuse the privilege by invoking it only when it suits his purposes but,
as noted in footnote 6, supra, he has been less than candid with the SEC and the Court regarding
the circumstances of his prior productions of the same documents to others.  As another example,
Lay’s counsel claims not to have had knowledge of the production of the same records to the
bankruptcy examiner, prompting his belated Amended Response.  However, Lay’s production to
the bankruptcy examiner was accomplished through his various attorneys, and whether the
production was by a different law firm or not, Lay as a party to this case had an obligation to
disclose the prior production, as well as the details he has still yet to disclose to the SEC and the
Court.  The timing of Lay’s Amended Response is most curious.  It followed the SEC’s
discovery of Lay’s production to the bankruptcy examiner and it was heretofore not disclosed in
Lay’s initial Response.    
Lay’s inconsistent and abusive invocation of the Fifth Amendment in this case with
respect to documents he has withheld, combined with his concessions on the law, results in the
following: (1)  Lay has waived his Hubbell
 act of production privilege with respect to personal
records and such records should be produced, and (2) Lay must produce corporate records for
which he now concedes he has no Fifth Amendment right to withhold.  Lay must produce all
records, corporate and personal, to the SEC forthwith.
D.The Standards Applicable To The In Camera Review Process
Lay agrees that if necessary the Court should conduct an in camera review to determine
whether the documents he has withheld are corporate or personal in nature.  The parties agree
that the functional test set forth in Government Records
 should be applied by the Court in

10
However, because Lay has already produced documents to the SEC containing
such personal notations (Kutchey Dec. ¶ 9) Lay would be hard pressed to argue similar notations
are purely personal and should be redacted. 
-10-
making this determination.  Inquiry into the nature, purpose, and use of the documents is in
order.  Id.
 at 741.  A “mixed” document containing both personal and corporate notations may
qualify as a corporate record.  Personal notations on a corporate document do not render it
personal rather than corporate.  Id.
 at 740.  
While Government Records
 states that “purely private notations” may be redacted from
corporate records prior to production, the Court should closely scrutinize any notations that Lay
claims are “purely personal.”  Notations that are purely personal are notations such as family
birthday reminders, household grocery lists, haircut appointments, and similar notations.
10
 
However, any notations by Lay made on records during his tenure as the Chairman of Enron,
referring to or relating to Enron’s business, or reflecting his views, opinions, reactions, or
thoughts on matters relating to Enron, are corporate notations.  Further, if Lay did not redact
“purely personal” notations from his production of the same documents to other parties he should
not be permitted to do so in this case.
As part of the in camera review, the Court may also take testimony from Lay concerning
the nature, purpose, and use of the documents.  Government Records
, 950 F.2d at 738.  An in
camera examination of Lay by the Court may be useful with respect to documents that contain
notations that Lay claims are purely personal.  If certain documents are so sensitive that the Court
cannot publish reasons for its disposition of those documents without revealing information
legitimately kept confidential, the Court can seal and impound that portion of its decision, thus
preserving it for possible appellate review.  Id.
 at 739.  

-11-
III.CONCLUSION
Based on the foregoing reasons the Court should grant the SEC’s Application and order
Lay to produce the subpoenaed documents he has withheld from the SEC.
Dated: October ___, 2003Respectfully submitted,
______________________________
Luis R. Mejia (DC Bar #417043)
David P. Bloch (DC Bar #445990)
Attorneys for Applicant
Securities and Exchange Commission 
450 Fifth Street, N.W.
Washington, D.C. 20549-0911
(202) 942-4744
(202) 942-9569 (Fax)
Of Counsel
:
Phil Gross 
Richard J. Kutchey

-12-
CERTIFICATE OF SERVICE
I hereby certify that on October ___, 2003, a copy of the attached:
Reply of the Securities and Exchange Commission in Support of its Application for Order
Requiring Obedience to Subpoena
was served upon the following parties or their counsel of record via:
Fax
Earl J. Silbert
Piper Rudnick
1200 Nineteenth Street, N.W.
Washington, D.C. 20036-2412
(202) 861-3900
(202) 223-2085 (Fax)
____________________________
Luis R Mejia

UNITED STATES DISTRICT COURT
FOR THE

DISTRICT OF COLUMBIA

__________________________________________
)

UNITED STATES SECURITIES )
AND EXCHANGE COMMISSION, )

)
Applicant, ) MISC. NO. 03 1962

)
v. )

)
KENNETH L. LAY, )

)
Respondent. )

__________________________________________)

REPLY OF THE SECURITIES AND EXCHANGE COMMISSION
IN SUPPORT OF ITS APPLICATION FOR ORDER

REQUIRING OBEDIENCE TO SUBPOENA

I. INTRODUCTION

Despite Lay’s concession that he has no Fifth Amendment right to withhold corporate

records from the SEC and the fact that he has produced the same documents at issue to parties in

other proceedings, including production to the bankruptcy examiner apparently after the SEC

filed this action, Lay continues to withhold corporate records from the SEC.  In light of the

foregoing, Lay’s continued refusal to designate and produce corporate records to the SEC, unless

the SEC “agrees” to his terms, is an outrage and belies his self-serving and disingenuous claim

that he has been fully cooperative with the SEC.  This Court should not permit Lay to continue

this charade.

Lay has demonstrated a frankly whimsical approach to asserting his Fifth Amendment

rights.  Lay initially produced documents to the SEC without invoking the Fifth Amendment. 

Lay later asserted the Fifth Amendment in refusing to testify to the SEC, and selectively invoked



-2-

the Fifth Amendment with respect to documents, withholding some documents and producing

others.  Yet Lay has already produced the same records he has withheld from the SEC to at least

two parties.  Further, just days ago, Lay submitted to questioning by the bankruptcy examiner,

apparently without invoking his Fifth Amendment rights.  Thus, when conditions suit his

purposes Lay talks and provides documents, but when called to answer to law enforcement

authorities, he invokes the Constitution, remaining silent and withholding documents.  By what

logic can Lay claim that he continues to hold a Fifth Amendment right to refuse compliance with

the SEC’s subpoena when he has produced the same documents to others?

Given Lay’s concession on the applicable law, his agreement to submit records for an in

camera review, and his production of the same records to others, the issues for the Court have

narrowed.  Because Lay agrees that he has no Fifth Amendment right to withhold corporate

records from the SEC: (1) he must designate records as either corporate or personal; (2) produce

the corporate records to the SEC; and (3) submit personal records, if any, to the Court for an in

camera review.  Should the Court determine in its in camera review that certain records

designated by Lay as personal are actually corporate records, such records should be produced to

the SEC.  Should the Court determine that certain records are personal, such records should also

be produced to the SEC if the Court finds that Lay waived his Fifth Amendment rights to such

records by producing them to other parties.

II. ARGUMENT

A. Lay Does Not Dispute That He Has No Fifth Amendment Right
To Withhold Corporate Records

There is no dispute regarding the law applicable to corporate records in Lay’s possession. 



1 Lay suggests that it was improper for the SEC to subpoena Lay personally and to
apply the collective entity doctrine to records sought in such a subpoena.  Lay was subpoenaed
while he was still the Chairman of Enron and the collective entity doctrine applies to corporate
records held by individuals regardless of the capacity in which they are served.  Bellis v. United
States, 417 U.S. 85 (1974) (subpoena served on former partner); In re Sealed Case (Government
Records), 950 F.2d 736 (D.C. Cir. 1991) (subpoena served on former government employee); In
re Grand Jury Subpoena, 957 F.2d 807 (11th Cir. 1992) (subpoena served on former Chairman
and CEO).  Further, as made clear in the caselaw cited by the SEC, unrebutted by Lay, the act of
production doctrine set forth in United States v. Hubbell, 530 U.S. 27 (2000) applies solely to
personal records, not, as Lay appears to suggest, to subpoenas served on individuals in their
“personal capacity” without regard to the nature of the records at issue.

2 Lay does not accurately set forth the dialogue between counsel prior to the filing
of the SEC’s motion.  The accurate pre-filing posture is set forth in the SEC’s letter dated

-3-

Lay now concedes that he cannot assert the Fifth Amendment with respect to corporate records. 

Lay does not dispute the well settled law cited by the SEC in its Application that an individual

may not invoke his personal Fifth Amendment privilege to avoid producing the documents of a

collective entity that are in his custody, even if his production of those documents would be

personally incriminating.  Given Lay’s concession, he should be ordered to produce all corporate

records in his possession to the SEC forthwith.1

B. If Lay Designates The Records As Corporate, And The Court Agrees, Lay Is
Not Subject To Any Risk Regarding His Fifth Amendment Rights   

Despite Lay’s concession that he has no Fifth Amendment right to withhold corporate

records, he continues to withhold them, purportedly because the SEC will not “agree” that such

records are corporate.  Lay’s theory is that without such an agreement the SEC would be free to

later claim that corporate records produced by Lay are personal records, and that production has

waived his Fifth Amendment rights.  Lay’s claim misstates the law and the facts. 

Lay has never designated the records he holds as corporate records, so there is nothing for

the SEC to “agree” to.2  And it is not the SEC’s burden to make the initial designation.  A party



September 24, 2003.  SEC Mem, Ex. 4.  The SEC did not request personal records once Lay
invoked his Fifth Amendment rights.  The SEC requested that Lay produce corporate records and
if he wished to continue to withhold personal records to provide a log with sufficient information
for the SEC to determine whether the claim was appropriate.  Lay refused, and tried to extract
conditions on the production of records that would insulate Lay and jeopardize potential future
actions by the government against Lay.  Id., SEC Mem, Ex. 5.

3 Should Lay designate any of the records as personal he should submit them to the
Court for an in camera review, a procedure to which he has consented.  See infra, section D.

-4-

claiming a privilege bears the burden of proving the privilege is applicable.  As the D.C. Circuit

has held in a similar case, the party asserting the privilege with respect to documents “bears the

burden of proving the nature of the documents and their various contents.” (Government

Records), 950 F.2d at 741 citing United States v. Wujkowski, 929 F.2d 981, 984 (4th Cir. 1991). 

It is not for the SEC to make the initial determination that records held by Lay are corporate or

personal, particularly when it has never seen the documents. While the SEC believes all of the

documents are corporate records, Lay must designate the records he holds as either corporate or

personal.  Corporate records must be produced.3 

Lay has not cited to any authority that would permit him to (a) avoid designating records

as either corporate or personal, (b) continue to withhold corporate records that he now concedes

he has no Fifth Amendment right to withhold, and (c) force the SEC to “agree” to conditions on

production.  In the absence of any designation by Lay, he would be able to later argue that the

SEC used his “personal” records, directly or indirectly, in violation of his Fifth Amendment

rights.  The SEC cannot take this risk.  

Conversely, the risk perceived by Lay attendant to the production of corporate records

will be nullified if Lay simply follows the law in this Circuit.  Lay must make the initial



4 Lay apparently agrees, in footnote 4 of his Response, that the government’s use of
the corporate records in any later proceeding will be governed by Braswell v. United States, 487
U.S. 99, 118 (1988).  Under Braswell, the government may not tell the jury that it was Lay who
produced the records but the government still has the right to use the records against Lay if it
establishes authenticity.  Further, since Lay held a “prominent position” at Enron “the jury may,
just as it would had someone else produced the documents, reasonably infer that he had
possession of the documents or knowledge of their contents.”  Id.  

5 However, if the Court finds a waiver, such personal records should be produced. 

-5-

designation of each of the records as either corporate or personal.  Because he is willing to

submit to an in camera review he should be ordered to provide the designations and the records

to the Court.  If the Court finds that records held by Lay are corporate records and orders

production of such records to the SEC, Lay will be afforded the protections of a judicial

determination on the classification of the records.4  If the Court finds that any records are purely

personal and covered by United States v. Hubbell, 530 U.S. 27 (2000), and Lay has not waived

his Fifth Amendment rights by producing the same records to other parties, such records need not

be produced to the SEC at this time.5 

C. By Producing The Same Records To Other Parties Lay Has Waived Any
Fifth Amendment Rights He May Have Regarding Personal Records

Given Lay’s concession that he has no Fifth Amendment right to withhold corporate

records, the only issue is whether Lay has any right to withhold personal records.  Here, Lay’s

prior production of the same records to other parties, including a production to a party apparently

just days ago, is fatal to his claim of privilege regarding personal records.  Thus, while the SEC

had expressed no desire to obtain Lay’s personal records if he had a legitimate Fifth Amendment

act of production privilege under Hubbell, the SEC is entitled to personal records given Lay’s

waiver of this privilege.



6 However, Lay did not disclose to the SEC or the Court in its Amended Response
significant details: (1) the identity of the private party to whom Lay disclosed the documents (the
plaintiffs in the class action, where Lay is a defendant); (2) the date of his productions; (3) the
fact that Lay submitted to questioning before the bankruptcy examiner while the SEC’s action
was pending, and did not assert the Fifth Amendment; and (4) Lay’s attempt to protect the
documents from disclosure to others by entering into a “Confidentiality Agreement” with the
bankruptcy examiner.  Clark Dec. at ¶¶ 6-15. 

-6-

Lay cannot rely on Hubbell to continue to withhold personal records.  Hubbell applies to

personal records only where the act of production would communicate information about the

existence, custody, and authenticity of the documents.  530 U.S. at 36-37.  In Hubbell, the Court

noted that the subpoena required the respondent to assist the prosecutor in identifying potential

sources of information and to produce those sources.  Id. at 40-42.  The respondent’s act of

producing personal records carried the risk of incrimination.  Indeed, the Court held that

respondent’s act of production led to his indictment by the government.  Id. at 42-43.

In the present case, Lay cannot satisfy the Hubbell criteria, including (a) whether the act

of production would communicate custodial information, and (b) whether the act of production

would be potentially incriminating.  As to the first point, Lay has already communicated

information about the existence, custody, and authenticity of any personal records called for in

the subpoena by producing the same records to others.  Amended Response; Declaration of

Charles J. Clark (“Clark Dec.”) at ¶ 11-13, 15 (attached hereto).  In fact, apparently after the SEC

filed this action, Lay took the extraordinary step of producing the same records to the bankruptcy

examiner.  Id. at ¶¶ 11-13.  Lay has informed the SEC of these prior productions, so the act of

production of the same records to the SEC would not disclose any new custodial information to

the SEC.6  As to the second point, Lay’s act of production to yet another party, the SEC, can

hardly be considered potentially incriminating.  Unlike Hubbell, Lay’s production to the SEC



7 Four pages of Lay’s Response and six exhibits he has offered relate to allegations
made against Lay by Congress and the media.  The SEC fails to see the relevance of this material. 
The SEC does not dispute that it is fairly obvious that Lay is, as he describes, “a Focus of
Multiple Governmental Investigations” for his conduct while Chairman and CEO of Enron.

8 Lay claims that the SEC’s subpoena was too broad, but the facts are otherwise, as
set forth in the undisputed Declaration of Richard J. Kutchey.  Kutchey Dec. at ¶¶ 7 (Ex. A), 17
(refining subpoena’s scope).  Further, Lay never moved to quash the subpoena on the ground that
it was overbroad.

-7-

would not be the first disclosure by Lay that the documents exist.  Lay certainly cannot have any

bonafide legal concerns attaching to his physical act of producing the subpoenaed records given

the fact that he has now produced them to third parties – the plaintiffs in the class action lawsuit

and the bankruptcy examiner – contemporaneous to his being, in his words, “pulverized” by

Congress and the media.7  It is too little too late for Lay to now claim protection for the act of

producing personal records.  In light of Lay’s prior productions, he cannot claim a Fifth

Amendment act of production privilege to withhold personal records under Hubbell.8

Lay argues that his prior productions do not constitute a waiver but does not cite to any

applicable authority.  The cases cited by Lay are from other jurisdictions, pre-date Hubbell, and

deal with prior testimony before the grand jury, not the prior production of documents.  Even if

cases involving prior grand jury testimony were relevant, the law in the D.C. Circuit does not

support Lay’s position.  In Ellis v. United States, 416 F.2d 791 (D.C. Cir. 1969), a case

reluctantly cited by Lay in a footnote, the court held that a witness waived his Fifth Amendment

rights by testifying before the grand jury.  In so holding the court rejected the Third Circuit’s

analysis in In re Neff, 206 F.2d 791 (3rd Cir. 1953), the case on which Lay places principal

reliance.  Ellis, 416 F.2d at 805.  The court held that “where a non-indicted witness has waived

his Fifth Amendment privilege by testifying before a grand jury voluntarily and with knowledge



9 The court in Ellis also addressed the point made in Neff that testifying before the
grand jury could not operate as a waiver for trial because the two were separate proceedings.  The
court stated that “this is a ‘mechanical limitation’ that fails to focus on the underlying interests:
whether the witness’s privilege is jeopardized, and the interest of the community in obtaining full
disclosure at criminal trials.”  416 F.2d at 804.  Similarly, in this case, Lay’s privilege is not
jeopardized and the public has an interest in obtaining full disclosure from Lay.  Further, Lay’s
attempt to distinguish Ellis because it dealt with a witness not accused or under indictment fails,
since Lay sits in the same shoes.  

-8-

of his privilege, his waiver extends to a subsequent trial based on an indictment returned by the

grand jury that heard his testimony.”  Id.  While Lay attempts to distinguish Ellis by stating that

Lay’s prior productions were to different parties, this is too fine a distinction.  As the court noted

in Ellis, a party who volunteers incriminating testimony in response to questions bears no further

risk of incrimination by answering the same questions again.  Id. at 802.  By analogy, a party who

produces documents to others, including public proceedings, bears no further risk of

incrimination by his act of producing the same documents to the government.9    

Lay’s demonstrated continual flip-flopping regarding the Fifth Amendment demonstrates

his blatant insincerity in asserting the privilege in this case.  Lay did not invoke the Fifth

Amendment in his initial productions to the SEC in response to the subpoena.  Shortly after his

resignation from Enron, Lay’s next production of records pursuant to the subpoena was

accompanied, for the first time, by a Fifth Amendment claim.  Kutchey Dec. at ¶¶ 9, 10, 13. 

Curiously, Lay recently entered into a confidentiality agreement with counsel for the bankruptcy

examiner and produced the same documents sought by the SEC in the instant action.  This

production apparently occurred while this very same subpoena enforcement action was pending

with the Court.  Lay refused to answer questions posed by the SEC based on the Fifth

Amendment, yet days ago submitted to questioning by the bankruptcy examiner.  Clark Dec. at



-9-

¶¶ 6-10.  

Not only does Lay abuse the privilege by invoking it only when it suits his purposes but,

as noted in footnote 6, supra, he has been less than candid with the SEC and the Court regarding

the circumstances of his prior productions of the same documents to others.  As another example,

Lay’s counsel claims not to have had knowledge of the production of the same records to the

bankruptcy examiner, prompting his belated Amended Response.  However, Lay’s production to

the bankruptcy examiner was accomplished through his various attorneys, and whether the

production was by a different law firm or not, Lay as a party to this case had an obligation to

disclose the prior production, as well as the details he has still yet to disclose to the SEC and the

Court.  The timing of Lay’s Amended Response is most curious.  It followed the SEC’s

discovery of Lay’s production to the bankruptcy examiner and it was heretofore not disclosed in

Lay’s initial Response.    

Lay’s inconsistent and abusive invocation of the Fifth Amendment in this case with

respect to documents he has withheld, combined with his concessions on the law, results in the

following: (1)  Lay has waived his Hubbell act of production privilege with respect to personal

records and such records should be produced, and (2) Lay must produce corporate records for

which he now concedes he has no Fifth Amendment right to withhold.  Lay must produce all

records, corporate and personal, to the SEC forthwith.

D. The Standards Applicable To The In Camera Review Process

Lay agrees that if necessary the Court should conduct an in camera review to determine

whether the documents he has withheld are corporate or personal in nature.  The parties agree

that the functional test set forth in Government Records should be applied by the Court in



10 However, because Lay has already produced documents to the SEC containing
such personal notations (Kutchey Dec. ¶ 9) Lay would be hard pressed to argue similar notations
are purely personal and should be redacted. 

-10-

making this determination.  Inquiry into the nature, purpose, and use of the documents is in

order.  Id. at 741.  A “mixed” document containing both personal and corporate notations may

qualify as a corporate record.  Personal notations on a corporate document do not render it

personal rather than corporate.  Id. at 740.  

While Government Records states that “purely private notations” may be redacted from

corporate records prior to production, the Court should closely scrutinize any notations that Lay

claims are “purely personal.”  Notations that are purely personal are notations such as family

birthday reminders, household grocery lists, haircut appointments, and similar notations.10 

However, any notations by Lay made on records during his tenure as the Chairman of Enron,

referring to or relating to Enron’s business, or reflecting his views, opinions, reactions, or

thoughts on matters relating to Enron, are corporate notations.  Further, if Lay did not redact

“purely personal” notations from his production of the same documents to other parties he should

not be permitted to do so in this case.

As part of the in camera review, the Court may also take testimony from Lay concerning

the nature, purpose, and use of the documents.  Government Records, 950 F.2d at 738.  An in

camera examination of Lay by the Court may be useful with respect to documents that contain

notations that Lay claims are purely personal.  If certain documents are so sensitive that the Court

cannot publish reasons for its disposition of those documents without revealing information

legitimately kept confidential, the Court can seal and impound that portion of its decision, thus

preserving it for possible appellate review.  Id. at 739.  



-11-

III. CONCLUSION

Based on the foregoing reasons the Court should grant the SEC’s Application and order

Lay to produce the subpoenaed documents he has withheld from the SEC.

Dated: October ___, 2003 Respectfully submitted,

______________________________
Luis R. Mejia (DC Bar #417043)
David P. Bloch (DC Bar #445990)
Attorneys for Applicant
Securities and Exchange Commission 
450 Fifth Street, N.W.
Washington, D.C. 20549-0911
(202) 942-4744
(202) 942-9569 (Fax)

Of Counsel:
Phil Gross 
Richard J. Kutchey



-12-

CERTIFICATE OF SERVICE

I hereby certify that on October ___, 2003, a copy of the attached:

Reply of the Securities and Exchange Commission in Support of its Application for Order

Requiring Obedience to Subpoena

was served upon the following parties or their counsel of record via:

Fax

Earl J. Silbert
Piper Rudnick
1200 Nineteenth Street, N.W.
Washington, D.C. 20036-2412
(202) 861-3900
(202) 223-2085 (Fax)

____________________________
Luis R Mejia