Risk & Compliance

Guilty Plea for Ex-Enron IR Chief

Mark Koenig admits he knew that a reorganization of a retail energy unit ''was done largely to conceal'' large losses at the division.
Craig SchneiderAugust 27, 2004

Mark Koenig, the former head of investor relations at Enron Corp., pleaded guilty to one count of aiding and abetting securities fraud, according to news reports. Like former chief financial officer Andrew Fastow, Koenig has agreed to cooperate with federal prosecutors, adding to the roster of potential witnesses against other senior executives at the energy company.

As part of the plea agreement, Koenig reportedly said he and “other members of Enron management” knew that a reorganization of a retail energy unit, in which part of the unit was moved over to the company’s much bigger wholesale-trading operation, “was done largely to conceal” the large losses at the retail division.

Although the Journal reported that Koenig did not name the other Enron executives, the paper noted that former chairman Kenneth Lay, former chief executive officer Jeffrey Skilling, and former chief accounting officer Richard Causey are charged with hiding hundreds of millions of dollars in losses at Enron’s retail energy unit. All three maintain their innocence.

In a civil complaint settled with the Securities and Exchange Commission, the SEC alleged that during Koenig’s review of certain quarterly earnings releases and analyst call scripts in 2001, he learned specific information about Enron’s retail energy business and telecommunications business units, revealing that they were not the successful business units described in the releases and scripts and as described in analyst calls. The SEC further maintained that Koenig made false and misleading statements about the businesses during the analyst calls and did not correct the information that was provided to analysts and investors.

Koenig faces up to 10 years in prison, according to The Wall Street Journal. In settling the civil charges brought by the SEC, he agreed to pay $1.49 million in civil penalties and asset forfeitures.