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ENRON: appeal Skilling Houston

are you going to disclose the overarching complexxon Jeff, since you wholeheartedly agreed that abusive industrial dominance is a global spiralvirus ?

Enron's Skilling sprung? It could happen this week

Audio Slide Show: Inside the Enron Trial

The trial of two former Enron executives has taken some unexpected twists and turns.

Innovation Corrupted: How Managers Can Avoid Another Enron


Exxon & Bush liars to be caught soon

"Not The Focus Of CFTC Probe Into Oil trading". May 30, 2008: 04:18 PM EST

HOUSTON -(Dow Jones)- Exxon Mobil Corp. (XOM) Friday confirmed that it has been contacted by the U.S. Commodity Futures Trading Commission in connection with a nationwide probe into crude oil trading, but said it doesn't believe it's the target of the investigation.

"We have been contacted by the CFTC for information but it is our understanding that we are not the focus of the investigation," ExxonMobil spokesman Gantt Walton said in an email.

In unveiling a broad enforcement initiative on energy markets, the CFTC on Thursday disclosed that it opened a wide-ranging probe into oil trading in December 2007. The agency said it's exploring "practices surrounding the purchase, transportation, storage and trading of crude oil and related derivative contracts." Walton said Exxon has been contacted about this investigation.

The CFTC is also expanding its surveillance of energy markets, expecting more disclosure on trading positions on a fast-growing electronic energy platform and information about index funds' positions. The agency also is moving to require more information on the presence of funds whose investments track indexes of energy futures prices. The assets of commodity index funds have grown considerably in recent years, leading some to assert their presence has driven up energy prices.

Walton said Exxon is "aware" of the CFTC's other initiatives, and that "we will cooperate with the CFTC as we may be requested and as we have with other CFTC matters." Exxon does "not trade crude oil for speculative purposes," Walton added. -By John M. Biers, Dow Jones Newswires; 713-547-9214;

Global Growth of Greed & the Exxon-culture factor weighed in! Compare

May 30th, 2008

Posted: 04:00 PM ET

(CNN) — Federal regulators investigating possible price manipulation of crude oil are likely looking at what role collapsed energy giant Enron may have played, a former commission member told CNN Friday.

In an interview on “American Morning,” Michael Greenberger, who once headed the Commodity Futures Trading Commission’s Division of Trading & Markets, said, “Almost certainly what they’re looking at is as a result of Enron pushing for having energy futures contracts being done outside of the United States’ regulatory purview.

“There is a theory that has gained momentum among economists and market observers that the price of crude oil is being driven up not by supply/demand principles in whole, but by speculators who are using what are called dark markets, markets that can’t be watched by the public or regulators, to manipulate the price of crude oil and, therefore, gasoline and heating oil in an upward direction,” he said. TOO BIG TO SEE

International Business Briefs: Green taxi float, ethanol plant ...oil recruitment slump, Enron, Shell probe. A Canadian company that is pioneering a "green" ...

Silobreaker: Ex-official: Enron likely a focus in oil probe

NY Judge Orders Second Examiner To Probe Enron Transactions | Oil ...

New York bankruptcy court judge Arthur Gonzalez this week ordered the appointment of a second independent examiner in the Enron case.

The examiner will be charged with investigating the failed energy giant's special-purpose entities, off-balance-sheet partnerships and accounting practices, and also its dealings with the investment banks, law firms, and accounting firm that advised it.

Senate Dems probe Enron's role in Calif. energy crisis - MarketWatch

The Globe and Mail: U.S. watchdog to probe oil trading U.S. regulators probe oil markets - Comments-

bush-enron-anim.gif (14428 bytes) explanatory journalism

The Cold Phase

Justice Lake's Rogue Ruling on Fastow's Rough Notes. coming up: US justice kaltgestellt


fair use


Skilling's appeal of september 14, 2007 questioning court proceedings and the way in which Sim lake presided over the case. O'Melveny & Myers, who mounted one of the most expensive individual criminal defenses ever on Skilling's behalf, argued that 14 of the convictions are 'indefensible' in the light of the court precedent in the related case.

Related links:

< What's going on in the Skilling appeal?


Lay, Enron, Cheney, Halliburton and patron Bush:


Enron Corp, Shell & Bechtel:

Compare with the Esso four story.......................... La Condition Americaine, Bechtel's patron Esso & Shell tanglement with the Dutch government -Gasunie, Gasgate / DEAL '63, the Dutch Disease, a global virus.

Shell we leave it to the Experts?

Houston's Clear Thinkers

Longtime Houston attorney Tom Kirkendall's observations on developments in law, business, medicine, culture, sports, and other matters of general interest to the Houston business, professional, and academic communities.

< The Spitzer Lesson | Main | The stench of prosecutorial abuse >

March 12, 2008

More rumblings in the Skilling appeal

Skilling 031208 This post from last week noted some interesting docket entries in former Enron CEO Jeff Skilling's Fifth Circuit appeal of his conviction on criminal charges in connection with the demise of Enron.

Now, it looks as if the mainstream media is picking up on the issue. The Houston Chronicle's Kristen Hays, who is one of the only mainstream media reporters continuing to follow-up on the Enron-related criminal cases, reports here on a couple of the pleadings referenced in the docket entries from last week that apparently were not placed under seal when filed. Although a copy of the pleadings that Hays was able to review are not included in the article, it appears clear that the government is scrambling in an attempt to contain public disclosure of exculpatory evidence that is contained in the interview notes of former Enron CFO and chief Skilling accuser, Andrew Fastow:

[Skilling attorney Daniel] Petrocelli and his team have since examined the notes. They want to file an additional brief arguing that the notes contain much information that is favorable to Skilling, and prosecutors and Lake wrongly denied him access to the notes before the trial.

He said the notes reveal evidence that is "a sledgehammer that destroys Fastow's testimony" against Skilling, "infecting virtually every facet" of the government's case.

Petrocelli also asked the 5th Circuit to accept his new brief as a public document, which he said quotes liberally from the Fastow notes.

The controversy regarding what Fastow told prosecutors and FBI agents who were investigating Enron became a big issue in the Lay-Skilling prosecution when the prosecution took the unusual step of providing the Lay-Skilling defense team a "composite summary" of the Form 302 ("302's") interview reports that federal agents prepared in connection with their interviews of Fastow. Those composites claimed that the Fastow interviews provided no exculpatory information for the Lay-Skilling defense, even though Fastow's later testimony at trial indicated all sorts of inconsistencies.

However, I have spoken with several former federal prosecutors about this issue and all believe that the government has a big problem in the Skilling case on the way in which the information from the Fastow interviews was provided to the Lay-Skilling defense team. None of these former prosecutors ever prepared a composite 302 in one of their cases or ever used such a composite in one of their cases. The process of taking all the Fastow interview notes or draft 302's and creating a composite is offensive in that it allowed the prosecution to mask inconsistencies and changing stories that Fastow told investigators as he negotiated a better plea deal from the prosecutors.

Similarly, the Enron Task Force's apparent destruction of all drafts of the individual 302s of the Fastow interviews in connection with preparing the final composite is equally troubling. Traditionally, federal agents maintain their rough notes and destroy draft 302s. However, in regard to the Fastow interviews, my sense is that the draft 302s were not drafts in the traditional sense. They were probably finished 302's that were deemed “drafts” when the Enron Task Force decided to prepare a composite summary of the 302's.

I will try and obtain copies of the pleadings referenced in Hays' article and add them later to this post. Stay tuned.

Update: A copy of the respective prosecution and Skilling pleadings that are the basis of the Hays/Chronicle story are here and here.

Update2: Larry Ribstein comments on the implications that criminalizing the actions of Skilling and Lay has on their prosecutors in light of their actions.

Posted by Tom at March 12, 2008 7:55 AM


Thank you for your continuing attention to this. It seems to me that 302s should always be viewed as prosecution spin documents. I have seen 302s in which entire segments of the interviews, usually involving exculpatory information, have been excluded from the 302s. I suspect that if defendants could get their hands on the raw notes, they would find that prosecutors routinely shape the testimony of witnesses, particularly in situations where they hold considerable power over the witness (as in the Fastow situation).

To add to the fiasco, a "composite summary" compiled from multiple 302s is surely a farce -- this simply amounts to more spinning of the spin documents (I guess you could call a composite 302 a "meta-spin" document). Let's hope that this practice gets some public exposure and discussion as a result of this current controversy.

Posted by: Evan [TypeKey Profile Page] at March 12, 2008 10:58 AM

Isn't it all so delicious? I absolutely *love* Petrocelli's 'sledgehammer' comment.

Fantastic article, as usual, Tom.

Posted by: Right Thinking Girl [TypeKey Profile Page] at March 12, 2008 9:36 PM

Skilling is just a nice guy who was in the wrong place at the wrong time with the wrong people doing the wrong things with the wrong legality! It could have happened to any billionaire!

Posted by: Steve Ballmer [TypeKey Profile Page] at March 14, 2008 10:36 AM

© 2003 - 2008. Tom Kirkendall. All Rights Reserved.

Enron: ultimate agent of the American empire by Larry Chin

Friday, February 15, 2008

Federal appeals court upholds decision to vacate ex-Enron CFO conviction
Jaime Jansen at 8:03 AM ET

Photo source or description
[JURIST] A three-judge panel of the US Court of Appeals for the Fifth Circuit on Thursday upheld [opinion, PDF] an earlier ruling [JURIST report] by a federal district court to vacate the conviction of former Enron [JURIST news archive] CFO Kevin Howard [Houston Chronicle profile]. District Judge Vanessa Gilmore had vacated Howard's conviction in light of an August 2006 opinion [JURIST report] by the Fifth Circuit that overturned separate Enron convictions "on the legal ground that the government's theory of fraud relating to the deprivation of honest services ... is flawed." Prosecutors in the Howard case relied on the "honest services" theory in four of the five counts on which Howard was convicted [JURIST report], despite the fact that Howard did not take money or property in negotiating a deal to sell future Enron profits in an alleged mark-to-market accounting fraud scandal, a required element of an "honest services" crime. The Fifth Circuit agreed with Gilmore, arguing that the honest services instruction "tainted" the falsifying records charge.

In 2006, former Enron CEO
Jeffrey Skilling [Houston Chronicle profile] also requested [JURIST report] that the judge presiding over his trial dismiss his conviction [JURIST report] on 19 counts of insider trading, securities fraud, and conspiracy in light of the Fifth Circuit decision. He appealed his conviction [JURIST report] to the Fifth Circuit last fall. AP has more. The Houston Chronicle has local coverage.

November 02, 2007

Enron lives!

It may sound like some late Halloween joke: the zombie husk of a long-dead company coming back to once again battle in the courts. But it's true.

Enron, of course, wasn't really dead, it merely became a liquidating trust as part of its bankruptcy. Now known as Enron Creditors Recovery Corp, it's been quietly collecting money to pay creditors.

All told, its gathered about $13 billion, and while that won't make the creditors whole, it will mean they collect about 36 cents on the dollar.

They may collect even more if Enron succeeds in efforts to garner another $3.5 billion from Citigroup, Enron's biggest banker. Citigroup, though, has other ideas. It claims it's owed about $5 billion from Enron.

Enron is basing a lot of its arguments on the findings including in the bankruptcy examiner's report.

Both sides are set to go to trial in New York in April in what's likely to be Enron's final courtroom showdown. I'll have more on the pending battle in Sunday's column.

Few bankrupt estates would have the resources to battle Citi, but Enron does. The company that once used such power to exert influence over banks is now using it on behalf of its victims.

Technorati tags: , , ,

Posted by Loren at 10:55 AM | Comments (3

Skilling again asks to be freed By JUAN A. LOZANO

from BusinessWeek

Former Enron chief executive Jeffrey Skilling -- serving a 24 year prison sentence for his role in the once-mighty energy company's collapse -- has again asked to be free on bond while his case is appealed.

The request was included in a 161-page court filing Skilling's attorney, Daniel Petrocelli, submitted to the 5th U.S. Circuit Court of Appeals on Friday as part of his client's appeal of his May 2006 conviction.

"Mr. Skilling is not a flight risk or danger to the community. He is inalterably committed to vindicating himself," Petrocelli wrote.

Just before he reported to a Minnesota federal prison in December 2006, Skilling asked to remain free on bond pending his appeal. The request was denied.

Skilling was sentenced in October 2006 to more than 24 years in prison for his role in the collapse of Enron Corp., once the nation's seventh-largest company.

He became the highest-ranking executive to be punished for the accounting tricks and shady business deals that led to the loss of thousands of jobs, more than $60 billion in Enron stock value and more than $2 billion in employee pension plans after the company imploded in 2001.

A spokesman for the Justice Department did not immediately return a telephone call late Friday seeking comment on Skilling's request.

The filing is the second written part of Skilling's appeal of his conviction on 19 counts of fraud, conspiracy, insider trading and lying to auditors.

In September, Petrocelli filed the first part of Skilling's written appeal, in which he asked for a new trial, saying the Justice Department used incorrect legal theories and "coercive and abusive tactics" to win a conviction, including threatening witnesses.

He argued Skilling's conviction was the result of the government's erroneous theory of fraud and jury instructions, the trial court's decision not to move the trial out of Houston and prosecutorial misconduct.

In their response last month, federal prosecutors said Skilling had a fair trial before an impartial jury and he received "a reasonable sentence for his multiple crimes."

Prosecutors denied all of Skilling's claims.

In his filing Friday, Petrocelli reiterated many of his previous arguments, including that all of Skilling's convictions should be overturned because they rest on the theory of "honest services."

A three-judge panel of the appeals court last year threw out most of the convictions in an Enron-related case involving four ex-Merrill Lynch executives charged with helping push through Enron's sham sale of three power barges in order to boost the company's earnings.

The panel said the executives were doing what Enron wanted them to do and did not profit at its expense. As a result, the court ruled, they did not deprive Enron of "honest services."

But prosecutors in their response last month argued this prior ruling doesn't apply to Skilling.

Petrocelli in his filing Friday argued that all of the mistakes in the case prevented Skilling from receiving a fair trial.

"If Jeffrey Skilling is to be held accountable for what happened at Enron, if he is to become the poster child for corporate fraud in this country, then give him a fair trail," Petrocelli wrote.

Skilling's co-defendant, Enron founder Kenneth Lay, died from heart disease in July 2006. Lay's convictions on 10 counts of fraud, conspiracy and lying to banks in two separate cases were wiped out with his death.

Unlike Enron CEOs, fraud not going away

Market experts see hedge funds, investing abroad as trouble spots

Skilling with his attorney

Former Enron CEO Jeff Skilling makes comments to the press with his attorney Daniel Petrocelli after the end of his fraud and conspiracy trial in Houston on May 25. After 16 weeks of testimony and six days of deliberation, the jury found Skilling guilty on 19 of 28 counts. Lay was found guilty on all counts. (Getty Images/Dave Einsel)

Two decades ago, when Enron Corp. was a fledgling natural gas pipeline, Barry Minkow was busy bilking Wall Street and investors out of hundreds of millions of dollars with his ZZZZ Best Co., a sham of a carpet-cleaning company that never made a profit.

Minkow eventually reformed himself as a minister and corporate-fraud investigator, but if he were still a financial crook, "I'd run a carpet-cleaning hedge fund," he offers. "Or you go offshore, baby. It's the latest twist in investment fraud. You get American money without American regulation."

The convictions yesterday of Enron's fallen chief executive officers, Kenneth L. Lay and Jeffrey K. Skilling, were widely described as providing closure to an era of accounting scandals that brought down several companies and executives in recent years. But corporate malfeasance has proved cyclical, often erupting when the stock market is riding high and euphoria trumps vigilance.

Fraud has come in waves, from widespread stock fraud suspected before the 1929 market crash that led to greater regulation of securities, to the insider trading scams of the 1980s, to the savings and loan failures that lasted into the 1990s, to executives and analysts exaggerating the fortunes of dot-com companies later that decade.

Though the next scandal is impossible to foresee, market experts see a number of potential trouble spots, including the hedge-fund world that is lightly regulated but increasingly popular and accessible to everyday investors. Also, with expanding globalization, many investors are looking for the next hot investment overseas where accounting standards vary and U.S. regulators often can't reach.

"This is the end of a chapter, though certainly not the closing of the book on fraud," said John J. Carney, a former federal prosecutor and lawyer specializing in complex financial cases. "Not only will there be new kinds of investments that people manipulate, but the kid in high school today who thinks he'll be immune from this because he's smarter and better will one day be CEO."

Underscoring the endurance of fraud, the Association of Certified Fraud Examiners recently found that U.S. losses from fraud, including corruption, fraudulent statements and asset misappropriation, rose to an estimated $638 billion last year, up from about $400 billion a decade ago.

One of the biggest corporate scandals of late happened at a Stamford, Conn., hedge fund firm, the Bayou Group. According to the Securities and Exchange Commission, fund advisers duped investors and misappropriated millions of dollars. Earlier this month, the agency barred two fund managers from the securities business. Only a portion of the more than $450 million raised from investors has been recovered.

Most hedge fund advisers are now required to register with the SEC, making them subject to periodic audits, although this month regulators told Congress that further regulation might not be needed. Hedge funds, investment pools designed for wealthy investors and institutions, have grown to oversee an estimated $1 trillion. The funds' trading strategies and holdings are often secret.

"That will always be the most dangerous area of the marketplace - those drifting in the unregulated areas that are nonetheless able to raise immense levels of capital," said Christopher Bebel, a former SEC attorney and federal prosecutor.

State and federal regulators also have warned investors about overseas investment swindles involving precious metals, currency speculation and other business opportunities.

Meanwhile, many investors are turning to international investments as a way to diversify portfolios. Most invest through mutual funds that have specialists who scrutinize those markets, though roughly one-fifth of individual investors own stock in foreign companies, according to a study by industry trade groups.

Shortly after Enron imploded, Congress implemented the Sarbanes-Oxley Act, the most sweeping corporate accountability legislation since the 1930s when the Great Depression followed the market's plunge. The law created a new accounting oversight board and required that chief executives and chief financial officers certify a company's financial results.

Enron was the "canary in the mineshaft," said Sen. Paul S. Sarbanes, a Maryland Democrat and co-author of the bill. Revelations of accounting fraud and looting of corporate funds followed at companies such as WorldCom Inc. and Tyco International Ltd. Those executives, like Lay and Skilling, have been convicted on criminal charges.

Jacob Zamansky, a securities lawyer who represents investors, said the criminal cases have sent a strong message after some accounting frauds were punished only with civil fines. Arthur Andersen LLP, the accounting firm for Enron, had previously paid to settle civil - but not criminal - charges and shareholder lawsuits over its auditing at Waste Management Inc. and Sunbeam Corp. Andersen eventually collapsed and was charged criminally in the Enron case.

"You had a culture of corporate executives trying to manage earnings to meet Wall Street expectations. They were very aggressive and fudged the books, and everyone was driven to keeping that stock price high," Zamansky said. "Hopefully, these convictions will break that culture."

The effort by prosecutors to go after top executives also sends a message, said Jill Fisch, director of the Center for Corporate, Securities and Financial Law at Fordham Law School in New York.

"Instead of picking out a couple of low-level scapegoats, the government proceeded all the way to the top and was able to pin responsibility on them," she said after yesterday's verdict. "I think the American public has been waiting for that kind of statement."

Some legal observers said the spate of high-profile prosecutions could have unintended consequences for corporate governance.

Richard A. Booth, a professor of corporate finance and securities law at the University of Maryland School of Law in Baltimore, said the prospect of being criminally liable for a company's fraudulent downfall could be viewed by corporate directors as rationale for boosting CEO pay and by executives as reason to deter risk-taking that has defined American enterprise. "You've got to pay people to take these kinds of risks," Booth said. "But once someone is sitting there in the CEO chair, they may not take the risks that investors want them to take for fear the company goes down. If investors wanted them to be conservative with their money, they would be investing in government bonds."

SEC lawyer who headed Enron investigation named Enforcement Division chief

SEC.jpgThe Securities and Exchange Commission lawyer who headed the agency's investigation into Enron Corporation has been named to head its enforcement division. Here is the SEC's press release on the appointment.