Risk & Compliance

No Convictions for Enron Broadband Execs

The defendants were accused of inflating the value of the Enron unit by lying about the company's technological prowess or by faking a sale to boos...
Dave Cook and Stephen TaubJuly 21, 2005

Five former executives of Enron Broadband Services can take a deep breath.

Three of the individuals who worked at the unit of Enron Corp. have been acquitted by a federal jury on several charges, according to published reports. The jury deadlocked on the remaining counts, as well as on all charges against the other two executives.

U.S. District Judge Vanessa Gilmore apparently has her eyes on a retrial, reported the Houston Chronicle. Gilmore reportedly declined the requests of prosecutors and defense attorneys to determine the exact nature of the jury deadlock, and before sending the 10 men and two women home, the judge ordered them not to speak with the media.

The Enron Broadband Services case has been called “the most important Enron trial to date,” said attorney Dan Cogdell earlier this year, according to Texas Lawyer. Added Cogdell, who successfully represented Sheila Kahanek in the so-called Nigerian barge case, in which five other former Enron defendants were convicted last year, “Whatever happens here is likely to be a harbinger of what’s going to happen the Lay, Causey, Skilling trial.”

That trial, the centerpiece of the government’s criminal investigation into Enron’s collapse, is scheduled to begin in January. Former chairman Kenneth Lay, former chief executive officer Jeffrey Skilling, and former chief accounting officer Richard Causey have pleaded not guilty. Part of the case against them reportedly involves wrongdoing at Enron Broadband Services (EBS).

In the just-concluded case, the five individuals were accused of inflating the value of EBS, either by lying about the company’s technological prowess or by faking a sale to boost earnings and inflate Enron’s share price, the Chronicle explained.

Former EBS chief executive officer Joe Hirko was acquitted of insider trading and money laundering charges; former senior vice president of strategic development F. Scott Yeager was acquitted of fraud and conspiracy charges; and former senior vice president of engineering operations Rex Shelby was acquitted of insider trading charges, according to reports.

The jury deadlocked on all charges against former vice president of finance Kevin Howard and former senior director of transactional accounting Michael Krautz.

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