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		   UNITED STATES GRAND JURY

		  SOUTHERN DISTRICT OF TEXAS

			 HOUSTON DIVISION

			   GJ NO. 02-2


		  RE:   INVESTIGATION OF ENRON


	  BE IT REMEMBERED    that on the 23rd day of

     October, 2002, beginning at 9:40 a.m., in the

     Federal Building, 515 Rusk, Houston, Texas, the

     United States Grand Jury convened, at which time

     the following proceedings were had and testimony

     adduced as hereinafter set forth.


		  TESTIMONY OF SHERRIE GIBSON


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						  * GOVERNMENT
						  *  EXHIBIT
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 3          I, TIERNEY R. LEDBETTER   , CSR, a Certified

 4     Court Reporter and Notary Public in and for the

 5     County of Harris, State of Texas, previously

 6     appeared before the Foreman of the Grand Jury,

 7     at which time I was sworn in as reporter for the

 8     United States Grand Jury.

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 3                      AP P EARANC ES

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 6          Special Assistant United States Attorney

 7     WILLIAM KIMBALL    and Special Assistant United

 8     States Attorney    SAMUEL W. BUELL   appearing for

 9     the United States of America.

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       SHERRIE GIBSON                                             4

 1                              INDEX

 2     EX. NO.   DESCRIPTION                                  PAGE

 3     KL-15    Repay Line of Credit with Options              57

 4     KL-21    Sununaries of Repayments                       61

 5     KL-22    Memo                                          100

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     SHERRIE GIBSON                                        5

     TESTIMONY OF SHERRIE GIBSON:

		     FOREMAN OF THE GRAND JURY:

		     solemnly swear or affirm that

		     will answer truthfully such

		     questions as may be propounded

		     you by the Grand Jury or under

		     direction, so help you God?

		     THE WITNESS:    I do.

		     FOREMAN OF THE GRAND JURY:

		     you.

						    Do you

						   you


						    to

						    its


						    Thank

		WHEREUPON  , the said  SHERRIE GIBSON

		having been duly sworn, testified as

		follows:

			   EXAMINATION

		     BY SPECIAL AUSA BUELL:

     Q.   Could you state your name and spell it for

	  the reporter, please?

     A.   My name is Sherrie Gibson, S-h-e-r-r-i-e.

     Q.   Ms. Gibson, before I begin my questions

	  this morning, I'd like to review with you

	  your rights and obligations as a Grand Jury

	  witness.  Do you understand that your

	  testimony here is being given under oath

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      SHERRIE GIBSON                                      6

  1        today and a record is being made by a court

  2        reporter?

  3   A.   Yes, I do.

  4   Q.   And do you know understand that, as any

  5        witness before the Grand Jury, you have an

  6        overriding obligation to tell the truth and

  7        that you could be prosecuted for the crimes

  8        of perjury and obstruction of justice if

  9        you were to lie about anything material to

10         the Grand Jury's investigation?

11    A.   Yes I do.

12    Q.   Do you understand that you have a right to

13         be -- consult with an attorney in

14         connection with your appearance before the

15         Grand Jury?

16    A.   Yes, I do.

17    Q.   I need you to try to speak up so everyone

18         in the room can hear you, ma'am.

19    A.   Oh, okay.

20    Q.   Have you consulted with a lawyer in

21         connection with your Grand Jury appearance?

22    A.   Yes.

23    Q.   And who is your attorney?

24    A.   George Murphy.

25    Q.   Is Mr. Murphy with you in the Courthouse





      SHERRIE GIBSON                                       7

 1         today?

 2    A.   Yes, he is.

 3    Q.   Do you understand that he can't be with you

 4         in the Grand Jury room, but that if you

 5         wish, you can ask to excuse yourself and

 6         consult with him during your testimony?

 7    A.   Yes.

 8    Q.   Is there a Mr. Bennett from Mr. Ramsey's

 9         firm also with you in the Courthouse today?

10    A.   Yes.

11    Q.   And do you understand that he represents

12         Mr. Lay in this case, Mr. Kenneth Lay?

13    A.   Yes.

14    Q.   Okay.   Do you also understand that you

15         would have the right to refuse to answer

16         any question I put to you on grounds of

17         your Fifth Amendment privilege if you

18         believed in good faith that a truthful

19         answer would tend to incriminate you? Do

20         you understand you have that right?

21    A.   Now I do, yes.

22    Q.   Okay.   All right, Ms. Gibson, how far did

23         you go in school; what degrees do you have?

24    A.   I graduated from Texas A&M with a BBA in

25         finance and accounting, May of 1982, and





      SHERRIE GIBSON                                         8

  1        then I obtained my CPA in 1987.

  2   Q.   Any graduate study?

  3   A.   No.

  4   Q.   What did you do between graduation from

  5        college and when you obtained your CPA

  6        license?

  7   A.   Out of college I went to work for Pete

  8        Marwick for two years.  After that I went

  9        to work for a year with AMI, American

10         Medical International as a financial

11         analyst.  Then I went to work for another

12         family here in Houston for 12 years.

13    Q.   What family was that?

14    A.   It was the Jerry Finger family.   I was

15         their personal accountant.

16    Q.   How do you spell the last name?

17    A.   F-i-n-g-e-r.

18    Q.   Were you employed by that family or by some

19         partnership or corporate entity doing

20         business --

21    A.   No, I was directly employed by the family.

22    Q.   And what business was Mr. Finger in?

23    A.   He was chairman of Charter Bank Shares at

24         that time.

25    Q.   Okay.  How are you currently employed?





      SHERRIE GIBSON                                        9

 1    A.   I'm currently self-employed.

 2    Q.   What are you doing?

 3    A.   I'm contracting on special projects for the

 4         Lay family as needed.

 5    Q.   And was your last employment prior to that

 6         a salaried position with the Lay family?

 7    A.   Correct.

 8    Q.   And when did that that employment stop?

 9    A.   May 31st of 2002.

10    Q.   And when did you begin working for the Lay

11         family?

12    A.   I began working for them in November of '97

13         and what I forgot to mention was that

14         between my employment with the Finger

15         family and the Lay family, I worked briefly

16         for a certified financial planner.

17    Q.   Who was that?

18    A.   The name of the company was Johnson, Bender

19         & Company.

20    Q.   And what did you do for them?

21    A.   Financial reports.

22    Q.   How was it that you came to be employed as

23         a personal accountant for the Finger

24         family?

25    A.   I had heard there was a -- my husband was





      SHERRIE GIBSON                                        10

  1        friends with the person that was CFO of a

  2        company, of Charter Bank Shares, and he

  3        knew that I was looking for, you know,

  4        something else and mentioned it and I

  5        interviewed.

  6   Q.   And what kinds of -- just briefly, what

  7        kinds of work did you do in your capacity

  8        as a personal accountant for the Finger

  9        family?

10    A.   A little bit of everything.   It's

11         everything you do on your own personal

12         level, just magnified, everything from

13         paying bills to compiling information for

14         tax returns, facilitating investments,

15         managing properties, coordinating meetings

16         regarding estate planning, preparing

17         reports, et cetera.

18    Q.   And how did you become employed as a --

19         well, what was your position with the Lay

20         family from '97 until 2002, May 2002?

21    A.   My official capacity, I was controller of

22         the Lay family interests.   I worked

23         directly for the family.

24    Q.   And why do you say "official capacity"?

25         Was there other capacity as well?





      SHERRIE GIBSON                                        11

  1   A.   No, that was just my title.

  2   Q.   Okay.  And were you -- what was the entity

  3        that actually employed you?   Was there a

  4        partnership or a trust or a corporation or

  5        anything like that?

  6   A.   No, it was -- it was an individual.   In

  7        fact, for the payroll tax reports, Linda P.

  8        Lay was the official employer, and that's

  9        also who appeared on my W-2.

10    Q.   Okay.  What were your duties and

11         responsibilities generally as controller

12         for the Lay family between '97 and '92

13         [sic]?

14    A.   Very similar to what I had done for the

15         previous family.  Payed bills.   I acted

16         more as a facilitator of information,

17         prepared monthly financial statements, also

18         prepared any quarterly reports, just kept

19         the flow of information going.

20    Q.   What about in connection with the taxes,

21         how did that process work?

22    A.   Also I prepared -- there was another firm

23         that actually prepared the tax return.

24    Q.   What firm was that?

25    A.   Margolis, Phipps & Wright.   Margolis is M-





      SHERRIE GIBSON                                       12

  1        a-r-g-o-l-i-s, Phipps is P-h-i-p-p-s, and

  2        wright is W-r-i-g-h-t.

  3   Q.   So what did you do in connection with the

  4        tax returns?

  5   A.   I just -- I prepared like all the

  6        workpapers.  I would take the books and I

  7        would do all the reconciliations, and as

  8        tax docu.ments or 1099s or whatever would

  9        come in, I would reconcile and present that

10         to the accounting firm for them to prepare

11         the tax return.

12    Q.   Did the Lays file jointly or individually?

13    A.   Jointly.

14    Q.   Okay.  In addition to Kenneth and Linda

15         Lay, were there any family entities that

16         you did work for, a foundation, a trust, a

17         partnership, anything like that?

18    A.   Yes.  There were two family partnerships.

19         One was KLL and LPL Investments, Limited,

20         and that was referred to as the investment

21         partnership.

22               There was another family partnership

23         known as KLL and LPL Family Partnership,

24         Limited.  We refer to that as the family

25         partnership.





      SHERRIE GIBSON                                        13

  1              There was also the Linda and Ken Lay

  2        Family Foundation, which is a private

  3        foundation.

  4   Q.   Okay.  Before we start getting into more

  5        detail on these various entities and your

  6        work, I just want to ask you what your

  7        salary was when you were hired in '97?

  8   A.   It was 55,000, but it was based on 30

  9        hours.

10    Q.   Okay.  And how did that change over time

11         between '97 and May of 2002?

12    A.   Well, I never really worked a 30-hour week.

13         Once I started getting into the job, it

14         just always -- it turned out to be more or

15         less a full-time job, but I was trying to

16         keep it at part time.   That was the reason

17         I had accepted the job.

18    Q.   Okay.  Tell us how that kind of developed

19         in terms of your hours and salary and how

20         the job changed?

21    A.   Well, as I, you know, worked more hours,

22         because I was -- I really wanted to stay at

23         30, but the job just wouldn't allow it.   I

24         had really two decisions.   I could, you

25         know, quit or keep going, and so for family





      SHERRIE GIBSON                                        14

  1        reasons I kept working, and they would pay

  2        me overtime then anything over -- well, it

  3        was 30 hours and then we increased it to 35

  4        hours in '98.

  5   Q.   And did the salary go up?

  6   A.   Yes, it went up.  I don't remember exactly.

  7   Q.   What was your salary when you left in May

  8        of 2002?

  9   A.   It was -- I believe it was 90,000.

10    Q.   And by 2001 had the -- by the end of 2001

11         had the hours increased any further beyond

12         the 35?

13    A.   Oh, yes.  It started increasing -- it's a

14         blur, but it started increasing in 2000,

15         beginning of 2000, end of '99.   There just

16         seems to be more activity.

17    Q.   So what -- I'm sorry, what did it increase

18         to?

19    A.   Well, it wasn't -- I mean it was 35 hours

20         and it was whatever it took to get the job

21         done, so it might have been, you know, it

22         could have been 30 hours one week or it

23         could have been 50 hours the next week.  It

24         was whatever it took to get the job done.

25    Q.   Were you compensated in any other fashion





      SHERRIE GIBSON                                        15

  1        by the Lay family or any of the related

  2        entities or any of the Lays with bonuses,

  3        gifts, stock options, real estate, anything

  4        of that nature?

  5   A.   Yes, I did get bonuses.   I don't remember

  6        for what year because it was usually the

  7        next year for the prior year.   I don't

  8        remember exactly.  Yes, I did receive

  9        bonuses.

10    Q.   Approximately how large were the bonuses?

11    A.   Ten thousand.  I think one was 15,000 and

12         one was 20,000.

13    Q.   Okay.  Any other compensation in --

14    A.   He -- a SEP was established for me, which

15         is a retirement plan.   And 15 percent of my

16         salary was then contributed to this plan.

17    Q.   Matched?

18    A.   No.

19    Q.   Okay.  What else?

20    A.   I received a gift in January of 2000 of

21         Enron stock.

22    Q.   How much?

23    A.   It was 143 shares.   It was equivalent to

24         $10,000.

25    Q.   Do you still have those shares?   I sold





      SHERRIE GIBSON                                        16

  1        them a week and a half ago for ten cents.

  2   Q.   Each or that was the total?

  3   A.   Well, that was per share.

  4   Q.   Okay.  You hadn't sold any other shares?

  5   A.   No.

  6   Q.   Did you purchase any Enron shares yourself

  7        at any time?

  8   A.   Yes, I did.

  9   Q.   When did you purchase Enron stock?

10    A.   I don't remember exactly.   I had 143

11         shares, so I purchased 57 shares when the

12         stock was about $47.   Then I purchased --

13    Q.   On its way up or on its way down?

14    A.   On its way down.  It was in 2002 --

15    Q.   2001?

16    A.   Oh, I'm sorry.  Yeah, 2001.   July, August,

17         whenever the stock was at 47.

18    Q.   Okay.

19    A.   And then I purchased another 200 shares, I

20         think when the stock was $7 a share and

21         that was November, approximately.

22    Q.   Okay.  And have all those shares also been

23         sold?

24    A.   Well, then I also purchased another 200

25         shares, like 75 cents a share in December





      SHERRIE GIBSON                                        17

  1        if 2001, so I had a total of 600 shares,

  2        and I sold all 600 shares October of this

  3        year.

  4   Q.   Okay.  Any other transactions in Enron

  5        stock?

  6   A.   No, that's it.  Well, I'm sorry, I do take

  7        that back.  My husband and I have a joint

  8        account and I'm not as active in that.  And

  9        he purchased some shares and I think we're

10         still holding those.   I think he purchased,

11         I think, 400 shares when it was 37 in 2001,

12         and I know we did not sell them in 2001.

13         So I don't know if we still are holding

14         them or not.

15    Q.   As -- I'm sorry, go ahead.

16    BY SPECIAL AUSA KIMBALL:

17    Q.   As far as you know, neither you nor your

18         husband sold any Enron stock during 2001?

19    A.   No.  I just did our tax return and I was

20         looking at our 1099B's.

21    BY SPECIAL AUSA BUELL:

22    Q.   And did you discuss your transactions in

23         Enron stock with Mr. Lay at any time?

24    A.   No.

25    Q.   You didn't seek or obtain any advice from





      SHERRIE GIBSON                                        18

  1        him, for example, about whether to purchase

  2        Enron stock or when to purchase Enron

  3        stock?

  4   A.   No.

  5   Q.   Did you have an understanding that it would

  6        be inappropriate or not advisable for you

  7        to discuss with Mr. Lay transactions in

  8        Enron stock that you or your husband might

  9        engage in?

10    A.   I just thought that was a personal matter

11         and that was just something I didn't

12         discuss.

13    Q.   Okay.  You never had any conversations with

14         Mr. Lay, for example, about,  "We shouldn't

15         discuss anything having to do with Enron

16         stock," or anything like that?

17    A.   No.  No.

18    Q.   Okay.  Have you ever been an employee of

19         Enron?

20    A.   No.

21    Q.   I'm sorry, I just want to back up for a

22         minute to make sure I finished the earlier

23         topic.  Any other bonuses, compensation,

24         gifts in kind or cash or any other form

25         from the Lay family or any of their related





      SHERRIE GIBSON                                        19

  1        entities?

  2   A.   Ms. Lay was -- paid for some of the camps

  3        that my children went to.   One year it was

  4        about $400.  One year approximately $1350.

  5        At Christmas I got, you know, some gifts,

  6        jewelry, bracelet, a Christmas ornament.

  7        think that's -- I'm trying to remember.

  8   Q.   You don't remember any other large items?

  9   A.   No.  The bonuses, the contribution to the

10         SEP, the gift of the stock in January of

11         2000, but then everything else -- I guess

12         it's everything's relative but that's -- I

13         mean, besides -- I was very appreciative of

14         the camps.

15    Q.   Okay.  Have you ever been an Enron

16         employee?

17    A.   No.

18    Q.   Did you have any friends who worked at

19         Enron?

20    A.   No.

21    Q.   Any relatives who worked at Enron?

22    A.   No.

23    Q.   Okay.  Where did you work physically, and

24         if if changed over time, please explain

25         that for us?





      SHERRIE GIBSON                                        20

  1   A.   Well, when I originally started in November

  2        of '97, there was not an office for me yet

  3        in the family office, so I would go up to

  4        the 50th floor in the Enron Building and I

  5        would use the conference room for the first

  6        month.  And then December I moved to the

  7        family office.

  8   Q.   Which was where?

  9   A.   It's in the River Oaks Bank Building.   It's

10         2001 Kirby Drive.

11    Q.   And is that where you remained through the

12         early part of this year?

13    A.   Yes, I remained in the building.   I would

14         though.  I moved four times.   I moved from

15         the 12th floor to the 8th floor to the 10th

16         floor to the 8th floor.

17    Q.   And was part of your job also maintaining

18         records of the Lays'  financial affairs?

19    A.   Yes.

20    Q.   And did you have any particular practice

21         with respect to record retention?   Did you

22         keep things for a certain nu.mber of years?

23         Did you keep everything?

24    A.   I kept everything.

25    Q.   Okay.





      SHERRIE GIBSON                                       21

  1   A.   Which is one of the reasons I needed more

  2        space was for the filing cabinets.

  3   Q.   All right.  And have any or all of those

  4        documents have been produced to any

  5        government entity or litigant in connection

  6        with any of the legal matters that have

  7        flowed from Enron's collapse?

  8   A.   To my knowledge, they have.

  9   Q.   Okay.  Have you been involved in that

10         process or have others handled that?

11    A.   It's been a mix.  There's been several

12         document requests and I was involved with

13         some.  I physically copied some and since

14         then I've showed where everything is

15         located and I think others have then taken

16         over that process.

17    Q.   Okay.  And you were previously interviewed

18         by personnel of the SEC, FBI and Department

19         of Justice; correct?

20    A.   Correct.

21    Q.   Okay.  Other than interview and your

22         appearance before the Grand Jury today,

23         have you been interviewed or have you

24         testified in any other setting other than

25         with your own lawyers?





      SHERRIE GIBSON                                        22

  1   A.   No.

  2   Q.   All right.  I want to focus you -- I'm

  3        going to try to break down the period you

  4        worked for the Lays into segments of time

  5        if I could, and I want to focus you --

  6        well, let me ask you this.   There came a

  7        time in approximately August of 1999 when

  8        Ken Lay's stepson Beau Herrold was hired to

  9        also work for the Lay family on financial

10         matters; correct?

11    A.   Correct.  He started August 15th of '99.

12         His capacity was as an investment advisor.

13    Q.   Okay.   Prior to that, had there been any

14         other employee of the family other than you

15         who worked on financial matters?

16    A.   No.  I was it.

17    Q.   Okay.   I want to focus you first then on

18         the period before Mr. Herrold was hired, so

19         '97 till August '99.   Can you just tell us

20         a little bit about what your routine was

21         either daily, monthly, quarterly or

22         annually?

23    A.   I'm sorry, could you repeat the question?

24    Q.   Could you just give us a general

25         description of what your routine was,





      SHERRIE GIBSON                                        23

  1        whatever way is easiest for you, daily,

  2        monthly, quarterly or annually in terms of

  3        the significant tasks you performed for the

  4        Lays?

  5   A.   Monthly, probably the most significant was

  6        the preparation of financial statements

  7        because that involved, you know, obtaining

  8        all the different statements and

  9        reconciling it and then being able to

10         produce it.  They were very detailed

11         statements.

12    Q.   Who did those statements go to?   Who were

13         they produced for?

14    A.   They went to Mr. and Ms. Lay.   A copy went

15         to Margolis, Phipps & Wright.   A copy would

16         go to Rocky Emergy Financial Group.  And

17         various copies, depending on who it was

18         for, would go -- some would go to the kids.

19    Q.   And would there --

20    A.   I'm sorry.  And a copy would also go to

21         Beau.

22    Q.   Were there -- were those statements

23         intended to include all the assets and

24         liabilities and cash flow for the Lay

25         family?





      SHERRIE GIBSON                                        24

  1   A.   Yes.

  2   Q.   And were there separate statements produced

  3        for the Lays personally,  for the investment

  4        partnership, for the family partnership,

  5        and for the foundation?

  6   A.   Yes.

  7   Q.   And did you prepare all of those?

  8   A.   Yes.

  9   Q.   And was there a monthly statement for every

10         one of those?

11    A.   Yes.

12    Q.   Were there any kind of different reports

13         that were prepared quarterly?

14    A.   No.

15    Q.   Or was it just monthly?

16    A.   They were monthly.

17    Q.   Were there annual reports?

18    A.   No, there were just monthly.

19    Q.   All right.  Now you also prepared something

20         additionally for tax purposes on an annual

21         basis, or did you just provide the monthly

22         reports to the accountant who did the

23         returns?

24    A.   No.  Then at the end of the year I would

25         reconcile -- as statements would come in





      SHERRIE GIBSON                                        25

  1        from the stockbrokers or from any third

  2        party, I would reconcile those statements

  3        to the books and then make adjustments for

  4        the books, so that,  for instance, since we

  5        were on a cash basis and, you know, might

  6        have received money that first week the

  7        following year, then I had to make an

  8        adjustment to match the 1099, so the books

  9        were more or less on a tax basis.

10    Q.   By the way, were there ever any other

11         employees of the family other than you and

12         Mr. Herrold through 2001?

13    A.   Yes.  There was Christopher May.   He

14         handled some of the properties and then an

15         additional role that he undertook in 2001

16         was that he sold the -- well, he handled

17         the investments of the foundation, or

18         monitored them.

19    Q.   And that was Robyn Lay's husband?

20    A.   Husband, correct.

21    BY SPECIAL AUSA KIMBALL:

22    Q.   When you say "the foundation," do you mean

23         the charitable foundation?

24    A.   The Linda and Ken Lay Family Foundation,

25         yes.





      SHERRIE GIBSON                                        26

  1   Q.   And what was his salary; do you know?

  2   A.   Sixty thousand.

  3   BY SPECIAL AUSA BUELL:

  4   Q.   Now, did each of these entities, Kenneth

  5        and Linda Lay personally, the investment

  6        partnership, the family partnership and the

  7        foundation, each have their own investment

  8        accounts?

  9   A.   Correct.

10    Q.   And were there multiple accounts for each

11         entity?

12    A.   Correct.

13    Q.   Okay.  What was your role in relation to

14         the investment accounts and the people who

15         were managing those accounts at the

16         financial firms that handled them?

17    A.   I -- if an investment was made, I was in

18         charge of moving the money to cover the

19         cost of the investment.   I more or less

20         just moved the money and then I was also

21         responsible for accurate accounting.

22    Q.   Did you relay directives to the investment

23         account managers on behalf of the Lays or

24         did they deal directly with those people,

25         or was it a combination?





      SHERRIE GIBSON                                        27

  1   A.   It was a combination.   There was only one

  2        money manager that I remember that he

  3        would, you know, give me information and

  4        then I would either write it down or tell

  5        Mr. Lay and that was before Mr. Herrold was

  6        hired.

  7   Q.   Who was that?

  8   A.   That was Don Sanders of Sanders Morris

  9        Monday, and he had discretionary abilities.

10         So he might, to the best of my knowledge,

11         or from what I remember, is he would tell

12         me perhaps why he was investing it, and I

13         did talk to him at the end of the year for

14         tax planning purposes to see if there were

15         any stocks that he would recommend to be

16         sold, et cetera.

17    Q.   But you didn't have regular dealings with

18         any of the other investment advisors or

19         managers?

20    A.   Besides the administrative side, no.

21    Q.   Okay.  And when Mr. Herrold came on in

22         August of '99, he took even a more active

23         role --

24    A.   Correct.

25    Q.   -- in dealing with those folks?





      SHERRIE GIBSON                                        28

 1    A.   Correct.

 2    Q.   Okay.  How about Enron personnel?  What

 3         Enron personnel did you have dealings with

 4         in your duties for the Lay family?

 5    A.   I talked --

 6    Q.   And what was the nature of those dealings?

 7    A.   I talked to Pam Butler.   She was in charge

 8         of compensation.  I would talk to Elain

 9         Overturf.  She prepared SEC reports for

10         Enron, and occasionally I would talk to Rex

11         Rodgers -- well, I shouldn't say

12         "occasionally."  A handful of times I would

13         talk to Rex Rodgers.

14    Q.   And what was his job at Enron?

15    A.   He was SEC counsel for Enron.

16    Q.   And he was an in-house lawyer; correct?

17    A.   Correct.

18    Q.   What would be the nature of your dealings

19         with Ms. Butler?  Why would you need to

20         speak to her or why would she need to speak

21         to you?

22    A.   Whenever I had a question about a program,

23         a benefit at Enron, she would walk me

24         through it or answer questions.

25    Q.   Would it be fair to say that like most





      SHERRIE GIBSON                                        29

 1         chairmen of large corporations in America,

 2         Mr. Lay's compensation from Enron was

 3         fairly complicated and had a lot of

 4         different aspects to it?

 5    A.   Correct.

 6    Q.   There were stock options, for example;

 7         correct?

 8    A.   Correct.

 9    Q.   There was salary?

10    A.   Correct.

11    Q.   There was so-called deferred compensation?

12    A.   Correct.

13    Q.   There were retirement benefits?

14    A.   Correct.

15    Q.   There were bonuses?

16    A.   Correct.

17    Q.   There was a line of credit with the company

18         during a certain period of time?

19    A.   Correct.

20    Q.   Were there other items as well?   Have I

21         covered the main ones or were there others?

22    A.   Those are primarily the ones I dealt with.

23    Q.   Okay.  And Ms. Butler would have been your

24         contact in terms of understanding how these

25         various parts of his compensation were





      SHERRIE GIBSON                                         30

  1        structured and what types of payments would

  2        be coming and how they should be handled

  3        and so forth?

  4   A.   Correct.  And there were like some plans

  5        that had change over the years and I wanted

  6        to make sure that I understood all the

  7        plans and that I had properly documented on

  8        the financial statements.

  9   Q.   All right.  And what about Ms. Overturf,

10         why would you need to speak to her or she

11         to you?

12    A.   Elain Overturf prepared the Form 4s and 5s,

13         which are SEC reports that disclose the

14         sale of Enron stock, or any -- and also

15         exercise the stock options.

16    Q.   All right.  And so why would you and her

17         need to speak to each other about that?

18    A.   Well, she would really -- she would like --

19         she wanted me to review the reports to make

20         sure that our nu.mbers were the same.   It

21         was another checks and balances.    She would

22         get her nu.mbers from one source.   I would

23         get mine from another source.   So we would,

24         you know, check each other and that was a

25         way for me to determine whether that I had





      SHERRIE GIBSON                                        31

 1         an accurate number.

 2    Q.   And who prepared those SEC reports?

 3    A.   Elain Overturf did.

 4    Q.   Did you give her the data that she used to

 5         prepare them or did she get the data from

 6         someone else, prepare them and --

 7    A.   She received the data and then I would

 8         compare it against my records and she

 9         prepared the report.

10    Q.   Okay.  Did you know an employee of Enron

11         named Sally Keepers?

12    A.   Correct.

13    Q.   And what was Ms. Keepers job at Enron?

14    A.   Sally would handle the travel for, I know,

15         Mr. Lay; also his agenda.   She also would

16         handle some of the -- of his personal

17         affairs.

18    Q.   Was she a secretary or administrative

19         assistant, executive assistant?   What was

20         her title?

21    A.   I don't know her correct -- I don't know

22         her title.

23    Q.   And was she working in that capacity at

24         Enron for Mr. Lay throughout the period you

25         were working for the Lays?





      SHERRIE GIBSON                                        32

 1    A.   She had been with him for -- I know for

 2         like 14 or 15 years.   I think she was with

 3         him since '86.

 4    Q.   All right.  Did you know an Enron employee

 5         named Rosalie Fleming?

 6    A.   Correct.

 7    Q.   And what was Ms. Fleming's job at Enron?

 8         What did she do?

 9    A.   She is the executive assistant to Mr. Lay.

10    Q.   How did her job differ from Ms. Keepers?

11    A.   Rosalie would do the scheduling for Mr.

12         Lay, answer the telephones, have

13         secretarial duties.

14    Q.   What dealings, if any, would you need to

15         have with Ms. Keepers or she with you?

16    A.   During her personal dealings, we may -- she

17         also would pay some bills as well, and she

18         would handle turning in the receipts for

19         any medical expenses.

20               She would also make the deposits or

21         prepare the deposits.   If I received any

22         checks, then she would prepare the

23         deposits.

24    Q.   Why would she handle that as opposed to

25         you?





      SHERRIE GIBSON                                        33

  1   A.   She was closer to the bank.

  2   Q.   Okay.  Where did Mr. Lay bank for cash

  3        purposes?

  4   A.   At Bank of America.

  5   Q.   All right.  Anything else Ms. Keepers would

  6        do in relation to your job?

  7   A.   Besides the -- having questions about

  8        checks or -- she handled the insurance on

  9        the personal properties.   And I just don't

10         remember at this time.

11    Q.   All right.  What about Ms. Fleming?  What

12         need would you have to deal with her or she

13         with you?

14    A.   She was would just call me about -- if --

15         to set up a meeting or -- that's really the

16         only dealings I had.

17    Q.   All right.  And you mentioned that you had

18         a handful of dealings with Mr. Rodgers.

19    A.   Correct.

20    Q.   What were the occasions for those

21         interactions?

22    A.   Mr. Lay asked me to call Mr. Rodgers to see

23         whether a transaction, whether he was able

24         to sell stock at a certain time and I did

25         that.  That was early on in '98 or so.





      SHERRIE GIBSON                                        34

  1              Also I talked to Mr. Rodgers.  We were

  2        doing a transaction and the appraisers -- a

  3        transaction that involved getting an

  4        appraisal of a partnership that had some

  5        Enron stock, and I was asked to find out

  6        the window or some information about when

  7        -- just in general when Enron stock could

  8        be sold.  So I called Mr. Rodgers and asked

  9        what the policy was on trading stock.

10    Q.   Do you remember when that was,

11         approximately?

12    A.   Yes.  That was November, December of '98

13         and then the end of November, beginning of

14         December of 2000.

15    Q.   Which was which?  I'm sorry, I lost you.

16         thought you were talking about one

17         conversation about appraising a

18         partnership.

19    A.   Well, it was two separate times.   I

20         apologize.

21    Q.   All right.  The second time was when?

22    A.   Was December of 2000.

23    Q.   Okay.  By the way, how do you know those

24         dates?  Do you have some records that have

25         shown that to you or do you just remember?





      SHERRIE GIBSON                                        35

  1   A.   Well, it was -- this transaction just took

  2        a lot of time and it was around Christmas

  3        and I just for -- just remember those

  4        dates.

  5   Q.   What partnership was this?

  6   A.   This had to do with the KLL and LPL

  7        Investments.

  8   Q.   All right.  Why was that being appraised?

  9        Was it being used as collateral for

10         something?

11    A.   No.  They were going to do a redemption.

12         They were appraising the partnership and

13         then Mr. Lay was going to redeem part of

14         his interest.  And in order to do that, you

15         had to get an appraisal of the partnership.

16               And once it was -- the value was

17         ascertained, then he would redeem a certain

18         part of his partnership and then they would

19         draw out -- he would get some assets and as

20         an end result, he would have less interest.

21    Q.   Okay.  What else do you recall discussing

22         with Mr. Rodgers?

23    A.   I might have had more than one

24         conversation, but it was always around

25         about the same thing, about the window.  I





      SHERRIE GIBSON                                        36

  1        did talk to him -- I think one time was

  2        discussed about when the stock was sold

  3        back to Enron, if we needed to contact him.

  4   Q.   And when you say that, you're referring to

  5        transactions in which Mr. Lay repaid his

  6        line of credit with stock option?

  7   A.   Of credit with Enron stock; correct.

  8   Q.   Okay.  We'll come back to that a little

  9        later, but other than that, do you remember

10         any conversations specifically with Mr.

11         Rodgers at any time about any particular

12         time frame or transaction?

13    A.   No.

14    Q.   Okay.  Now, why was -- what was your

15         understanding as to why Mr. Herrold was

16         hired in August of '99, and what was he

17         hired to do?

18    A.   He was hired to coordinate or get the big

19         picture.  I was so caught up in the detail

20         in trying to reconcile and get everything

21         that I couldn't stand back and look to see

22         what was really going on.   I was just more

23         focused on trying to get all the detail, so

24         people receiving the reports could then

25         make, you know, make what decisions they





      SHERRIE GIBSON                                      37

  1        needed to or -- that the information was

  2        accurate.

  3              So Mr. Herrold was hired to take more

  4        of a global approach or look at the big

  5        picture and to coordinate any investments

  6        with the investment advisors.

  7   Q.   And after Mr. Herrold came on, did you

  8        participate in any kind of like regular

  9        meetings with him and Mr. Lay or did he

10         deal directly with Mr. Lay without you?

11    A.   He would deal directly with Mr. Lay.

12    Q.   By the way, did you ever have any dealings

13         with Mr. Derrick at Enron?

14    A.   No.

15    Q.   Okay.   Focusing your attention for the

16         moment on the year 1999, how much

17         approximately, if you can give us a rough

18         number, was Mr. Lay's net worth in 1999

19         between the family and the investment

20         partnership?  I mean, him and Linda and the

21         investment partnership, leaving aside the

22         family partnership.

23    A.   I don't remember.

24    Q.   Do you have any approximate nu.mber you can

25         give us, in the hundreds of millions or





      SHERRIE GIBSON                                        38

  1        tens of millions?

  2   A.   I would be speculating.   I mean, that's

  3        two, three years ago.

  4   Q.   Okay.  More or less than a billion?

  5   A.   Oh, less than a billion.

  6   Q.   More or less than 500 million?

  7   A.   Less than 500 million.

  8   Q.   Okay.  More than a hundred million?

  9   A.   Between -- more -- well...   A hundred to

10         two hundred million.   But that is really an

11         estimate at this time.

12    Q.   Okay.  That's all I was asking you for.

13         What about in '99 a rough estimate of the

14         amount of debt that Mr. Lay had?

15    A.   I really don't remember.

16    Q.   Okay.  What about the year 2000?   Can you

17         recall either a rough estimate of net worth

18         or debit for the year 2000?

19    A.   Just from working on, I guess, production

20         requests from the government, around 80

21         million of debt.

22    Q.   And the net worth, do you recall that being

23         essentially different than what it would

24         have been in '99?

25    A.   I'm going to estimate or speculate about





      SHERRIE GIBSON                                       39

  1        250, 300 million.

  2   Q.   Now, the Lay Family Partnership, had that

  3        already been created when you began working

  4        for the Lays in '97?

  5   A.   Correct.

  6   Q.   And was it making distributions to the

  7        family already at that time?

  8   A.   To the best of my knowledge, I don't think

  9        so.

10    Q.   Did there come a time when it began making

11         distributions?

12    A.   It did.

13    Q.   And do you remember when that was?

14    A.   Oh, I would estimate 1998 or '99.

15    Q.   Do you remember approximately what the

16         distribution -- the distributions were

17         monthly; correct?

18    A.   Correct.

19    Q.   Do you remember approximately what they

20         were when they began?

21    A.   I cannot remember.

22    Q.   Do you remember what they were at their

23         most?

24    A.   At their most...

25    Q.   I'm just asking for approximate amounts,





      SHERRIE GIBSON                                        40

  1        Ms. Gibson.  We're not going to hold you to

  2        a specific nu.mber here.

  3   A.   I know.  It's just in my profession, you

  4        know, I try to be exact and it's just -- I

  5        always like to refer back to docu.ments

  6        before I give answers.

  7   Q.   We understand that you're -- we understand

  8        you to be saying that you could be more

  9        precise if you had docu.ments, and so no one

10         is going to hold to you to a specific

11         number.

12    A.   Okay.

13    Q.   We're just asking you to give us an

14         approximate amount for purposes of our

15         discussion today?

16    A.   Approximately 30,000 a month.   At the

17         beginning we're talking -- there were two

18         different partnerships and the family

19         partnership had an interest in the

20         investment partnership.

21               So when the investment partnership

22         would make distributions, it would be, you

23         know, to all the partners and one of the

24         partners was this family partnership.

25    Q.   And then it would flow through the --





      SHERRIE GIBSON                                         41

  1   A.   Correct.  So when you -- you know, the

  2        family partnership didn't always have to

  3        give, you know, distributions.    So that's

  4        why I was having trouble because it was --

  5        whenever I'd make the distribution, it

  6        would be like three or four different

  7        checks or ways I would do it because of how

  8        it would flow through.   So in total, I'd

  9        say approximately 30,000.

10    Q.   Okay.  By the way, who made all the

11         decisions about how to structure these

12         partnerships and set up the amount of the

13         flows and all that.   Who's --

14    A.   To my knowledge, it was some estate

15         planning done by Stacy Eastland, an

16         attorney who had worked with Baker & Botts.

17    Q.   Who gave you all the information that you

18         needed in terms of how this structure was

19         supposed to operate?   Who did you get that

20         from?

21    A.   I would review the docu.ments.   There was a

22         consultant that worked prior to me and she

23         would assist me because she was there when

24         it was being set up.   And then I also had

25         -- the CPAs at Margolis, Phipps & Wright





      SHERRIE GIBSON                                        42

  1        would also assist me.   And then if I had

  2        any detailed questions, I would call the

  3        law firm.

  4   Q.   Baker & Botts?

  5   A.   Correct, I'm sorry.   Yes.  Stacy Eastland's

  6        assistant.

  7   Q.   Focusing your attention on the year 2000

  8        or, say, the end of the year 2000, could

  9        you give us an approximation of the net

10         worth of the family partnership at that

11         time?

12    A.   There was a redemption of -- in December,

13         so the net worth was less at the end of

14         December than it would have been at the end

15         of November.

16    Q.   And what was it approximately at the end of

17         November?

18    A.   I want to say it was approximately, from

19         what I can remember, a hundred million.

20    Q.   Did you have occasion to deal with Rocky

21         Emery at all?

22    A.   Correct.  I did.

23    Q.   And what was Mr. Emery's role in Mr. Lay's

24         financial affairs?

25    A.   Mr. Emery was his -- was one of the





      SHERRIE GIBSON                                       43

  1        investment advisors -- or I should say, he

  2        was the investment advisor.  His firm or

  3        team would actually monitor the performance

  4        of other money managers chosen.

  5   Q.   Would it be fair so say that Mr. Emery was

  6        Mr. Lay's stockbroker?

  7   A.   Correct.

  8   Q.   And what firm was he at?

  9   A.   He was at PaineWebber and then in --

10         approximately in July of 2001, he move to

11         First Union Securities.

12    Q.   How did Mr. Emery become Mr. Lay's broker,

13         if you know?

14    A.   Approximately -- well, in about 1998, Mr.

15         Lay started interviewing different advisors

16         or was seeking to diversity his portfolio.

17         So I remember sitting in a few meetings and

18         he would interview various firms.

19    Q.   But you don't know of any particular reason

20         why Mr. Emery was selected as Mr. Lay's

21         broker?  It wasn't a prior relationship or

22         some mutual --

23    A.   Well, I do know why he was one of those

24         invited originally, was because his

25         affiliation with -- PaineWebber handled the





      SHERRIE GIBSON                                       44

  1        stock options for Enron and through that

  2        affiliation, or I guess he was known, he

  3        was invited to talk with the group.

  4   Q.   Okay.  Now I'm focusing your attention for

  5        the moment on the period from '97 until

  6        just prior to when Mr. Herrold became

  7        involved in the family finances.

  8              What role, if any, did you have in

  9        transactions at which Mr. Lay was

10         purchasing, selling or otherwise

11         transacting in Enron stock?

12               Would you be, for example, involved in

13         relaying directives about that to the

14         broker or would you be involved in any of

15         the discussions with Enron personnel about

16         whether that was cleared or not cleared,

17         what reports should be filed, would not be

18         filed?

19    A.   All the above at different times.

20    Q.   Okay.  Was there any particular routine

21         that was followed when Mr. Lay transacted

22         in Enron stock?

23    A.   Could you given a specific transaction and

24         then I could --

25    Q.   Well, I guess I'm not asking about any





      SHERRIE GIBSON                                        45

  1        specific transaction at this point.   I'm

  2        just asking if generally --

  3   A.   Or type of transaction?

  4   Q.   Well, if Mr. Lay wanted to sell Enron

  5        shares that he held in any of his

  6        investment accounts, what role, if any,

  7        would you play in that process?

  8   A.   He might have asked me to -- well, that

  9        would be speculating.  I would say prior to

10         Mr. Herrold being hired, I would speak to,

11         you know, Mr. Rogers whether or not that

12         that window was open.

13    Q.   What do you mean by that?  Could you just

14         explain that to the Grand Jury?   When you

15         use the phrase "the window open," what are

16         you referring to?

17    A.   There's certain times that, I guess, people

18         that are executives are not allowed to sell

19         their stock, so I would need to call the

20         attorney because there was not a formal

21         window -- I mean a formal policy.   Then I

22         would call the attorney and he would say

23         whether or not it was possible to do that

24         transaction.

25    Q.   Was that always Mr. Rogers?





      SHERRIE GIBSON                                        46

  1   A.   Yes, that's who I would talk to.

  2   Q.   And what about if Mr. Lay wanted to

  3        exercise stock options, would that be

  4        handled any differently?

  5   A.   No.  He was the same.   He was the same

  6        person I would talk to.

  7   Q.   And it was still a process of determining

  8        whether or not, with the attorneys at Enron

  9        whether or not the window was open?

10    A.   Correct.  Well, if you would -- if Mr. Lay

11         would exercise his stock options, that's

12         when a stock option would become a share of

13         stock, and you didn't sell it but just they

14         call if exercise to hold, then you wouldn't

15         need to call Mr. Rogers.   It wouldn't be

16         until you actually sold the share.

17    Q.   And what would be the reason to exercise to

18         hold as opposed to exercise and sell?

19    A.   If you wanted to accu.mulate more shares and

20         you think the stock is going up -- I'm

21         looking at this from a tax point.   You

22         would exercise to hold. You would lock in

23         at a certain price and then if you held the

24         stock for a year and sold it, then you

25         would pay a long-term capital gains rate.





      SHERRIE GIBSON                                      47

  1        So instead of paying a 40 percent, you'd

  2        pay a 20 percent, if you're -- depending,

  3        you know, what tax bracket you were in.

  4   Q.   Do you recall -- prior to Mr. Herrold's

  5        involvement in August of '99, do you recall

  6        any occasions when you sought to determine

  7        from Mr. Rodgers or anyone else at Enron

  8        whether the window was open because Mr. Lay

  9        wanted to engage in a sale of some sort and

10         you were told he could not or it was not

11         open?

12    A.   No.

13    Q.   Are you pretty sure that never happened?

14    A.   I don't know -- I mean, if it ever -- when

15         I asked, but I don't know if, you know,

16         Mr. Lay had asked him or anything else.

17    Q.   I mean to limit the question to your

18         personal knowledge.  My question was simply

19         intended to determine whether you were

20         saying you don't remember whether or not it

21         happened or you were saying you know it

22         didn't happen, to your knowledge?

23    A.   Oh.   To my knowledge, when I asked Mr.

24         Rodgers, I was never told that no, that the

25         window was closed -- well, I was told the





      SHERRIE GIBSON                                       48

  1        window was closed.

  2   Q.   Okay.  After Mr. Herrold joined in August

  3        of '99, was there any change in the process

  4        in terms of when Mr. Lay wanted to dispose

  5        of Enron stock, in terms of your

  6        involvement in the process?

  7   A.   He would contact Beau directly and then

  8        Beau would call me.

  9   Q.   Okay.  To your knowledge, did Beau

10         sometimes deal directly with the people at

11         Enron as well, such as Mr. Rodgers?

12    A.   Yes.

13    Q.   How often during the period '97 through

14         '99, if you, you know, can recall, how

15         often would you estimate Mr. Lay engaged in

16         a transaction in which he sold Enron stock?

17         Was this a frequent or a common occurrence?

18         Was it rare, monthly, weekly?

19    A.   Would that include cashless stock option

20         exercises?

21    Q.   Yes.

22    A.   Occasionally -- is this '97 through '99?

23    Q.   Yes.

24    A.   End of '99?

25    Q.   Yes.





      SHERRIE GIBSON                                        49

  1   A.   I don't remember the exact occurrence.

  2        There were some transactions that are

  3        called cashless stock option exercises and

  4        that is when you will exercise a stock

  5        option but then you sell the stock

  6        immediately and you get the net proceeds,

  7        the difference between whatever the price

  8        of the stock is and the strike price.

  9              That -- to the best of my knowledge,

10         and I'm estimating, approximately less than

11         eight times in '98,  '99.

12    Q.   Okay.  And were those the most -- to the

13         extent he did engage in transactions where

14         he sold shares or otherwise disposed of

15         shares or options, were those the most

16         common type --

17    A.   Correct.

18    Q.   -- those cashless option exercises?

19    A.   Correct.

20    Q.   Okay.

21    BY SPECIAL AUSA KIMBALL:

22    Q.   And for a cashless exercise, you'd have to

23         get permission from Rex Rodgers first,

24         because that's like a --

25    A.   To my knowledge, yes.





      SHERRIE GIBSON                                        50

  1   Q.   Because that would be like an exercise to

  2        sell?

  3   A.   Correct.

  4   BY SPECIAL AUSA BUELL:

  5   Q.   Okay.  At some point did you become aware

  6        -- and I think you mentioned this earlier

  7        in your testimony, that Mr. Lay had a line

  8        of credit with the company?

  9   A.   Yes.

10    Q.   And was that something that was in

11         existence at the time you began working for

12         him in '97?

13    A.   Yes.

14    Q.   And was that a so-called revolving line of

15         credit, meaning that Mr. Lay could draw it

16         down, pay it back, draw it down, pay it

17         back?

18    A.   That was my understanding of it.

19    Q.   Okay.  And there was always a cap on the

20         amount that could be drawn down at any

21         given time; correct?

22    A.   Correct.

23    Q.   And was that during '97,   '98, '99, 2000, $4

24         million, or did it change?

25    A.   To the best of my knowledge, it was four





      SHERRIE GIBSON                                       51

  1        million.

  2   Q.   Okay.  During the period -- well, let me

  3        ask you this.  Did you ever see any

  4        documents from Enron that evidenced to you

  5        what the rules were on this line of credit

  6        or how it had been approved by the company,

  7        or were you just told orally about it?

  8   A.   I did not have any documents, but it was in

  9        existence before I started.

10    Q.   You didn't see, for example, the board

11         minutes approving it or any resolution that

12         had been adopted by the company that put

13         terms on it, explained how it could be

14         used, or anything like that?

15    A.   Not in the time frame you're asking.

16    Q.   Yeah, and I'm asking you about the period,

17         say, prior to 2001?

18    A.   Correct.  I did not have that.

19    Q.   Okay.

20    A.   Well, prior to that there was a change in

21         the -- or amendment to that where instead

22         of repaying the line of credit with just

23         cash, you were able to repay it with

24         shares.

25    Q.   Okay.  When did that happen?





      SHERRIE GIBSON                                       52

  1   A.   That happened in May of '99.

  2   Q.   And did you see any documents about that

  3        aspect of the line of credit at or around

  4        that time?

  5   A.   Yes, I did.  There was some compensation

  6        committee minutes.

  7   Q.   Compensation committee being a committee of

  8        Enron's board of directors?

  9   A.   Yes.

10    Q.   All right.  And you saw the minutes that

11         talked about the approval for the repayment

12         of the line of credit with options?

13    A.   Correct.

14    Q.   And what was the occasion for you to be --

15         I mean, what was the purpose for you to be

16         looking at those or for someone to provide

17         you with those?

18    A.   I had received a copy of a letter that Mr.

19         Lay had written instructing that he was

20         going to pay -- use some shares to pay down

21         his line of credit.

22               And that hadn't occurred before and so

23         I called Pam Butler and asked her how to

24         handle it.

25    Q.   All right.





      SHERRIE GIBSON                                       53

  1   A.   Or what was the occasion or what was the

  2        next step I needed to do.

  3   Q.   Okay.  And tell us about that conversation

  4        and what flowed from it?

  5   A.   I asked like if there were any restrictions

  6        and so she faxed to me like two pages -- I

  7        don't know if it was just a resolution.  It

  8        wasn't a complete set of minutes -- that

  9        just dealt with the amendment in order for

10         him to repay the line of credit with

11         shares.  And in that it gave some

12         guidelines.

13    Q.   What do you recall about the guidelines?

14    A.   The most pertinent fact that I remember is

15         that you had five days to deliver the

16         shares.

17    Q.   Five days from when?

18    A.   Day of notification, five business days.

19    Q.   Date of notification that you were drawing

20         down the line or notifying that you were

21         paying back?

22    A.   That you were going to pay back, that you

23         were going to pay back the line of credit

24         with shares.

25    Q.   All right.  Anything else you remember





      SHERRIE GIBSON                                        54

  1        about the provisions of the approval for

  2        this?

  3   A.   I was focusing on the delivery aspect

  4        because I was -- that was my job, is to

  5        make sure that it was done.   So then I was

  6        reading the minutes and to me they were

  7        somewhat vague, so I wrote kind of a list

  8        of guide -- like a checklist for myself on

  9        what to do.

10               And I faxed Pam Butler a copy and I --

11         of these guidelines.   I said, "Is this your

12         understanding?  If I do this, will I meet

13         the criteria?"  And they say,  "Yes."

14    Q.   What do you recall about what you put on

15         those guidelines?

16    A.   First, that there were be notification of

17         when the payment would be made and then it

18         would go to different individuals.

19    Q.   Who?

20    A.   Pam Butler.  I think a copy to Elain

21         Overturf and a copy to an individual -- it

22         changed -- in accounting.   And I might -- I

23         mean, that's the best of my knowledge.

24         They may be different names or different

25         departments.  I don't -- there may have





      SHERRIE GIBSON                                       55

 1         been another one.

 2               And then the second thing after

 3         notification was done, then -- well, I

 4         would call accounting and they would accrue

 5         interest and then they would fax that to

 6         Elain Overturf, who would then take the

 7         amount that was due plus the accrued

 8         interest and then she would calculate the

 9         number of shares needed to pay back the

10         line of credit.

11    Q.   And when would she take the share price to

12         determine that?

13    A.   It would be the closing price of that day.

14    Q.   Okay.  And then would she then given that

15         information back to you?

16    A.   Yes.  Then she would given it to me and

17         then it was my job then to, you know, look

18         at his shares and then to select which

19         shares that we would -- that would be used

20         to repay that line of credit.

21    Q.   And how would you choose which shares to

22         use?  In other words, Ms. Overturf would

23         tell you you needed X amount of shares

24         priced at this price in order to meet this

25         amount that's due of principal and





      SHERRIE GIBSON                                       56

  1        interest.  Then how would you pick which

  2        shares to use to meet that share amount?

  3   A.   Well, I would select the shares that would

  4        result in the lowest tax gain.

  5   Q.   Okay.  So you would want to use the shares

  6        that had the highest tax basis?

  7   A.   Highest -- correct.

  8   Q.   Okay.  And what would you do after that?

  9   A.   Well, once those shares were identified,

10         the shares were all used as collateral or

11         were at different places.  So then,

12         depending on where they were, then I would

13         notify the institution that I was

14         withdrawing those shares and then I would

15         coordinate the delivery of the shares to

16         Enron.   It could have been electronicly.

17         It could have been stock certificates.

18         They  are all different types of ways to do

19         it.

20    Q.   What understanding did you have, if any, at

21         the time as to why this had been set up,

22         that Mr. Lay could repay the line of credit

23         with options?

24    A.   I don't know.

25    Q.   Were you ever told --





      SHERRIE GIBSON                                        57

  1   A.   No.

  2   Q.   -- that information?

  3   A.   No.

  4   Q.   You don't know who had requested it, who

  5        initiated this proposal to the board of

  6        directors or what the motivation was for

  7        it?

  8   A.   No.

  9   Q.   Well, let me show you a docu.ment, which I'm

10         going to ask you to refer to at various

11         points in my questions here.   It's marked

12         Grand Jury Exhibit KL-15.   This is at Tab

13         15 of the Grand Jurors binders.

14                         [Grand Jury Exhibit No. KL-15

15                         marked for identification and

16                         made a part of the record.]

17    BY SPECIAL AUSA BUELL:

18    Q.   Without going through this in detail right

19         now, does this appear to be a collection of

20         documents -- if you want to just flip

21         through some of them -- a collection of

22         some of the documents relating to the

23         process of -- that you have just described

24         that was followed when Mr. Lay sought to

25         repay his line of credit with stock





      SHERRIE GIBSON                                       58

  1        options?

  2   A.   Correct.

  3   Q.   All right.  I want to focus your attention,

  4        if I could, on the first portion of those,

  5        and they're ranked in chronological order.

  6        And if you could just leaf through the ones

  7        that bear dates, mainly in the year 1999,

  8        and just if you could take a minute and

  9        leaf through those for yourself.

10               My question when you're finished is

11         going to be whether those documents, the

12         ones dated '99, appear to you to be

13         reflective of what all of the transactions

14         of this type that Mr. Lay conducted in the

15         year 1999?

16    A.   These particular docu.ments appear to --

17         will involve the repayment of the Enron

18         shares to the line and there also is a gift

19         he made.

20    Q.   All right.  What's the date on the document

21         you're referring to?

22    A.   Well, the gift --

23    Q.   Is that the June 30th?

24    A.   June 30th; right.

25    Q.   And that's the University of Missouri?





      SHERRIE GIBSON                                       59

  1   A.   Correct.

  2   Q.   Okay.  And the other documents from '99 are

  3        repayments of the line of credit with

  4        options?

  5   A.   Correct.

  6   Q.   Okay.  Directing your attention to the

  7        first one, the one dated May 12th of '99,

  8        does that letter appear to you to relate to

  9        the first such transaction that you

10         described as being the impetus for your

11         discussions with Ms. Butler and your

12         creations of procedures?

13    A.   Correct.  Correct.

14    Q.   All right.  Is that your handwriting at the

15         bottom of that page?

16    A.   No, it's not.

17    Q.   Do you know whose handwriting that is,

18         where it says, "See Pam Butler for

19         details"?

20    A.   No.

21    Q.   Okay.  Do you recall there being any

22         additional such transactions in '99 other

23         than the ones that are reflected on these

24         documents?

25    A.   No.  I've taken an opportunity to review in





      SHERRIE GIBSON                                        60

  1        my mind and no, there was just two in '99.

  2   Q.   Two in 99?

  3   A.   Yes.

  4   Q.   The one in May and then the one in

  5        November?

  6   A.   November, correct.

  7   Q.   Okay.

  8   A.   And I think before when you asked me if

  9        there were any more transactions in Enron

10         stock, I did not mention the contributions

11         or the gifts of stock he made.   That was an

12         oversight.

13    Q.   Okay.  I wasn't -- yeah, I didn't mean my

14         questions to include gifts.

15    A.   Oh, okay.

16    Q.   I meant to include transactions in which

17         Mr. Lay would have realized any gains or

18         income from Enron stock.

19    A.   Okay.

20    Q.   By the way, what did you -- well, let me

21         ask you this first.   These procedures that

22         you wrote out and faxed to Ms. Butler, have

23         you seen that document recently?   Does it

24         still exist?

25    A.   Yes.





      SHERRIE GIBSON                                       61

  1   Q.   Okay.  Has it been produced to anybody?

  2   A.   Mr. Kimball.  I think I showed it during

  3        our meeting.

  4   Q.   You did?  Okay.  And the documents that you

  5        reviewed to refresh your recollection in

  6        preparation for your testimony here about

  7        the line of credit transactions, what

  8        documents did you look at?

  9   A.   The only one I really was a sunimary of all

10         the advances and paybacks.

11    Q.   For what period?

12    A.   Just for 2001 and I looked at it very

13         briefly because in '99 there were two and

14         then in 2000 there were four.

15    Q.   Okay.  I'm going to show you a document

16         that summarizes transactions in 2001, and

17         ask you if this was the document you

18         reviewed in preparation for your testimony.

19         It's marked Grand Jury Exhibit KL-21 and

20         it's at Tab 21 of the Grand Jurors'

21         binders.

22    A.   Correct.  That's the one.

23    Q.   That's the document you reviewed?

24    A.   Yes.

25    Q.   Okay.  And having reviewed that, is that





      SHERRIE GIBSON                                       62

 1         document, the activity reflected on that

 2         document, consistent with your

 3         recollection about the nu.mber and frequency

 4         of the transactions in 2001?

 5    A.   Correct.

 6    Q.   Okay.  I'll leave that here.  So two such

 7         transactions in '99 and then your

 8         recollection is there were only four in

 9         2000?

10    A.   Correct.

11    Q.   All right.  I'm going to ask you to leaf

12         through on Grand Jury Exhibit KL-15 and

13         continuing, if you could leaf through the

14         pages that bear dates ending in the year

15         2000, and let me know whether those appear

16         to reflect the four transactions that you

17         recall from the year 2000.

18    A.   Correct.

19    Q.   They do?

20    A.   Yes.

21    Q.   Okay.  And so what were the approximate

22         dates of the four transactions in which Mr.

23         Lay repaid the line of credit with stock

24         options in the year 2000?

25    A.   With shares of stock?





      SHERRIE GIBSON                                        63

  1   Q.   Yes.

  2   A.   February of 2000, August of 2000, November

  3        of 2000, and December of 2000.

  4   Q.   Okay.  Do you see on the letter that it's

  5        dated February 15th, 2000?  Again, they are

  6        arranged in chronological order.

  7   A.   Yes.

  8   Q.   Do you see a note at the bottom, a

  9        handwritten note saying,  "Do not report

10         until 2/14/01"?  Do you see that note?

11    A.   I see that.

12    Q.   Is that your handwriting?

13    A.   No.

14    Q.   Do you know whose handwriting that is?

15    A.   I would have to speculate.

16    Q.   Okay.  I don't want you to speculate on

17         that.

18    A.   I mean, because there's some docu.ment I'd

19         recognize handwriting because I've -- but

20         no, I don't know.  I'm sorry.

21    Q.   All right.  Let me ask you this.   Prior to

22         2001, during '99 and 2000, from the time in

23         May of '99 when up first learned about

24         these transactions of repaying the line of

25         credit with stock through 2000, did you





      SHERRIE GIBSON                                       64

  1        have any conversations with anybody, Mr.

  2        Lay, anyone else in the family, or anyone

  3        at Enron about any reporting rerequirements

  4        or issues, SEC reporting requirements or

  5        issues relating to these transactions?

  6   A.   Who -- could you please repeat that

  7        question?

  8   Q.   Yeah.  I mean, it was a fairly broad

  9        question.  If you want, I can break it

10         down, but what I was asking you was whether

11         you had any conversations in '99 or 2000

12         with Mr. Lay, anyone in the family, or

13         anyone at Enron, including all the people

14         we've talked about so far about SEC

15         reporting issues relating to these

16         transactions, repaying the line of credit

17         with stock?

18    A.   The only person that I discussed this with

19         was Elain Overturf, and how that occurred

20         is when I was reconciling the number of

21         shares per the books to the nu.mber of

22         shares being reported on the Form 4,  which

23         is a monthly filing, I had a discrepancy.

24               And this occurred in May of '99 because

25         my books were reflecting less shares than





      SHERRIE GIBSON                                       65

  1        the Form 4.  So I called Elain and I wanted

  2        to see, you know, what I had missed or why

  3        we were different.

  4   Q.   And how did -- I mean, you were just

  5        talking about the numbers on the Form 4?

  6   A.   Correct.

  7   Q.   All right.  Did you have any conversation

  8        with Ms. Overturf about how SEC rules would

  9        require or not require this activity to be

10         reported?

11    A.   I don't know that I would have talked to

12         her at that time.

13    Q.   Okay.  I mean to limit you for now to '99

14         and 2000.  Ms. Overturf or anyone else

15         about whether this had to be reported,

16         didn't have to be reported, which form it

17         should go on?

18    A.   I did discuss it would Elain, but I don't

19         remember the time period.

20    Q.   Okay.  What do you recall about your

21         discussion with her?

22    A.   Well, another item that would not appear on

23         the monthly Form 4's was if gifts were made

24         and so the gifts and the shares sold back

25         to Enron were going to be reported at the





      SHERRIE GIBSON                                        66

  1        end of the year on an annual form which was

  2        a Form 5, or they could have been also

  3        filed on a Form 4 for January of the

  4        following year.

  5   Q.   Okay.  This is all information that Ms.

  6        Overturf was conveying to you about the SEC

  7        rules or was this something that you

  8        independently had made a determination of?

  9   A.   Someone relayed this information to me.  To

10         the best of my knowledge, it was Ms.

11         Overturf.

12    Q.   Okay.  Anything else you recall about

13         discussions about SEC reporting

14         requirements as it affected the line of

15         credit transactions?

16    A.   Well, the common thread with the delay in

17         reporting was that they were not over the

18         -- it was not an open market transaction.

19    Q.   Okay.  When you say "the delay in

20         reporting," you had an understanding from

21         these conversations that these transactions

22         didn't need to be reported on the so-called

23         Form 4's, which are the monthly reports of

24         stock transactions by company executives

25         witih the SEC, but rather could be reported





      SHERRIE GIBSON                                        67

  1        on the so-called Form 5's, which are annual

  2        reports for executive stock transactions?

  3   A.   That was my understanding per my discussion

  4        with Ms. Overturf, based upon either her or

  5        the company's review of the rules, SEC

  6        rules.

  7   Q.   And you were made to understand that the

  8        reason these transactions qualified for

  9        Form 5 annual reporting as opposed to Form

10         4 monthly reporting was that they were

11         viewed as transactions with the company as

12         opposed to transactions on the open market?

13    A.   Correct.

14    Q.   All right.  Directing your attention to the

15         second docu.ment marked "Draft," also dated

16         February 15th, 2000 -- I mean, the second

17         document that bears the date February 15th,

18         2000.  There are two February l5ths and I'm

19         directing your attention to the second one

20         that has handwritten on the top draft and

21         typed at the top Ken's letterhead.   Have

22         you located that document?

23    A.   Yeah, that's -- I actually typed that.

24    Q.   Okay.  That document also bears handwriting

25         at the bottom that says,  "Do not report





      SHERRIE GIBSON                                        68

  1        until 2/14/01."  And then next to it,  "Told

  2        Sherrie it was okay 2/16/00."   Do you know

  3        whose handwriting that is?

  4   A.   No.  I'm not a hundred percent certain, but

  5        it appears to be Ms. Overturf's, but I'm

  6        speculating.

  7   Q.   Okay.  And the note,  "Told Sherrie it was

  8        okay," do you know what that's a reference

  9        to?  Does that prod any recollection in

10         your own mind or thought about what that

11         might be a reference to?

12    A.   No, because sometimes I would fax Elain

13         these letters to make sure that I was

14         wording things properly, that I was giving

15         clear direction since, you know, that I was

16         explaining myself well, and so I don't know

17         why.

18    Q.   Okay.  Now do you see that on some of these

19         documents we've been looking at there's a

20         Deanna Taylor on the cc list?

21    A.   Yes.

22    Q.   Who's she?

23    A.   To the best of my knowledge, she was

24         someone someone in accounting.

25    Q.   At Enron?





      SHERRIE GIBSON                                       69

 1    A.   Correct.

 2    Q.   Okay.   Now directing your attention to the

 3         Enron memorandum dated August 24th of 2000.

 4    A.   Oh, okay.

 5    Q.   Interoffice memorandum dated August 24th of

 6         2000.   Do you see that document?

 7    A.   Correct.

 8    Q.   From Mr. Lay,  "Subject: Enron Line of

 9         Credit."  Do you see at the bottom the cc

10         list include Elain Overturf and then Mary

11         Joyce, Bob Butts and then Rocky Emery; do

12         you see that?

13    A.   Yes.

14    Q.   Who's Mary Joyce and why would she have

15         been copied on the documents relating to

16         these transactions?

17    A.   From what I remember, I think Mary Joyce is

18         also in compensation.  She worked with Pam

19         Butler at Enron.  I don't know why -- that

20         was one of the departments. I guess I would

21         have to speculate.

22    Q.   Okay.   Someone at Enron decided to copy her

23         on this?

24    A.   Correct.  Yeah.

25    Q.   What about Bob Butts?  Who is he and if you





      SHERRIE GIBSON                                        70

  1        know, why was he copied on docu.ments

  2        relating to these transactions?

  3   A.   Bob Butts was a controller of Enron in

  4        accounting.  It appears to me -- I mean,

  5        I'm speculating, but it's the same

  6        departments but just different people.

  7                   SPECIAL AUSA BUELL:     Okay.  Why

  8                   don't we take a break for 10

  9                   minutes.

10                          [Witness out, 11:05 a.m.]

11                          [Recess.]

12                          [Witness in, 11:21 a.m.]

13                    FOREMAN OF THE GRAND JURY:      We

14                    have a quorum.

15    BY SPECIAL AUSA BUELL:

16    Q.   Ms. Gibson, you understand that you're

17         still under oath?

18    A.   Yes, sir.

19    Q.   Okay.  Backing up for a moment to my

20         questions at the outset regarding your

21         salary, was there something you could

22         clarify for us with respect to how you were

23         compensated for overtime above that 90,000

24         salary for the 35 hours?

25    A.   Yes.  The 90,000,  from what I remember, to





      SHERRIE GIBSON                                       71

  1        the best of my knowledge, it was 90,000,

  2        was based on 35 hours and anything over 35

  3        hours I was paid time and a half.

  4   Q.   Okay.  And as you said before, there were

  5        some weeks when you worked more than 35

  6        hours?

  7   A.   Correct.

  8   Q.   All right.  Now I want to move forward to

  9        the year 2001.  Would it be fair to say

10         that there was an increase in 2001 in the

11         number and frequency of these transactions

12         in which the line of credit was repaid with

13         stock?

14    A.   Yes.

15    Q.   All right.  Directing your attention again

16         to that sunimary, which is exhibit KL-21,

17         Tab 21 in the Grand Jurors' binders, is

18         that a summary that reflects each advance

19         on the line of credit and payback with

20         shares that occurred during 2001?

21    A.   Yes.

22    Q.   And would it be fair to say that there was,

23         as reflected on this sheet numerous such

24         transactions during the year?

25    A.   Correct.





      SHERRIE GIBSON                                       72

 1    Q.   And that many or most of them included a

 2         drawdown on the line of credit in the full

 3         amount of $4 million, which was then

 4         repaid?

 5    A.   Correct.  Looking at this, you know, in

 6         February and April of 2001, those three

 7         combined made 4 million.

 8    Q.   So there was an advance in January of 4

 9         million that was repaid?

10    A.   Correct.

11    Q.   Then three advances totaling 4 million in

12         February and April that were repaid in

13         April?

14    A.   Correct.

15    Q.   And then there were a series in May and

16         June of $4 million advances, each repaid in

17         the full amount of 4 million?

18    A.   Correct.

19    Q.   And there were some more August, one in

20         July and then some more in August?

21    A.   Correct.

22    Q.   Each the full amount?

23    A.   Correct.

24    Q.   And then there was an advance on September

25         6th and then there were some further





      SHERRIE GIBSON                                        73

  1        advances in late October; correct?

  2   A.   Correct.

  3   Q.   And the last payback occurred with shares

  4        on October 26th?

  5   A.   Correct.

  6   Q.   And would it be fair to say that the total

  7        amount of such transactions during the year

  8        2001 was in the tens of millions of

  9        dollars?

10    A.   Correct.  The total is at the very bottom.

11    Q.   The total at the very bottom is over 77

12         million?

13    A.   Correct.

14    Q.   Okay.  Now directing your attention to

15         January of 2001, again I'm just asking for

16         approximate numbers, if you recall.   Do you

17         remember approximately how much debt Mr.

18         Lay had in January of 2001?

19    A.   I think as I said before it was

20         approximately 80 million.

21    Q.   And as -- I'm sorry?

22    A.   Maybe we should clarify because I think

23         before when we talked about debt, there's

24         the personal debt and then there's the

25         debt on the partnership.





      SHERRIE GIBSON                                       74

  1   Q.   Uh-huh.  I mean to include both.

  2   A.   Okay.  I cannot remember if the 80 million

  3        would include both or not.

  4   Q.   Okay.  Did you know in January of 2001 that

  5        Mr. Lay had a lot of loans that were

  6        collateralized with his Enron stock

  7        holdings?

  8   A.   Correct, yes.

  9   Q.   And these were bank loans; correct?

10    A.   Correct.  And then there was also a line of

11         credit at PaineWebber.

12    Q.   All right.  And the moneys that Mr. Lay was

13         receiving from these bank loans and his

14         line of credit at PaineWebber, was he using

15         those moneys for investment purposes, or

16         for expenses, or both?

17    A.   Well, money is fungible, so if you traced

18         it, it could be probably both for, you

19         know, whatever outflows of cash you have.

20    Q.   Okay.  Did you -- let me ask you this

21         question.  Did you ever develop an

22         understanding that Mr. Lay had an

23         investment strategy which included as a

24         component essentially seeking to diversify

25         his holdings by borrowing -- rather than





      SHERRIE GIBSON                                        75

  1        selling his Enron stockholdings and

  2        investing in other things, borrowing money

  3        using his Enron stockholdings as

  4        collateral, and then taking that money and

  5        investing it in other things?   Did you

  6        understand that to be a component of his

  7        overall strategy?

  8   A.   I don't know if it was a strategy, but

  9        that's what appears to have happened.

10    Q.   Okay.  And it wasn't part of your job to

11         participate in those kinds of discussions

12         with Mr. Lay; is that correct?

13    A.   No.

14    Q.   All right.  Now, would it be fair to say

15         that during the early part of 2001, Enron's

16         share price began to decline from its high

17         point?

18    A.   Correct.

19    Q.   Did you understand that to have any

20         relationship to Mr. Lay's debt structure?

21    A.   Well, it affected me in that one of the

22         parts of my job was to, you know, look to

23         see how the collateral was doing or the

24         value of the collateral was doing to the

25         outstanding balance of the line of credit.





      SHERRIE GIBSON                                        76

  1   Q.   And why was it your job to do that?  Why

  2        was that important?

  3   A.   As the amount -- as the market went down or

  4        as Enron price went down, then there could

  5        be -- there could be margin calls if the

  6        collateral wasn't in compliance with the

  7        lines of credit.

  8   Q.   All right.  And can you explain to the

  9        Grand Jury what a margin call is?

10    A.   Behind every line of credit there were

11         certain shares.  It could be Enron, it

12         could be any liquid asset that was held as

13         collateral, and depending on the

14         institution or whatever, they would give

15         you -- it would be something called a loan-

16         to-value ratio.

17               Let's say if it's a 70 percent loan-to-

18         value ratio, they give you -- I'm just

19         going to use a hypothetical situation.  If

20         you had $10,000 worth of collateral, then

21         you got like 70 percent or 7,000 worth of

22         credit.

23               So if you had borrowed $7,000, you

24         still were okay.  But if you had borrowed

25         like 8,000 and the collateral is now worth





      SHERRIE GIBSON                                       77

  1        $7,000, the bank would issue or you would

  2        get a call that you had a margin call or a

  3        house call.

  4              And there were two ways to make it up.

  5        You either would pay down with money or you

  6        would add more collateral.

  7   Q.   Okay.  So there is a relationship between

  8        the amount of outstanding debt or the

  9        amount of outstanding loan collateral, and

10         when the gap gets too large, you get one of

11         these calls?

12    A.   Correct.

13    Q.   And then you --

14    A.   Or when it goes over that -- I mean, as

15         soon as it would get to over 70 percent,

16         you would get a call; right?

17    Q.   Okay.  And then you have two ways to deal

18         with that.  One is to bring the collateral

19         up; the other is to pay back some of the

20         loan, bring the outstanding debt down?

21    A.   Correct.

22    Q.   Okay.  Did there come a time in 2001 when

23         these house calls or margin calls became a

24         more prominent issue than they had been in

25         the past?





      SHERRIE GIBSON                                        78

  1   A.   Yes.

  2   Q.   Around when was that?

  3   A.   From what I remember, I want to say end of

  4        April.

  5   Q.   Okay.  And what involvement did you have in

  6        that process?

  7   A.   I guess I kind of want to give some

  8        background.

  9   Q.   Sure.

10    A.   Mr. Lay had asked me to start, you know,

11         monitoring this in early 2001.   And I would

12         prepare a spreadsheet that would just show

13         what the amount of debt was, the

14         approximate, you know, value of the

15         collateral, and, you know, if there was any

16         amount left available or if there was a

17         house call or margin call.   So it was a

18         summary like a snapshot of where we were at

19         a certain time.

20    Q.   And how often would you prepare that?

21    A.   I tried to prepare it once a week.

22    Q.   And you'd provide it to Mr. Lay?

23    A.   Correct.  And I -- to the best of my

24         knowledge, I remember starting it, you

25         know, early 2001 February-ish.





      SHERRIE GIBSON                                        79

  1   Q.   And then you recall that it was around

  2        April when there started to be substantial

  3        issues about meeting potential margin

  4        calls?

  5   A.   Well, it was starting.   It was starting.

  6   Q.   Okay.  And did it get worse in those

  7        ensuing months?

  8   A.   Yeah.  And then I also -- and I don't

  9        remember when I started this or if I was

10         consistent.  I would give a copy to Beau

11         Herrold as well.

12    Q.   All right.  Now, was there, to your

13         knowledge, a relationship between these

14         Enron line of credit transactions on Grand

15         Jury Exhibit KL-21 and this issue of the

16         margin calls on Mr. Lay's other loans?

17    A.   There was.  I'd have to go back and review

18         and, you know, actually look at what I

19         prepared and see what matched to this.

20    Q.   Yeah.  My question is not intended to ask

21         you to link any particular transaction here

22         to any particular margin call or anything

23         of that sort.

24               I'm just asking you generally whether

25         the increased frequency of these line of





      SHERRIE GIBSON                                       80

  1        credit transactions in 2001 had to do with

  2        this issue of margin calls on the other

  3        debt?

  4   A.   Yes, they did.

  5   Q.   Okay.  And how so?  What was the

  6        relationship there and how did you learn

  7        that?

  8   A.   Well, just by, you know, providing the

  9        spreadsheet, when you look at all your

10         lines and you have this is the amount

11         that's drawn down, this is what you can and

12         you either have a negative or a positive,

13         you just look to see where you would have

14         money, if that was available, you know,

15         that was just another option.

16    Q.   Okay.  To your knowledge who made the

17         determination to make more frequent use of

18         the Enron line of credit for purposes of

19         dealing with the house calls or margin

20         calls or preventing house calls or margin

21         calls on the other debt?

22    A.   Well, Mr. Lay would make those decisions.

23    Q.   Did you ever have a discussion with him

24         about that as a general matter, as an

25         approach?





      SHERRIE GIBSON                                       81

  1   A.   No.  No.

  2   Q.   Did he ever say anything like, you know,

  3        "Sherrie, we're going to start to use the

  4        line of credit more to deal with this," or,

  5        "I want to, you know, let me know any time

  6        there's going to be a potential house call

  7        and we'll do one of these line of credit

  8        transactions to prevent it," anything like

  9        that?

10    A.   No.

11    Q.   All right.  Did you ever have any

12         conversations like that with Mr. Herrold

13         about general approach to using the line of

14         credit to deal with the margin calls?

15    A.   No.

16    Q.   But you did have an understanding that that

17         was the impetus for the increased frequency

18         of this?

19    A.   Well, it's my understanding that that was,

20         you know, a source of cash and that was

21         what was used.

22    Q.   Okay.  You do know that the moneys that

23         were drawn down on this line of credit

24         during 2001 were used to deal with

25         maintenance of other debt?





      SHERRIE GIBSON                                        82

  1   A.   Paying down other lines; correct.

  2   Q.   Okay.  Now, prior to 2001, had you had any

  3        conversation with Mr. Lay or anybody at

  4        Enron, Mr. Herrold, anyone else about

  5        whether there were any rules about how

  6        frequently Mr. Lay could use the line of

  7        credit and repay it with shares?

  8   A.   No.

  9   Q.   Did that issue ever come up?

10    A.   No.

11    Q.   Did you see anything in those documents

12         that you saw in early '99 that dealt with

13         that issue at all?

14    A.   I don't remember.

15    Q.   Did you have any conversations with Mr. Lay

16         or Mr. Herrold or anyone else that would

17         have helped you understand how it was that

18         Mr. Lay came to have such a large amount of

19         debt in early 2001?

20    A.   I mean, I was preparing the financials, so

21         I could -- I just -- could you repeat the

22         question?

23    Q.   You had a -- okay.  Let me see if I can

24         break it down a little bit.   You did

25         prepare the financial statements?





      SHERRIE GIBSON                                       83

  1   A.   Correct.

  2   Q.   So you had a complete picture of Mr. Lay's

  3        financial status at any given time?

  4   A.   Yes, but I was so engrossed in the detail

  5        and providing to make sure that whoever

  6        reviewed it, that I didn't always stand

  7        back and look at the whole picture.

  8              So I get sometimes so caught up in the

  9        detail and there were others to look at the

10         whole picture, so I don't feel

11         comfortable...

12    Q.   It wasn't part of your job to evaluate the

13         wisdom of any strategy that Mr. Lay was

14         employing with his money?

15    A.   My primary -- I felt like my primary job

16         was to make sure that they had accurate

17         information on which others could then make

18         decisions.

19    Q.   All right.  Understanding that, did you

20         have any conversation with Mr. Lay or

21         anyone else at any time about why Mr. Lay

22         was carrying such a large amount of debt?

23    A.   No.

24    Q.   All right.  Did you have any understanding,

25         understanding you generally didn't make it





      SHERRIE GIBSON                                       84

  1        a practice to sort of step back and think

  2        about the big picture, did you nonetheless

  3        have any understanding from reviewing the

  4        financials every month as to how it was

  5        that this came about that Mr. Lay in early

  6        2001 had such a large amount of debt?

  7   A.   From making investments, diversifying his

  8        portfolio and --

  9   Q.   And borrowing in order to do that?

10    A.   To do that; correct.

11    Q.   And using in many case Enron -- his Enron

12         stockholdings as collateral for those

13         loans?

14    A.   Correct, because if you look as his

15         financials, Enron stock made up at least 80

16         percent or more the value of his whole

17         holdings -- I mean, of his asset base.

18    Q.   And did it appear to you over the course of

19         this period of years, that as a general

20         matter in making choices about investments,

21         that Mr. Lay appeared to prefer to borrow

22         against his Enron stockholdings rather than

23         liquidate them?

24    A.   Could you repeat the question?

25    Q.   Did it appear to you from looking at Mr.





      SHERRIE GIBSON                                        85

  1        Lay's financial picture over this period of

  2        years that -- understanding you didn't talk

  3        to him about this, but did it appear to you

  4        that he preferred to borrow against his

  5        Enron stockholdings rather than to

  6        liquidate them?

  7   A.   Correct.

  8   Q.   Did there come a time in 2001 when the line

  9        of credit was increased from four million

10         to seven-and-a-half million?

11    A.   Yes.

12    Q.   When did that happen?

13    A.   I don't remember the exact date.

14    Q.   Do you remember approximately when in the

15         year it was?

16    A.   It was the latter part of 2001.

17    Q.   Okay.  Let me ask you this.   Was it before

18         or after this period on Grand Jury Exhibit

19         KL-21 in June when there is a large number

20         of transactions?

21    A.   No.  It --

22    Q.   Was it after that?

23    A.   To the best of my knowledge, it was in

24         October.  I just don't remember when in

25         October.





      SHERRIE GIBSON                                       86

  1   Q.   Did you ever see any docu.ments reflecting

  2        the authorization for that or the rules

  3        about it?

  4   A.   To to be quite honest, I thought I did and

  5        then when I tried to find it to give it

  6        during our meeting, I couldn't locate it,

  7        SO I don't know if it was just...

  8   Q.   When you say "it," are you referring to --

  9   A.   To a document.

10    Q.   From the board of directors reflecting --

11    A.   Or some type of documentation authorizing

12         this increase?

13    Q.   Enron documentation?

14    A.   Correct.  I'm sorry.

15    Q.   All right.  Do you know why that was either

16         sought or approved at that time?

17    A.   No.

18    Q.   Did you ever discuss that with Mr. Lay?

19    A.   No.

20    Q.   Did you ever discuss it with Mr. Herrold?

21    A.   No.

22    Q.   Okay.  Directing your attention again to

23         KL-21 and the period during June, July and

24         August when there's a large nu.mber of these

25         transactions, did you have any discussion





      SHERRIE GIBSON                                        87

  1        with anybody during 2001 about the -- any

  2        limits that did or didn't exist on the

  3        frequency with which Mr. Lay could do this?

  4   A.   Yes.

  5   Q.   Who did you talk to about that?

  6   A.   I talked to Bob Butts in accounting.  He

  7        was a controller for Enron.   My job was to

  8        -- well, to make sure that Enron received

  9        the shares when they were used to pay back

10         the line of credit.

11               And from my previous questioning, I

12         guess, by Mr. Kimball and others, they

13         focused on June.  So I'd try to go back and

14         remember, you know, why I called him during

15         that period of time.

16               And from what I discussed before, you

17         had five business days to deliver the stock

18         to Enron for repayment.   Before there was,

19         you know, there was always long periods of

20         time or the five days wasn't an issue, but

21         in June, there was a payback and an advance

22         and, again, the stock was held at all these

23         different places and one of my jobs was to

24         select the stock.

25               Well, if the stock that had the highest





      SHERRIE GIBSON                                        88

  1        cost basis was held as collateral, you know

  2        at a bank who kept it out of state, that

  3        would affect my delivery time.  So whenever

  4        there was a payback on June 12, it -- I

  5        went back and I looked at this.  I reviewed

  6        this -- the stock was at PaineWebber, so it

  7        was easy -- it was not a stressful -- it

  8        was easier to get the stock on a timely

  9        manner to Enron, and I did it prior to the

10         July -- I mean, to the June 15th and, you

11         know, I didn't know June 15th was going to

12         happen until it had happened  or the

13         advance was requested.

14               So just -- I just wanted to make sure

15         that I was doing my job and I was in

16         compliance.  I called -- I called Bob

17         Butts, the controller, and I asked him, I

18         said, you know, "When we do a payback, we

19         give you notification, and then there's

20         five business days to deliver the stock,

21         but what would happen if we notified you

22         and then there was another advance?   You

23         know, I know that we notify you we're

24         paying back.  Is there something I should

25         be aware of?"  I just --





      SHERRIE GIBSON                                        89

  1   Q.   In other words, what happens if you notify

  2        of a payback and --

  3   A.   And the interest stops then.

  4   Q.   And then before that five days runs for the

  5        delivery of the shares, he's already taken

  6        another advance?

  7   A.   Correct.

  8   Q.   Or can he do that or would that be

  9        considered drawing it down beyond the

10         limit?

11    A.   Correct.  I wasn't real clear on that

12         because the docu.ment weren't of assistance.

13         So being -- you know, so then I asked him

14         four days and I asked him three days and I

15         asked him two and I said I just wanted to

16         know every situation.

17               I said, what if, you know, we did

18         advancement, payback, you know,

19         advancement, would that affect -- would we

20         be -- you summarized it very well.   Would

21         we be over the limit?  I mean, we have

22         notified where we're paying back, but you

23         don't actually have the shares in hand.

24    Q.   All right.   What was Mr. Butts' response

25         to your inquiries?





      SHERRIE GIBSON                                       90

  1   A.   He said yes, that may be done.

  2   Q.   Did he explain how he had determined that

  3        that was appropriate?

  4   A.   No.

  5   Q.   Did he answer that question on the spot or

  6        did he say he had to consult with someone

  7        or look at something first?

  8   A.   He answered me on the spot, from what I can

  9        remember.

10    Q.   Okay.  Other than -- anything else you

11         remember about your conversation with Mr.

12         Butts?

13    A.   No.

14    Q.   All right.  Other than the conversation

15         with Mr. Butts, did you have any

16         conversation with anybody at any time

17         during 2001 about any issues relating to

18         the frequency of Mr. Lay doing this, any

19         limits on it, any reporting implications of

20         it, SEC rules, anything of that nature?

21    A.   No.

22    Q.   Do you recall receiving some instruction at

23         some point in 2001 were either Mr. Lay

24         or Mr. Herrold to speak to Mr. Rodgers

25         about Mr. Lay transacting in Enron stock?





      SHERRIE GIBSON                                        91

  1   A.   I know I did, but I don't remember when.

  2        Regarding that particular transaction when

  3        I called Mr. Butts, I just -- I also asked

  4        Mr. Herrold to call Mr. Rodgers because,

  5        you know, I was looking at the accounting

  6        and I just wanted to make sure it wasn't a

  7        legal issue.  I was just trying to cover

  8        all bases.

  9   Q.   Did you given Mr. Herrold any specific

10         issue that you thought he ought to talk to

11         Mr. Rogers about or did you just say

12         generally just see if there were any legal

13         issues?

14    A.   Well, I just -- any legal issues on

15         delivery.

16    Q.   What do you mean "on delivery"?

17    A.   Well, delivery of the shares.   The same

18         issue that I was having with Mr. Butts.

19    Q.   In other words, the lag between --

20    A.   If you would be over --

21    Q.   -- the notification of repayment and the

22         actual delivery of the shares?

23    A.   Correct.  Correct.

24    Q.   Whether that created any legal issue?

25    A.   Correct.





      SHERRIE GIBSON                                        92

  1   Q.   So just specifically that question?

  2   A.   Correct.

  3   Q.   Anything else you asked Mr. Herrold to talk

  4        to Mr. Rodgers about?

  5   A.   Not that I remember.

  6   Q.   Did Mr. Lay or Mr. Herrold ask you to speak

  7        to Mr. Rodgers about anything having to do

  8        with Mr. Lay's transacting in Enron stock

  9        during 2001, in these transactions or

10         otherwise?

11    A.   I might have.

12    Q.   Why do you say you might have?

13    A.   Occasionally, you know -- but I don't know

14         if it was in 2001.   I remember one or two

15         instances where Mr. Lay asked me to call

16         Mr. Rodgers to verify that stock, Enron

17         stock, could be sold back to Enron.

18    Q.   Are those the same conversations you

19         referenced earlier in your testimony about

20         the window being open?

21    A.   No.  The one in December of '98 and

22         December of 2000, that was having to do

23         with kind of the partnership window.   I

24         just know that I did talk to Mr. Rodgers,

25         but I don't remember which year.   It's a --





      SHERRIE GIBSON                                        93

  1        you know, somewhere between '98 and 2001.

  2   Q.   Do you recall ever speaking to Mr. Rodgers

  3        about the subject of Mr. Lay selling or

  4        transacting Enron stock back to the

  5        company?

  6   A.   I have, but I don't remember when.   I might

  7        have remembered it when I talked to Mr.

  8        Kimball, but I don't remember now.

  9   Q.   Do you recall anything about the substance

10         or content of that conversation?

11    A.   Well, I remember that he told me -- I don't

12         remember if he told me or when Beau got

13         back -- well, Mr. Herrold got back when he

14         talked to Mr. Rodgers, that we did not need

15         to get back with again because this was an

16         exempt transaction.

17    Q.   "This" being what?

18    A.   Selling Enron stock back to Enron

19         Corporation, back to the company.

20    BY SPECIAL AUSA KIMBALL:

21    Q.   When you say "exempt," exempt from what?

22    A.   That was a legal -- it was a term he used.

23    Q.   It was a term that --

24    A.   Well, I guess -- well --

25    Q.   Who used that term, Mr. Rodgers or Mr.





      SHERRIE GIBSON                                        94

  1        Herrold?

  2   A.   It would have been Mr. Rodgers.

  3   BY SPECIAL AUSA BUELL:

  4   Q.   And what did you -- what do you understand

  5        that to mean?  In other words --

  6   A.   And I don't know who -- and that's why I'm

  7        trying to be as exact as possible.  My

  8        understanding is that exempt meant that

  9        it's not an over the -- it's not a market

10         -- over-the-market transaction.

11    Q.   Meaning what?

12    A.   That you're not selling on the market.

13    Q.   Therefore?

14    A.   That it doesn't apply to the window.

15    Q.   Okay.  Drawing your attention to that

16         Exhibit KL-21 again, the records reflect

17         that there was a, you know, as we have

18         pointed out, some significant frequency of

19         the these transactions during the su.mmer

20         and then the records would appear to

21         reflect, do they not, that there were no

22         such transactions between early September

23         and late October?

24    A.   Correct.

25    Q.   Do you have any knowledge as to why the





      SHERRIE GIBSON                                       95

  1        frequency of the transactions slowed

  2        between early September and late October?

  3   A.   I remember that there was an inflow of cash

  4        in the -- in September that could have had

  5        a bearing on this.

  6   Q.   Tell us about that.

  7   A.   Mr. Lay sold his Manulife annuities to

  8        Enron Corporation for $10 million.  There

  9        were two annuities at $5 million each.

10    Q.   Was that a transaction that was provided

11         for because of something related to his

12         compensation that had changed because he

13         had resumed the position of CEO?

14    A.   That's what I was told.

15    Q.   And so there was a 10 million influx --

16    A.   Dollar influx of cash.

17    Q.   In September?

18    A.   Correct.

19    Q.   And to your knowledge, was some or all of

20         those funds used to service other debt?

21    A.   To the best of my knowledge, yes.

22    Q.   Did you have any discussions with Mr. Lay

23         or Mr. Herrold or anyone else about not

24         needing to do these transactions for a

25         period of time because of that influx of





      SHERRIE GIBSON                                       96

  1        cash?

  2   A.   No.

  3   Q.   All right.  You're just concluding that

  4        because you know of that event?

  5   A.   Well, I'm concluding that because I was

  6        looking at because we had cash.

  7   Q.   Okay.

  8   A.   I mean, I --

  9   Q.   From your own review of the financial

10         records, that's just an observation that

11         you would make?

12    A.   Correct.

13    Q.   That there was other money available --

14    A.   Correct.

15    Q.   -- during that time?

16    A.   Yeah.

17    Q.   Okay.  Now, do you notice on these records

18         that the last payback of the line of credit

19         occurs on October 26th?

20    A.   Correct.

21    Q.   There are some additional advances after

22         that but no further paybacks in 2001?

23    A.   Correct.

24    Q.   Do you know why there were no further

25         paybacks with stock after the 26th of





      SHERRIE GIBSON                                       97

  1        October?

  2   A.   No.

  3   Q.   Did you ever discuss that with anyone?

  4   A.   No.

  5   Q.   Is there any conclusion that you can draw

  6        from your own knowledge and review of

  7        financial records as to why the paybacks

  8        with stock would have stopped on the 26th

  9        of October?

10    A.   No.

11    Q.   Did you have any occasion -- have you had

12         up until today any occasion after the 26th

13         of October of 2001 to discuss with Mr. Lay

14         the subject of his use of Enron's line of

15         credit?

16    A.   No.

17    Q.   Or his paypack of the line of credit with

18         Enron shares?

19    A.   No.

20    Q.   Ms. Gibson, did you have occasion in the

21         course of your ordinary duties to discuss

22         at any time Enron's business with Mr. Lay?

23    A.   No.

24    Q.   Did he make it a practice not to discuss

25         those matters with you or was it just not





      SHERRIE GIBSON                                       98

  1        something you would have needed to talk to

  2        him about?

  3   A.   Whenever we discussed, it was just very

  4        direct and it had a purpose, a personal

  5        purpose, maybe a question on the

  6        financials, but no, we did not discuss the

  7        company.

  8   Q.   Mr. Lay wouldn't share with you

  9        observations about the company's prospects

10         or it's averages or it's stock price or

11         anything of that nature?

12    A.   No.  No.

13    Q.   You didn't have occasion, for example, to

14         discuss with Mr. Lay at or around the time

15         it occurred Mr. Skilling's resignation?

16    A.   No.

17    Q.   Did you have occasion to discuss with Mr.

18         Lay at any time what have come to be known

19         as the Sharon Watkins' allegations; is that

20         something that he shared with you?

21    A.   No.

22    Q.   Did you know -- and I'm just using these as

23         examples, but did you know prior to its

24         release that Enron was preparing to

25         announce bad financial results for the





      SHERRIE GIBSON                                        99

  1        third quarter of 2001?

  2   A.   No.  I was still buying stock.

  3   Q.   Okay.  So it would be fair to say as a

  4        general matter that you just didn't discuss

  5        Enron business with Mr. Lay?

  6   A.   No.  That's correct to say.

  7   Q.   Did there come a time in December of 2001

  8        when the Lays paid off the mortgage on

  9        their home in Houston?

10    A.   Yes.

11    Q.   And why was that done, to your knowledge?

12    A.   To my knowledge, it was done on the --

13         based on an attorney's advice to them.

14    Q.   And who told you about that?

15    A.   I don't remember.   I just know it.

16    Q.   Directing your attention to early 2001, and

17         again I'm not trying to hold you here to

18         exact details.  I just want a general

19         sense.  What real estate holdings did the

20         Lays have?

21    A.   Well, they had some properties in

22         Galveston, some in Aspen, and then some

23         rental properties in Houston.

24    Q.   Commercial or residential rental

25         properties?





      SHERRIE GIBSON                                       100

  1   A.   Residential.

  2   Q.   How many properties in Aspen?

  3   A.   I don't remember exactly in the beginning

  4        of 2001; three or four.

  5   Q.   And in Galveston?

  6   A.   There were -- again I don't remember

  7        exactly the beginning of -- there were two

  8        lots, three homes, but I don't know when

  9        that last home was purchased.   I don't

10         remember.

11    Q.   And how many rental properties in Houston?

12    A.   Five or six, to the best of my knowledge.

13    Q.   Okay.  I want to show you a document marked

14         Grand Jury Exhibit KL-22.

15                          [Grand Jury Exhibit No. KL-22

16                         marked for identification and

17                         made a part of the record.]

18    BY SPECIAL AUSA BUELL:

19    Q.   You don't need to read through that in

20         detail but if you could just leaf through

21         it and let me know if you recognize that.

22         That's actually a set of documents.

23         There's a memo and then there's some other

24         documents attached.

25    A.   Oh, okay.   [Reviews documents.]





      SHERRIE GIBSON                                       101

  1   Q.   Do you recognize those?

  2   A.   Yes.

  3   Q.   Okay.  did you become aware at some point

  4        in 2000, late 2000, that Mr. Lay had

  5        adopted a stock sales plan with the

  6        company?

  7   A.   Yes.

  8   Q.   And how did you learn,  first learn about

  9        that?

10    A.   I don't remember exactly.

11    Q.   Did you have any role in the process of

12         putting that plan together or implementing

13         it?

14    A.   No.  I just --

15    Q.   Did it affect any part of your job, the

16         trading plan?

17    A.   No.  No.  The only thing it affected was my

18         reporting.  I mean, how -- just because of

19         the volume -- well, just because of the

20         transactions.

21    Q.   Do you know why -- and by the way, there

22         was a trading plan both for Mr. Lay and

23         also for the family partnership; is that

24         correct?

25    A.   Investment partnership.





      SHERRIE GIBSON                                       102

  1   Q.   The investment partnership.   I'm sorry.

  2   A.   That's okay.

  3   Q.   And do you know why those plans were

  4        adopted?

  5   A.   For some -- I know that the SEC had changed

  6        the rules and allowed this.   It was a

  7        change in SEC rules that allowed companies

  8        to adopt these types of plans.

  9   Q.   "These types of plans" being plans where

10         you would essentially commit in advance to

11         sell a certain number of shares

12         periodically?

13    A.   Yeah.  They're called scheduled sales

14         plans, and from my understanding, once you

15         got a scheduled sales plan, you couldn't

16         alter it.

17               Like for instance, you could decide to

18         sell so many shares every day, so many

19         shares once a week, so many shares, you

20         know, on a --  just whatever you would

21         specify in your plan, and that regardless

22         of what the stock was doing, it just would

23         be done.

24    Q.   Okay.  Do you know of any other reason why

25         Mr. Lay adopted these plans at the time he





      SHERRIE GIBSON                                       103

  1        adopted them?

  2   A.   I'm trying to be, you know, very exact in

  3        my answers and I don't know where I -- I

  4        remember the source, but as part of this

  5        sales plan, because it has to be approved

  6        by the SEC up front, this sales plan can go

  7        through even though a window is closed.

  8              So even though, you know, let's say, in

  9        an isolated case, you would not be able to

10         sell, because you had already this in

11         place, it still was acceptable or in

12         compliance.

13    Q.   Okay.  But you don't know who you got that

14         from?

15    A.   No.

16    Q.   Okay.  Did you become aware that Mr. Lay

17         terminated these sales plans in or about

18         July of 2001?

19    A.   Yes.

20    Q.   What do you know about why that was done?

21    A.   Mr. Herrold mentioned to me that they -- or

22         Mr. Lay thought the price was too low and

23         that -- that he terminated the plan.   The

24         price of Enron stock was too low.

25    BY SPECIAL AUSA KIMBALL:





      SHERRIE GIBSON                                             104

     Q.   If I can just briefly go back to Exhibit

	  21, which is the schedule.

		     SPECIAL AUSA BUELL:

		     it back to her.

     BY SPECIAL AUSA KIMBALL:

     Q.   I just want to make sure that I understand

	  kind of the grand totals here.   And Ms.

	  Gibson, I'm sorry if you got asked this

	  question before, but is this a docu.ment

	  that you prepared?

     A.   No.

     Q.   Do you know who prepared it?

     A.   Yes.  Joanna Cortez in accounting prepared

	  it.

     Q.   Joanna Cortez in accounting at Enron?

     A.   Correct.  She was my last contact person at

	  Enron.  Whenever we would notify that there

	  was going to be a payback, she would

	  calculate the interest due.

     Q.   Did she prepare it because you asked her to

	  prepare it?

     A.   No.

     Q.   Do you know who did?

     A.   Well, she told me she prepared it because

	  she wanted to doublecheck herself on

					    Let me give

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      SHERRIE GIBSON                                       105

  1        interest.

  2   Q.   Okay.  And just so I understand, the grand

  3        totals there under "Daily Activity,"

  4        there's "Advances" and a "Paybacks" total.

  5        The figure at the very bottom, bottom

  6        $77,500,025?

  7   A.   It's five hundred twenty-five thousand.

  8   Q.   $525,000?

  9   A.   Yes.

10    Q.   Approximately $77 million.

11    A.   Right.

12    Q.   That represents the amount of money that

13         Mr. Lay borrowed from Enron on his

14         revolving line of credit in 2001?

15    A.   Correct.

16    Q.   And the $70 million figure, approximately

17         $70 million figure in the next column, that

18         represents, I guess, the fact that Mr. Lay

19         repaid that debt with approximately $70

20         million worth of his stock?

21    A.   Correct.

22    Q.   Is that correct?

23    A.   Correct.

24                     SPECIAL AUSA KIMBALL:     Okay.

25                     That's all.





       SHERRIE GIBSON                                       106

 1                     SPECIAL AUSA BUELL:     Okay.  We're

 2                     going to ask you to step in the

 3                     hall if you could for a minute,

 4                     Ms. Gibson.  We'll see if we have

 5                     any other questions?

 6                          [Witness out, 12:07 p.m.]

 7                          [WHEREUPON, at 12:10 p.m., the

 8                          investigation in the above-

 9                          entitled matter was recessed.]

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      SHERRIE GIBSON                                       107

  1

  2

  3

  4

  5

  6        I, TIERNEY LEDBETTER, CSR, a Certified

  7   Court Reporter and Notary Public in and for the

  8   State of Texas, having been duly sworn in as the

  9   Grand Jury Reporter, hereby certify that the

10    foregoing pages constitute a true and correct

11    transcript of the proceedings had and testimony

12    adduced in said cause at the time and place as

13    hitherto set forth; that the interrogatories and

14    answers by the witness were taken down by me in

15    shorthand and thereafter reduced to typewriting.

16         AS WITNESS MY HAND AND SEAL OF OFFICE this

17    _______ day of ____________,  2002.


18

19

20                    ___________________________________


21                    Tierney Ledbetter, Certified Court

22                    Reporter and Notary Public in and

23                    for the State of Texas.

24

25