Westar fraud trial nearing end

Douglas Lake testifies investment in QuVis wasn't conflict of interest

? The federal fraud trial of two former Westar Energy Inc. executives ended its seventh week Wednesday as the company’s former chief strategy officer denied pushing the company in 2001 to invest in a Topeka-based tech startup because he was an investor.

Douglas Lake, testifying in his own defense, acknowledged that he and then-chief executive officer David Wittig owned stock in QuVis Inc., which makes digital imaging equipment and whose servers last week recorded the launch of the space shuttle Discovery for NASA.

Lake estimated his personal investment at $130,000. But he said the idea for Westar to invest in QuVis came from Westar board member Owen Leonard, who Lake said was one of QuVis’ largest financial backers. The Topeka-based utility eventually invested $400,000 in Quvis.

“It was based on Owen’s recommendation, and Owen had a good track record with tech companies,” Lake said, adding that Westar’s general counsel reviewed the deal.

Prosecutors have charged that Lake and Wittig, whose wife was on the QuVis board, were trying to protect their investments in the financially troubled QuVis by pushing Westar to invest.

Lake said he didn’t report it as a potential conflict of interest in Westar records because he owned less than 10 percent of QuVis’ stock, the benchmark under Westar policies.

Prosecutors have also said Wittig and Lake got Leonard kicked off the board after he raised questions about the two executives’ rising salaries and other benefits. Defense attorneys said Leonard was urged to leave after selling company stock in the midst of Westar’s attempt to merge with a New Mexico utility in 2000.

The court is taking today and Friday off and will reconvene Monday. Lake’s attorney, Edward Little, said he expects to call only a couple more witnesses after Lake, who still faces cross-examination. Little said he expects the case to go to jurors in a couple of weeks.

Lake and Wittig are each charged with 40 counts of fraud, money laundering and circumventing internal controls at Westar, the largest electric utility in Kansas.

Prosecutors have claimed that the two men took advantage of the company’s board of directors and internal policies to get extra payments and stock options, used company planes for personal trips and vacations, and tried to wring a cash bonanza out of the proposed merger with the Public Service Company of New Mexico.

Both men deny the charges, saying their actions were legal, approved by the board of directors and detailed in public filings.

Their first trial lasted 10 weeks last fall, ending in December in a mistrial when jurors couldn’t reach a verdict on more than half of the charges.

The second trial has followed the same path, including days of testimony explaining the convoluted history of the 2001 merger proposal, which was ultimately nixed by Kansas regulators, as well as how companies track airplane use and award stock options to executives.