http://discuss.agonist.org/smf/index.php?topic=16116.0

Tue Mar 7, 1:03 PM ET

HOUSTON, United States (AFP) - Enron's top executives actively promoted fraudulent deals that led to the spectacular collapse of the energy giant, former chief financial officer Andrew Fastow testified.

The star witness for the prosecution in the trial of Enron's two former chief executives, Andrew Fastow was clear-eyed as he addressed the jury and calmly explained the arcane side deals he structured to help hide his company's massive losses.

http://www.turkishpress.com/news.asp?id=111336

HOUSTON (AP) -- The former chief financial officer of Enron Corp. conceded Thursday he had no record of conversations in which he says he and former chief executive Jeffrey Skilling made secret side deals that helped the company manipulate its earnings.

Lawyer Daniel Petrocelli questioned Andrew Fastow about a document that came to be called Global Galactic -- a written record of the profits that were promised to partnerships run by Fastow when they did deals with Enron.

Fastow has claimed Skilling, who was chief operating officer in 1999 when the partnerships were created, made verbal promises to him -- Fastow called them "bear hugs" -- that the partnerships would lose no money on the side deals.

Petrocelli asked whether there was "any piece of paper, any e-mail, any notes written on the back of a business card, anything" that documented the conversations with Skilling.

"I can't recall any specific document," Fastow answered.

Fastow claims Enron made deals with the partnerships he ran to conceal poorly performing assets and help Enron meet Wall Street earnings expectations.

The ex-CFO says he destroyed the original Global Galactic document, but a photocopy of it turned up in 2004 in a folder along with Fastow's employment agreement in a safe deposit box he kept at home.

The document bears the initials of Fastow and Richard Causey, Enron's former top accountant, but not Skilling's.

Fastow, a pivotal witness for the government, was facing a second day of cross-examination in the fraud and conspiracy trial of Skilling and Enron founder Ken Lay.

On Wednesday, Petrocelli said Fastow watched his own wife go to prison rather than come clean to federal investigators about the his crimes.

http://biz.yahoo.com/ap/060309/enron_trial.html?.v=8

HOUSTON (AP) -- Sherron Watkins, the former Enron vice president who warned higher-ups the company was a house of cards ready to fall, testified Wednesday that she discussed her concerns with founder Kenneth Lay only to learn months later her job was threatened for speaking up.

http://biz.yahoo.com/ap/060315/enron_trial.html?.v=12

(see more of the story on the old BB)

HOUSTON (AP) -- Former Chief Executive Jeffrey Skilling, back in the hands of his own lawyer after three days of cross-examination by the prosecution, reiterated his innocence Thursday on charges related to Enron Corp.'s collapse.

The government says Skilling knew Enron wrongly dipped into reserves to pad earnings when business units failed to meet income targets through regular operations.

"Did you think of reserves as a place you could just pull out money for earnings?" Skilling attorney Daniel Petrocelli asked.

"You couldn't," Skilling replied. He repeated a phrase he'd used before -- that once a reserve was set aside, it was in a "lock box" and couldn't be tapped.

Several prosecution witnesses testified that they felt pressure from Skilling to use reserves to pad earnings when such funds are supposed to be used for specific expenses, like litigation costs.

During cross-examination Tuesday, prosecutor Sean Berkowitz displayed a chart for jurors that showed more than $1 billion in reserves were "available for earnings" in the spring of 2001. Skilling bristled and insisted the prosecutor misinterpreted the document.

On Thursday, Skilling explained that the $1 billion reserve increased to $1.3 billion by the end of the first quarter of 2001 -- reducing reported earnings -- to prepare for risks and contingencies.

"The whole characterization of reserves as a cookie jar is demonstratively untrue," the ex-CEO said.

Skilling appeared refreshed Thursday after a grueling three days of cross-examination, from which he emerged looking tired. Skilling often simmered with tension as Berkowitz repeatedly challenged his truthfulness. He could face Berkowitz again Thursday after Petrocelli finishes questioning him a second time.

http://biz.yahoo.com/ap/060420/enron_trial.html?.v=7

Kim Clark | April 24

U.S. News & World Report - The hang-'em-high days of cracking down on white-collar crime may already be over. As the trial of the two former CEOs of Enron captures headlines, companies and executives are quietly winning policy changes and court rulings to water down investor protection and weaken fraud investigations, prosecution, and punishment.

The pullback is evident at every level--from investigations to prosecutions to sentencing. And there's even a drive to weaken some new investor protection rules that force executives to give up conflicts of interest and do tougher audits.

HOUSTON (AP) -- Enron Corp. founder Kenneth Lay testified Tuesday it was "against every bone in my body" not to talk to The Wall Street Journal when it first raised questions about some Enron transactions in September 2001.

On Sept. 26, 2001, Lay met with senior Enron executives to discuss questions the newspaper raised about special partnerships created by Enron chief financial officer Andrew Fastow that did business with Enron.

"My policy had always been it's better to talk to the press than not talk to the press," Lay told jurors in his second day of testimony at his fraud and conspiracy trial. "At least try to get your viewpoint across and let them at least consider it."

But Lay said Enron public-relations officials believed the Journal was asking biased, negative and judgmental questions, and urged him not to respond with an interview or to allow Fastow to be interviewed.

Lay said he told Enron public-relations chief Mark Palmer: "Even though it's against every bone in my body I will agree with your recommendation." Enron ultimately responded with a written statement.

Weeks later, the Journal published several more stories that raised more questions about Fastow's role in the partnerships -- articles that drove down Enron stock by as much as 10 percent per day.

On Monday, Lay told jurors it was a lethal blend of bad press, a nervous post-Sept. 11 market and a chief financial officer's greed that sank Enron -- not a criminal conspiracy.
http://biz.yahoo.com/ap/060425/enron_trial.html?.v=5

HOUSTON (AP) -- Enron Corp. founder Kenneth Lay ignored employees' concerns about accounting integrity in the weeks before the company collapsed in 2001, a prosecutor sought to show Monday. On the third day of cross-examination in his federal fraud and conspiracy trial, Lay again flashed his temper to prosecutor John Hueston, comparing Hueston's second-guessing of his decisions during Enron's downward spiral to carving up a corpse.

Lay was confronted with e-mails and survey responses from October 2001 in which employees raised questions about accounting "trickery" and Enron's business ethics.

One veteran Enron employee said, "I've lost all respect for Enron senior management" and suggested it was criminal for Enron executives to exercise stock options when they knew accounting tricks were being used to manipulate earnings.

At the time, about six weeks before Enron sought bankruptcy protection, its stock price was falling fast, and The Wall Street Journal was raising questions about unusual business partnerships created by Enron Chief Financial Officer Andrew Fastow.

When prosecutor John Hueston asked Lay why he did not question Fastow directly, Lay responded that "I was getting information from all sides" and said other senior officers thought the Journal and others were on a "witch hunt" against Fastow.

Lay bristled as he told Hueston repeatedly that it was easy in hindsight to second-guess his decisions.

"The corpse is on the gurney now, Mr. Hueston, and you're carving it up any way you want to carve it up," Lay said. "I didn't have that luxury when I was right in the middle of battle."

http://biz.yahoo.com/ap/060501/enron_trial.html?.v=4

Will we remember these Enron characters when no one can afford to heat their house or cook their food? The incredible political corruption perpetrated by these folks kept the US government doing what it needed to do. You would like demand to fall with production after its peak but production peaked with increasing deman. That is our government's fault but Enron was the main engine of corruption.

We shall not try to make these people or any of their children into philosophers or men of learning or men of science. - General Education Board Letter #1, 1906, Rockefeller Foundation.

HOUSTON (AP) -- Enron Corp. founder Kenneth Lay wrapped up six days on the witness stand Tuesday by saying that the company's collapse was "the most painful thing in my life." "I loved Enron very much," Lay told jurors in his federal fraud trial. "I think we built a great company. I think the most painful thing in my life was watching Enron finally have to go into bankruptcy."

His final day of testimony ended with a last, testy exchange with federal prosecutor John Hueston, who took aim at Lay's claim earlier in the trial that he takes responsibility for what happens at Enron, but not for any criminal activity.

"Sir, you have a long list of people to blame for Enron's collapse, sir, and it gets longer and longer as you testify," the prosecutor said. "And your list of people to blame and events to blame did not include yourself, did it, sir?"

Lay answered: "I did everything I could humanly do during this time. Did I make mistakes? I'm sure I did, Mr. Hueston. I had to make real-time decisions based on the information I had at the time."

Lay and former Enron Chief Executive Jeffrey Skilling are accused of repeatedly lying to investors and employees about Enron's prowess when they allegedly knew the company's success stemmed from accounting tricks that hid bad news and inflated profits.

The two men counter that no fraud occurred at Enron other than that committed by a few executives who stole money through secret side deals. They attribute Enron's descent into bankruptcy to a combination of bad publicity and lost market confidence. Skilling testified earlier.

Four character witnesses, including Houston Astros owner Drayton McLane Jr., were to follow Lay to the witness stand.

http://biz.yahoo.com/ap/060502/enron_trial.html?.v=10

HOUSTON (AP) -- Last-minute changes to quarterly earnings reports prosecutors contend were ordered by Enron Corp. Chief Executive Jeffrey Skilling to improve the company's reputation on Wall Street were accurate, and not the result of improper tapping of company reserves, a defense expert testified Wednesday.

"The whole process of financial reporting, in a company as large as Enron, to get financial statements out ... is an enormous undertaking," said Walter Rush, an accounting expert hired by Skilling. "And people are scrambling, trying to get these estimates put together.

"There are changes going on up to the very last second. It is universal. Every company goes through this."

Rush was the second consecutive accounting expert to take the stand, following University of Southern California professor Jerry Arnold, who testified for Enron founder and former CEO Kenneth Lay.

They are among the last defense witnesses, as lawyers for the two top chiefs at Enron expect to conclude their case early next week, the 15th week of their federal fraud trial.

Mark Koenig, former head of investor relations at Enron, testified early in the trial that he believed top Enron executives were so bent on meeting or beating earnings expectations to keep analysts bullish on the company's stock that they made or knew of overnight changes to estimates. Paula Rieker, Koenig's former top lieutenant, said Koenig told her Skilling ordered abrupt last-minute changes to two quarterly earnings reports to please analysts and investors.

"They could have just had a bad number," Rush said, referring to Koenig's and Rieker's testimony about a late-night change in a fourth-quarter 1999 report that boosted earnings per share from 30 cents to 31 cents.

Arthur Andersen, Enron's outside accounting firm, already had the 31-cent number days earlier, Rush said.

"They could have been a couple steps behind the way the process was evolving," he said of Koenig and Rieker.

In addition, Rush said the intention to "beat the street," a phrase attributed to Skilling, was typical in business.

"Companies set goals and forecasts for themselves all the time," Rush said.

http://biz.yahoo.com/ap/060503/enron_trial.html?.v=8

HOUSTON (AP) -- The marathon fraud and conspiracy trial of Enron Corp. founder Kenneth Lay and former Chief Executive Jeffrey Skilling is nearing an end, with the judge anxious to put it in the jury's hands.

Lawyers on both sides clearly got U.S. District Judge Sim Lake's message that the remaining defense witnesses and whoever the government calls on rebuttal had better not settle into the witness chair for a long haul.

"I am confident we will conclude next Thursday," the judge told the eight-woman, four-man panel last week, having already told prosecutors and defense teams that more than two days of lengthy closing arguments will begin May 15.

So far, 27 witnesses have testified for the defense -- including Lay and Skilling -- and five more are on deck. Twenty-two witnesses testified for the government before prosecutors rested their case March 28.

Prosecutors expect to call up to 10 rebuttal witnesses, who they have yet to identify in court, and finish by Lake's deadline.

Lawyers who have closely followed the case differ over how long the rebuttal case should be.

"The most powerful rebuttal case the government could put on is, 'Your honor, we have no witnesses to put on, we're ready for closing arguments,'" said Jacob Frenkel, a former federal prosecutor. "That sends a powerful message in terms of the government's confidence in its case -- the meaning is, 'We don't need to say anything else.'"

Michael Wynne, another former federal prosecutor in Houston, said the government's case was strong, but a few short rebuttal witnesses could buff it up just a bit more.

"Rebuttal is an opportunity to sort of tie up loose ends. If you've got those witnesses and you can get them on and done quickly, I'd err on the side of doing it," he said.
http://biz.yahoo.com/ap/060507/enron_trial.html?.v=2

HOUSTON (AP) -- Testimony ended Monday in the federal fraud and conspiracy trial of Enron Corp. founder Kenneth Lay and former Chief Executive Jeffrey Skilling after attorneys on both sides cut short their witness lineups.

But a dozen hours of closing arguments in the premier criminal case to emerge from one of the biggest corporate scandals in U.S. history remain scheduled to start May 15. Jurors will get the rest of this week off while attorneys hone their final comments to the panel.

The defense teams expected to call five witnesses, but ditched two experts and rested their case Monday morning. The government followed up with three rebuttal witnesses -- also cut from last week's estimate of up to 10 -- ending testimony at least a day earlier than expected.

Deliberations are to begin May 17.

Both defendants testified as part of a 29-witness defense lineup. The government called 22 witnesses in its main case, which rested March 28.

Prosecutors questioned rebuttal witnesses Monday to reinforce their contention that Lay and Skilling committed crimes at the energy company before it careened into bankruptcy proceedings in December 2001.

Oil and gas executive Mike Muckleroy told jurors he saw Lay lie under pressure.

"Under certain business exigencies, I have known Mr. Lay not to tell the truth," said Muckleroy, who worked for Lay before and after Enron was founded in 1985.

Muckleroy was referring to financial problems created by top oil traders in the so-called Enron oil scandal in 1987. But he couldn't provide that context to jurors because U.S. District Judge Sim Lake prohibited prosecutors from addressing the issue in the trial. Lay was never charged with any wrongdoing in the scandal.

However, Muckleroy, whose actions in 1987 helped Enron avert a crisis, told jurors Monday he was fired in 1992 or 1993 because he wasn't a "team player."

"I'd been very unhappy with the direction that Mr. Lay had set for the company and some of the people he had hired, including the other defendant, Mr. Skilling," Muckleroy said.

The stars among the defense witnesses were clearly Lay and Skilling. As expected, both adhered to their stance that no fraud occurred at Enron, they did nothing wrong, and a lethal combination of bad press and a skittish post-Sept. 11 market siphoned market confidence from the company.

The government contends Lay and Skilling repeatedly lied about Enron's strength when they knew accounting tricks were being used.

The prosecution lacked hard evidence pointing to the defendants' guilt. The defense also lacked tangible evidence, relying heavily on the credibility of Lay and Skilling.

http://biz.yahoo.com/ap/060508/enron_trial.html?.v=18

HOUSTON (AP) -- Enron founder Kenneth Lay won't settle in for a long wait when 12 jurors begin deliberating in the conspiracy and fraud case against him and former Chief Executive Jeffrey Skilling.He'll be back on trial, without a jury, on charges in a separate case stemming from his personal banking.

If convicted, those charges alone could translate into a life sentence for the 64-year-old Lay. The counts, which include one for bank fraud and three for false statements, each carry a maximum sentence of 30 years.

In the case, expected to last two to three days, prosecutors allege Lay obtained $75 million in loans from three banks and then reneged on an agreement with the lenders that he wouldn't use the money to carry or buy margin stock. The indictment does not specify what stock was carried or bought on margin.

The banking case was originally part of the conspiracy indictment, but U.S. District Judge Sim Lake ruled in October 2004 that it would be tried separately.

The case's Enron connection is that the $75 million in loans were collateralized by Lay's company stock. Those lenders issued margin calls as Enron's share price fell throughout 2001, which he said prompted him to tap the company for cash and repay the energy giant with Enron stock.

Deliberations in the conspiracy case are expected to begin Wednesday after jurors hear a dozen hours of closing arguments beginning Monday. Lay's legal team tried last week to persuade Lake to hold off on starting the bank fraud case until May 22, citing the hardship of having to prepare without lead Lay lawyer Michael Ramsey. Ramsey is helping to make the closing argument for the defense in the conspiracy trial.

The 66-year-old Ramsey has been sidelined from the trial since early April, recovering from stents inserted in two arteries to relieve blockage.

But Lake was unsympathetic because the banking case was no surprise, having been pending against Lay since he was indicted in July 2004. The judge said that trial will begin Thursday.

"These are not complicated charges," Lake told attorneys.

http://biz.yahoo.com/ap/060511/lay_bank_fraud.html?.v=4

HOUSTON (AP) -- A federal judge told jurors Monday to weigh with "great care" the testimony of witnesses who have pleaded guilty as part of a deal with prosecutors in the fraud and conspiracy trial of two top Enron Corp. executives.

U.S. District Judge Sim Lake stressed that those plea agreements are "lawful and proper," however, as he read instructions to the eight women and four men who later this week will begin deliberating the fate of Enron founder Kenneth Lay and former chief executive Jeffrey Skilling. Lay and Skilling are charged with fraud and conspiracy in the energy giant's spectacular collapse.

"You as jurors are the judges of the facts," Lake said, urging the panel to decide the case solely on the evidence and "without prejudice or sympathy."

A key element of Lay and Skilling's defense is that prosecutors pressured Enron subordinates into admitting crimes they never committed.

Jurors were expected to hear the government's closing argument against Lay and Skilling later Monday. Each side has six hours to make its argument, and jury deliberations are expected to begin Wednesday.

The case lasted more than 14 weeks and featured 54 government and defense witnesses, including Lay and Skilling. Each side also presented mountains of documents and hours of video and audiotapes that will be available for jurors to sift through during deliberations.

While the jury deliberates the case against Lay and Skilling, Lake will conduct a separate trial related to Lay's personal banking -- specifically, that he took out $75 million in loans from three banks and reneged on an agreement not to use the money to carry or buy margin stock.

http://biz.yahoo.com/ap/060515/enron_trial.html?.v=8

HOUSTON (AP) -- The government bore down on Enron Corp. as it would the Mafia, intimidating top lieutenants into pointing fingers at their bosses because someone had to pay for crimes that preceded the company's stunning collapse, the lawyer for former Chief Executive Jeffrey Skilling said Tuesday.

"This was all manufactured after the fact," Daniel Petrocelli declared in an impassioned plea for jurors to acquit his client of all 28 fraud and conspiracy counts against him. "Because it's Enron. After all, somebody has to pay. It's Enron."

In a searing closing argument, Petrocelli sought to drive home the defense theme that neither Skilling nor Enron founder Kenneth Lay perpetuated an overarching fraud at the company because none existed.

But prosecutors, unable to dig up tangible proof, found mouthpieces in a string of ex-Enron executives "robbed of their free will," who pleaded guilty to crimes they didn't commit, Petrocelli said. He said fear of lengthy prison terms and expensive legal battles drove those witnesses to say whatever the government wanted them to in testimony against Lay and Skilling.

"That's how they take down Mob kingpins," Petrocelli said.

Skilling told reporters outside the courthouse he was "staggered" by the government's power to rack up cooperating witnesses, using the specter of prosecution. But when asked if he was confident of acquittal, he said, "I'm very confident. I'm innocent."

Lay lawyer Bruce Collins, the first of several attorneys on his legal team to address jurors, said his client has accepted "full responsibility" for Enron's failure -- but Lay committed no crimes.

Collins said another judge presiding over numerous Enron-related lawsuits in another courtroom will decide whether Lay is liable for losses suffered by investors after the company sought bankruptcy protection in December 2001.

The current jury's job is to decide if he is guilty of the crimes alleged by the government.
http://biz.yahoo.com/ap/060516/enron_trial.html?.v=9

HOUSTON (AP) -- Yet another clash of Enron trial titans is on the horizon, but it may be less explosive than the first.While jurors deliberate the outcome of the fraud and conspiracy trial of Enron Corp. founder Kenneth Lay and former Chief Executive Jeffrey Skilling, Lay is on trial again without a jury on charges stemming from his personal banking.

The 64-year-old former chairman spent six days on the witness stand during the conspiracy trial, often combative and contentious with federal prosecutor John Hueston, who secured the indictment against Lay nearly two years ago.

Lay is expected to square off with Hueston again late Monday in the ongoing bench trial before U.S. District Judge Sim Lake, who presided over the conspiracy case. The bench trial began Thursday, the conspiracy jury's first full day of deliberations, which also will continue Monday.

"I had so much fun before, I'm going to do it again," Lay said outside of court last week about his second stint in the witness chair.

The first faceoff between Lay and Hueston featured plenty of fireworks. But Lake has repeatedly told lawyers in the banking case to keep a brisk pace. With no jurors to engage and a seasoned judge who sat through a painstaking examination of Lay's personal finances in the conspiracy case, the second matchup will be shorter and likely more matter-of-fact.

"There's a high degree of fatigue at this point on the part of everybody," said Sam Buell, a former prosecutor with the Justice Department's Enron Task Force who is a visiting professor at the University of Texas School of Law. "Also, (Lake) is pushing very strongly in the direction of making this quick."

The bank trial could wrap up as early as Tuesday.

http://biz.yahoo.com/ap/060521/enron_trial.html?.v=4

May 25 (Bloomberg) -- Kenneth Lay and Jeffrey Skilling, who built Enron Corp. into the nation's seventh-largest company and then drove it into bankruptcy, were convicted of orchestrating a fraud that made the energy trader the symbol of corporate deceit in America.

Jurors in federal court in Houston deliberated six days before finding Lay, Enron's former chairman, and Skilling, its former chief executive officer, guilty today of fraud, conspiracy and other charges. The panel heard four months of testimony before reaching its verdict.

``This conviction brings to a close the government's effort to send a clear message to the corporate world that fraudulent behavior won't be tolerated,'' said David Irwin, a former state and federal prosecutor who now handles white-collar criminal defense cases in Baltimore.

Lay, 64, and Skilling, 52, face at least 25 years each in prison after being convicted of using off-the-books partnerships to manipulate Enron's finances. Skilling faces additional jail time over his conviction for using inside information to sell Enron stock. Lay was also convicted on bank fraud charges after a trial that U.S. District Judge Sim Lake held without a jury while the panel in the main case deliberated.

``Obviously I'm not real happy with this,'' Skilling said in the courtroom after the verdict. ``It is what it is.'' Skilling maintained his innocence after the verdict and his lawyer, Daniel Petrocelli, said he would appeal.

Lake said he would sentence the defendants on Sept. 11. Skilling is allowed to remain free on $5 million bond and doesn't have to be put in ``home confinement'' as prosecutors sought, Lake said.

Surrender Passport

Lay must surrender his passport. ``I'm not letting him leave this building until his passport is surrendered,'' Lake said. Lay also must post a $5 million cash bond.

Both men face spending the rest of their lives in prison if they are given maximum sentences.

``We've had a trial, and obviously it did not come out the way we hoped, Petrocelli said. ``It doesn't change our view of what happened at Enron. And it certainly doesn't change our view of Jeff Skilling's innocence.''

Enron, once the world's largest energy trading firm, had more than $68 billion in market value before its December 2001 bankruptcy filing wiped out thousands of jobs and at least $1 billion in retirement funds virtually overnight. Investors suing over the company's collapse claim accounting fraud at the Houston-based firm caused at least $25 billion in losses.

``I think investors can feel validated in that the legal system worked here,'' said Mark Ross, partner at Sichenzia Ross Friedman Ference. ``On a bigger picture, it will instill confidence back in the capital markets in America.''

Government Crackdown

In the wake of Enron's meltdown, government prosecutors cracked down on corporate crime. CEOs of WorldCom Inc., HealthSouth Corp., Adelphia Communications Corp. and Rite Aid Corp. were prosecuted for accounting fraud or looting company treasuries. All were convicted of fraud except HealthSouth founder Richard Scrushy, who now is on trial on unrelated bribery charges in Alabama.

The eight-woman, four-man jury convicted Skilling on 19 of the 28 charges against him while finding Lay guilty of all of the six counts against him. The government presented a total of 25 witnesses against the men, including a parade of former Enron executives.

Lengthy Prison Sentence

``The conspiracy charge is the main one here,'' said Robert Heim, a partner at Meyers & Heim LLP in New York. ``It's going to mean a lengthy prison sentence for Mr. Skilling. If it's in line with the other corporate fraud charges, he is looking at 25, 30 years, if not more. Under the sentencing guidelines, he could have been eligible for over 200 years in prison. After defense lawyers put in motions about health and other extenuating circumstance, he could very well be in prison for the rest of his life.''

Former Chief Financial Officer Andrew Fastow told jurors Skilling helped orchestrate a scheme to use off-the-books partnerships to hide billions in losses and debts racked up by what was once the seventh-largest U.S. corporation. Other executives said Lay took over the effort to deceive investors about Enron's finances after Skilling stepped down as CEO.

http://quote.bloomberg.com/apps/news?pid=10000103&sid=az4tV7n0wAx8&refer=news_index

Wednesday May 31, 2:38 pm ET
By Kristen Hays, AP Business Writer
1 of 2 Former Enron Broadband Executives Convicted in Retrial; Other Acquitted

HOUSTON (AP) -- Jurors on Wednesday convicted one of the former executives from Enron Corp.'s defunct broadband unit to be retried after his original case ended in a hung jury last year. Former broadband unit finance chief Kevin Howard was convicted while former in-house accountant Michael Krautz was acquitted of five counts of fraud, conspiracy and falsifying records after a monthlong trial.
http://biz.yahoo.com/ap/060531/enron_broadband.html?.v=10

NEW YORK (AP) -- Former Enron Corp. President Jeffrey Skilling says he contemplated suicide after his company crumbled and authorities began to ratchet up legal pressure on him.

"I've come to the conclusion that life is better than the alternative, which was not a conclusion that was real clear to me for a period of time," Skilling told The Wall Street Journal in an interview published in Saturday editions.

Skilling, 52, said he sought psychiatric help but was only able to emerge from a deep, two-year malaise after his 2004 indictment in which he was charged with conspiracy, fraud and insider trading, among other counts.

"The indictment, in a lot of ways, that was the turning point," Skilling told the newspaper. "That's when I started climbing back."

During those couple of years of depression, Skilling said he turned into a recluse, retreating to his mansion in an upscale part of Houston, where he lingered in bed and obsessively followed coverage of the scandal.

In the interview, Skilling insisted he was innocent despite a jury convicting him on 19 counts.

Skilling and Enron founder Kenneth Lay were convicted in May of lying to investors and employees about Enron's health before the company collapsed into bankruptcy protection in December 2001.

The collapse obliterated more than $60 billion in market value, almost $2.1 billion in pension plans and, initially, 5,600 jobs.

Court observers said the two disgraced corporate chiefs face prison sentences ranging from less than a decade to more than 30 years. Both also are likely to face the possibility of millions of dollars in fines.

Skilling and Lay have had their sentencing dates pushed back six weeks to Oct. 23. U.S. District Judge Sim Lake on Friday granted a request from defense attorneys for more time to prepare their arguments before sentencing.

Skilling says that he stupidly helped convict himself by telling federal authorities -- whom he described as the "Gestapo" -- too much.

"I was the best source of information that the government had," he said. "Absolutely."

http://biz.yahoo.com/ap/060617/enron_skilling.html?.v=5

HOUSTON (AP) -- Former President George Bush and his wife, Barbara, were among the mourners Wednesday at a memorial service of Enron Corp. founder Kenneth Lay.

Lay's memorial service drew some of the high-profile guests who were close to him before he was convicted in May of fraud and conspiracy for lying to investors and the public about the energy company's financial health before it collapsed in 2001.

Among the other mourners at the downtown Houston church Lay attended for 12 years were former Secretary of State James A. Baker III, Houston Astros owner Drayton McLane Jr., heart surgeon Denton Cooley and Lay's criminal lawyer, Mike Ramsey.

His co-defendant, former Enron chief executive Jeffrey Skilling, did not attend the service Wednesday. Skilling did attend a private service Sunday in Aspen, Colo., where Lay died July 5, with about 200 friends and family members.

Skilling's wife, former Enron corporate secretary Rebecca Carter, did attend Wednesday's memorial service.

Former Houston Mayor Bob Lanier, 80, collapsed at the memorial service shortly after arriving and was taken by ambulance.

Lay, 64, died while vacationing in Aspen with his wife, Linda. His body was cremated there.

Lay and Skilling, 52, were convicted in May of fraud and conspiracy for repeatedly lying to investors and employees about the company's financial health before Enron careened into bankruptcy proceedings in December 2001.

The two men were the public faces of Enron throughout its days as a premier trading company that enjoyed Wall Street's adoration and grew into the nation's seventh-largest company. They also fell hard, vilified as masterminds of a massive fraud that fueled a flameout that left thousands jobless and wiped out billions from investors.

They insisted at their trial that they committed no crimes and no fraud occurred at Enron except for a few executives who skimmed money behind their backs.

A jury convicted Lay of six counts of fraud and conspiracy and Skilling of 19 of 28 counts of fraud, conspiracy, insider trading and lying to auditors. Lay also was convicted of bank fraud and lying to banks in a separate, non-jury trial related to his personal banking.

http://biz.yahoo.com/ap/060712/lay_memorial_service.html?.v=3

HOUSTON (AP) -- Federal prosecutors want former Enron Corp. CEO Jeffrey Skilling to turn over nearly $183 million for helping perpetuate one of the biggest business frauds in U.S. history -- his alleged share and that of his late co-defendant, company founder Kenneth Lay.

The government had originally split that amount between the two former corporate titans, who were convicted in May of charges including fraud and conspiracy at the close of a four-month trial.

In late June, prosecutors asked U.S. District Judge Sim Lake to issue a money judgment ordering Skilling to pay $139.3 million, and Lay $43.5 million in proceeds the government contends they pocketed by conspiring to present an optimistic picture of Enron's health when they knew it was an illusion propped up by cooked books.

However, Lay died July 5 of heart disease. His lawyers have since filed court papers noting their intention to ask Lake to wipe Lay's record clean because he hadn't yet appealed his conviction or been sentenced. That would thwart the government's bid for a money judgment against him, but his assets could remain targets in civil litigation.

In a filing Friday, prosecutors responded to Skilling's opposition to the pricey proposed judgment by asking Lake to require the ex-CEO to pony up the entire $182.8 million.

Prosecutors said that with his conspiracy conviction, Skilling is "liable for all the proceeds attributable to all co-conspirators, indicted or unindicted, including Lay," because they participated in the same scheme.

http://biz.yahoo.com/ap/060812/enron_skilling.html?.v=3

HOUSTON (AP) -- Former Enron CEO Jeffrey Skilling, the most vilified figure from the financial scandal of the decade, was sentenced Monday to 24 years, four months in the harshest sentence yet from the energy trading giant's collapse.
http://biz.yahoo.com/ap/061023/enron_skilling.html?.v=28

http://mauberly.blogspot.com/

HOUSTON (AP) -- Former Enron Corp. financial whiz Andrew Fastow will serve six years in a federal prison in Louisiana for plundering the company while concealing its feeble financial condition from investors.

According to a posting Friday on the Web site for the U.S. Bureau of Prisons, which decides where inmates are sent, Fastow was assigned to the Federal Detention Center in Oakdale, La., about 200 miles northeast of Houston.

Fastow, 44, had asked that he be able to serve his sentence at a federal prison in Bastrop, Texas, about 30 miles southeast of Austin. U.S. District Judge Kenneth Hoyt made that recommendation when he sentenced Fastow in September.

The Oakdale detention center is part of a prison complex that includes a low security correctional institution and a satellite prison camp that houses minimum security male inmates. The entire prison complex has about 2,400 inmates.

Fastow has already reported to the prison.

Fastow, the ex-chief financial officer who cooperated with prosecutors in other cases related to Enron's 2001 implosion, had agreed to serve a maximum 10-year term when he pleaded guilty in 2004.

But Hoyt instead sentenced him to six years, saying Fastow had already paid a heavy price for his actions.

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HOUSTON (AP) -- Two Enron executives received sharply reduced sentences Friday after cooperating with prosecutors to help convict the architects of the biggest scandal in U.S. corporate history.
Michael Kopper, once the top lieutenant to former Enron Chief Financial Officer Andrew Fastow, was sentenced to three years and one month in prison. An hour later, Mark Koenig, the company's former investor relations chief, received an 18-month sentence.

The men were also fined $50,000 that will be sent to a fund for victims of Enron's collapse, and each will be on probation for two years after they are released from prison.

Both men will remain free on bond until they have to report to prison, a process that usually takes four to six weeks.

Prosecutors had asked U.S. District Judge Ewing Werlein Jr. to cut the potential sentences because of their help. Kopper, 41, faced up to 15 years in prison after pleading guilty in 2002 to money laundering and conspiracy to commit wire fraud.

Koenig, 51, who helped present the company's false financial reports to investors, pleaded guilty in August 2004 to one count of aiding and abetting securities fraud, which carries up to 10 years in prison.

"I want to apologize to all the people who have been harmed by the Enron affair," Kopper said before he was sentenced. "Families and employees suffered not just monetary failure but reputational failure. I am very deeply sorry for having participated in causing that."

Koenig also apologized.

"I didn't make the right choices in my last year at Enron. I am profoundly sorry for that," said Koenig, whose wife and sons attended the sentencing.

Kopper's sentencing hearing was packed with family and friends, including his parents and his domestic partner.
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WASECA, Minn. (AP) -- Former Enron CEO Jeffrey Skilling reported to federal prison on Wednesday to begin serving his 24-year sentence for fraud and other crimes in the collapse of the former energy giant.

Skilling arrived at the low-security prison a little after 1 p.m. EST in a small silver SUV. The vehicle pulled up to the front gate, and at least four people got out. Skilling hugged a woman who arrived with him, and the entourage walked into the prison. A few minutes later, everyone except Skilling emerged and the SUV drove away.

The identity of the woman Skilling hugged was not known.

Even if Skilling earns a few years off for good behavior and for participation in an alcohol treatment program at the Federal Correctional Institution in Waseca, Skilling, 53, will be an old man at the end of his 24-year, four-month prison term. That's more than twice as long as the sentence of any other Enron executive.

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Feb. 16 (Bloomberg) -- Three former Merrill Lynch & Co. bankers will be retried for their roles in an Enron Corp. fraud involving the sham sale of Nigerian power barges.

``We would prefer to try the case sooner rather than later,'' Arnold Spencer, the government's lead prosecutor, told U.S. District Judge Ewing Werlein at a hearing today in federal court in Houston.

A U.S. appeals court in New Orleans last year threw out the convictions of former Merrill bankers Daniel Bayly, Robert Furst and James A. Brown, ruling that they hadn't deprived Enron of their ``honest services'' because their actions, while possibly criminal, were in Enron's best interest. Prosecutors yesterday said they wouldn't appeal that ruling to the U.S. Supreme Court.

The reversal of the 2004 verdicts was fatal to convictions in another Enron case and could boost chances for the appeal of former Enron Chief Executive Office Jeffrey Skilling, who is serving 24 years in prison for defrauding investors. He plans to appeal his conviction on similar grounds as early as March.

The bankers and a former finance executive at Houston-based Enron were found guilty of helping Enron disguise a $7 million loan as proceeds from the fake sale to Merrill of electricity- generating barges moored off the coast of Nigeria. Bayly and Brown got 30-month prison sentences; Furst got 37 months.

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NEW ORLEANS (AP) -- A federal appeals court ruled Monday that Enron Corp. shareholders cannot proceed with a class-action lawsuit against investment banks for their alleged role in the accounting fraud that led to Enron's collapse.

The 5th U.S. Circuit Court of Appeals opinion reversed a ruling by U.S. District Judge Melinda Harmon in Houston, who had said shareholders could sue as a class.

"As we have recognized, class certification may be the backbreaking decision that places 'insurmountable pressure' on a defendant to settle, even when the defendant has a good chance of succeeding on the merits," the 5th Circuit opinion said.

The three-judge panel said it's appropriate for the court to intervene "before settlement may be coerced by an erroneous class certification decision."

Shareholders' attorneys argue that Merrill Lynch & Co., Credit Suisse Group and other investment banks that did business with Enron should be held liable for billions of dollars in damages.

William Lerach, an attorney for the policyholders, expressed disappointment in the 5th Circuit's ruling.

"We think it is unfair and wrong under the law," he said. "The basic holding of the court is that even if the banks participated knowingly in a scheme to defraud investors in Enron's collapse, you cannot have a class action against the banks."

http://biz.yahoo.com/ap/070319/states_enron.html?.v=11

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HOUSTON (AP) -- The former chief of Enron Corp.'s high-speed Internet unit, who turned government witness and testified in the trial of former Enron CEO Jeffrey Skilling and company founder Kenneth Lay, was sentenced Monday to 27 months in prison.

It's been nearly three years since Kenneth Rice, 48, pleaded guilty to securities fraud and agreed to help federal prosecutors on other cases related to the energy giant's collapse. His sentencing was postponed as he cooperated with prosecutors.

Lay and Skilling were convicted last year for their roles in the company's collapse, which wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans.

Skilling is serving a sentence of more than 24 years. Lay's convictions for conspiracy, fraud and other charges were wiped out with his July death from heart disease.

Rice had faced up to 10 years in prison and a fine of up to $1 million. The plea agreement with prosecutors also required him to forfeit $13.7 million in cash and property that included jewelry and a pair of exotic sports cars.

Rice was charged in 2003 with selling 1.2 million shares of Enron stock for more than $76 million while he knew Enron Broadband Services was failing. The more than 40 counts against him included fraud, conspiracy and other charges for participating in a scheme to tout Enron's broadband network as having capabilities it didn't possess to impress analysts and inflate the company's stock.
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HOUSTON (AP) -- Imprisoned former Enron chief executive Jeffrey Skilling asked Friday for a new trial, saying the Justice Department used incorrect legal theories and "coercive and abusive tactics" to win a conviction, including threatening witnesses.

Skilling was sentenced last October to more than 24 years in prison for his role in the collapse of Enron Corp., once the nation's seventh-largest company. He was convicted along with company founder Kenneth Lay on May 25, 2006, on 19 counts of fraud, conspiracy, insider trading and lying to auditors.

Skilling reported to a federal prison in Minnesota in December. Lay died before his sentencing date.

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HOUSTON (AP) -- Three British bankers who were set to go to trial for their roles in a fraudulent scheme with former Enron Chief Financial Officer Andrew Fastow changed their pleas to guilty Wednesday.

David Bermingham, Giles Darby and Gary Mulgrew had originally pleaded not guilty to seven counts of wire fraud for allegedly colluding with Fastow in a secret financial scam in 2000 to enrich themselves at their employers' expense. They were set to go on trial in January.

But during a court hearing before U.S. District Judge Ewing Werlein Jr., each pleaded guilty to one count of wire fraud as part of a plea agreement with federal prosecutors.

"By changing their pleas today, Gary, Giles and David have fully accepted responsibility for the significant lapse of judgment that led to the filing of these charges," Reid Figel, Mulgrew's attorney, said outside the federal courthouse, reading a joint statement issued by lawyers for the bankers.

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HOUSTON (AP) -- A federal judge has approved a plan to distribute more than $7.2 billion recovered as part of a lawsuit by Enron Corp. shareholders and investors in connection with the company's collapse.
U.S. District Judge Melinda Harmon also approved $688 million in attorneys fees, the largest ever in a securities fraud case.

About 1.5 million individuals and entities will be eligible to share in the distribution under the settlement plan. The plan was part of a $40 billion lawsuit claiming financial institutions participated in the accounting fraud that led to Enron's downfall.
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