I know how Joe Hirko can escape his plea deal. He simply needs to claim that there was a secret verbal side deal with the government assuring him that all charges would be dismissed if the SCOTUS remanded his petition.
The government has already established that actual written agreements are trumped by secret verbal side deals. So they would have to let him go!
I must pass this on to Hirko’s attorneys ASAP.
Filed under Enron
See Dealbreaker. I’m sort of speechless, except to say ew, ew, ew, gross! and yet so spleen-bustingly funny.
Filed under Uncategorized
Okay! I finally figured out what is going on with Hirko.
There was a time when Hirko, Yeager, and Shelby each had a petition before the SCOTUS at the same time. The SCOTUS decided to hear Yeager’s argument and not hear Shelby’s. They published no opinion on Hirko’s at the time. What we know now is that the SCOTUS held Hirko’s petition pending their decision on Yeager. So now, both Yeager’s appeal and Hirko’s appeal have been remanded to the Fifth Circuit. Shelby gets a chance at the Gilmore level with the option to appeal to the Fifth Circuit.
What does this mean for Hirko’s plea?
This is where Cara Ellison’s heart breaks. The government crafted the plea to lock Hirko out of exactly this eventuality. He agreed to plea guilty, no matter what happened to Hirko’s or Yeager’s appeal at the Supreme Court, and he can not withdraw his plea.
My feeling is that if the Supreme Court decrees that one’s Constitutional rights have been violated, there must be recourse to correct the situation. Hirko pleaded guilty because he was tired of fighting; he wanted this mess to go away. Had he waited, he would have the same shot as Shelby with Gilmore and then the Fifth Circuit. But he was so eager to get it over that he took a plea. The government, possibly fearing that Yeager and Hirko both had a good shot at the Supreme Court, specifically barred him from asserting or correcting the violations to his Constitutional rights. So what happens if Hirko is eventually legal exonerated and yet is still obligated to spend sixteen months in prison? How can that possibly be legal – or ethical?
One possible avenue for Hirko is Judge Gilmore. Gilmore could effectively choose not to accept the plea by refusing to sentence within the plea range. Gilmore originally declared the sentence too light. But the SCOTUS decision could change her mind. It will be interesting to see what Hirko’s attorneys do.
What interesting legal cases the Enron defendants provide. How marvelous. How sad.
Filed under Enron
Enron was created with the merging of two companies, InterNorth and Houston Natural Gas Company. Before InterNorth was InterNorth, it was Northern Natural Gas Company. The Northern Natural Gas Company is just now selling off its headquarters at 2223 Dodge St. in Omaha, Nebraska.
Besides a little piece of history (which, let’s face it, everything possesses to some degree), the buyer will have more than four football fields’ worth of usable space, plenty of off-street parking and nearly four acres of land. The building carries a $10.95 million price tag, reduced by $1 million over the past year and less than its purchase price of 20 years ago.
The 15-story building overlooks Joslyn Art Museum’s new sculpture garden and Creighton University to the north, the Midtown Crossing development to the west and, to the east, the Missouri River and the central business district.
From some offices, you’d be able to watch the 2011 College World Series, although you’d need a good telescope to see who’s on first.
“I think it’s the greatest view in town,” said John Lund, whose Lund Co. real estate firm is listing the building. “This is a very big deal for Omaha. This is a large asset in a very significant corridor, Dodge Street. It’s a landmark building.”
It’s ready for occupancy almost immediately, Lund said.
All the asbestos in the building has been removed. There’s a fully equipped cafeteria on the sixth floor, and 200 of the parking spots are covered. The top two floors, where executives once presided over more than 2,000 high-salaried engineers and other employees, are linked by a spiral staircase. (Which reminds me of another company… in Houston… that had that same crazy-wacky idea….)
If you’re in the market for a great piece of Omaha real estate, you can do no better than this fine establishment. It is still in pristine condition, says Lund, and is being considered for the National Register of Historic Places.
If I were in Omaha, I would snap this baby up, tear up the first two floors for lofts, and then keep the upper floors for corporate use. But that’s just me. If you have $10 million and a jonesing for a piece of Omaha history, you can do whatever you wish.
Filed under Enron
Bethany McLean chimes in on the Madoff scandal and has a few more pearls of wisdom about Enron.
And as I had mentioned at the beginning of this, after the sentencing of Jeff Skilling and Ken Lay in the Enron case, I wrote a piece for Fortune saying that the rules—the rules had changed now, and everybody in the business community understood that it wasn’t OK to operate in the grey zone. And what is our financial crisis but a massive case of everybody in the system operating in the grey zone? And so, it turns out that the Enron case really was the canary in the coal mine, and the sentencing in the Enron case did absolutely nothing to deter anybody else from following—from going down the same path.
If only we had listened to Bethany McLean. If only!
Filed under Enron
This morning, Bernie Madoff was sentenced to the maximum of 150 years in prison for his role in a ponzi scheme that defrauded investors of billions. In every report I’ve read, Jeff Skilling is mentioned at least once. I have problems with the analogy for several reasons, but the most important one is that Jeff Skilling was an employee of a public corporation who functioned as part of an organization (and that’s what his trial was about: whether he provided Enron Corporation with his honest services.) Madoff, on the other hand was an individual and every decision was his alone. There is simply no-one else to blame in Madoff’s case.
What fascinates me is the punishments of both men. Here’s a crude math problem.
Bernie Madoff received 150 years for $50 billion fraud
Jeff Skilling = 25 years for $50 billion (The Task Force never said he was running a $50 billion fraud, nor was he convicted of bankrupting the company, but $50 billion is about what the company was worth when it collapsed, so I’m using that as a nice round number.)
Bernie Madoff will be paying $33,333,333 per year for his fraud. (50 billion divided by 150 years.)
Jeff Skilling will be paying $200,000,000 per year for basically being a CEO who made a few bad business decisions (50 billion divided by 25 years).
Jeff Skilling is 55 years old.
Bernie Madoff is 71.
The average life expectancy for Madoff is 13 more years.
For Jeff it is 29 more years, which means he can expect to live for four years after he is released from prison (as the sentence stands now.)
In 13 years, $433 million will be paid off of Madoff’s sentence.
In 25 years, $50 billion will be paid off in Jeff’s sentence.
Jeff’s time sentence is 16.7% of Madoff’s; however, Jeff’s financial sentence is 1154.7 % of Madoff’s.
This is just cool. The SCOTUS issued no previous order on Hirko’s appeal. The assumption was that they held it, but they never said so. This means they now looked at his case in light of the Yeager decision and have remanded it to the Fifth Circuit.
Unfortunately, his plea deal is ironclad, so he cannot get out of it. But this may help him at sentencing.
More information as it becomes available.
Filed under Enron
Today in 1999, Enron completed the final process of setting up LJM1. Fastow gave a presentation at a board meeting attended by Skilling, Dr. Lay, Rick Buy and David Duncan at Arthur Andersen. Fastow explained how he could hedge its Rhythms Net stock with a put option offered by LJM. It was, of course, later approved.
Also today, in 2002, three lovely men referred to here as the Natwest Three, were charged with one count of wire fraud.
Gary Mulgrew, Gilles Darby, and David John Birmingham were all employees of NatWest. They were accused of being involved in a series of financial transactions involving an investment in Enron. The pay off, the Task Force alleged, should have gone to NatWest and not to the men personally.
These three, like the Broadband Three, are great men who did nothing wrong. The legal case of the Natwest Three is fascinating to me because they were pursued under certain of the new terrorism laws that had been put into place after 9/11. They are three British subjects who worked for a British bank – IN BRITAIN – and ended up in a Texas courtroom.
Just another crazy incident in the Enron prosecutions, I guess.
Filed under Enron
I’m very excited that my friend, referred to here as Whatshisname or Anonymous, has agreed to answer some questions about his experience at Enron for the public record. However, because he is still in a somewhat compromised position, he can not yet reveal his name. Other identifying details, including his business unit, have been obscured. Without that information, any discussion of the allegations at Enron are useless. However, I still believe this question and answer exchange can be valuable for background information.
CARA ELLISON: Thank you for agreeing to answer some questions. I’d like to start with some background. I’ll focus on the so-called conspiracy period between 1999 and 2001. What was the general financial condition of the company in 1999?
ANONYMOUS: Enron was strong in 1999.
CE: Was there a time when the financial condition began to decline?
A: That’s a very broad question. Enron was strong and growing through part of 2000. In 2000, Enron began to encounter some financial issues.
CE: Did Enron engage in fraud in order to cover up those financial issues?
A: In 2000?
CE: Ever.
A: I believe that some fraud was committed inside the company.
CE: In mid-2000, there is an allegation that certain people dipped into the company reserves and accounted it as earnings. Is that the first fraud allegation that you became aware of? I’m not asking if you participated in that activity, if it happened. I’m only asking if you heard of that event at the time.
A: That’s a very specific question. I’d rather stay away from those kinds of specific issues.
CE: Okay, let me rephrase. What was the first rumor or allegation of fraud that you heard?
A: Fraud was never rumored at Enron. Even the most aggressive deals were never called fraud.
CE: So you were not told anything was illegal until after the company collapsed?
A: I think that’s accurate.
CE: Okay. Did you commit any kind of fraud?
A: I admitted that I did in a court of law.
CE: What about in the privacy of your own conscience? Did you commit fraud?
A: That’s a difficult question to answer. I met with the FBI and SEC numerous times. During those interviews, they read the definition of various crimes that they were accusing myself and others of committing and they asked if those definitions sounded like something I might have done. There were some things that did sound familiar to me.
CE: Did anyone you know commit fraud?
A: Yes.
CE: Are you going to name names?
A: Not today.
CE: Was there a conspiracy at Enron?
A: There was no organized conspiracy that I was aware of. People who committed crimes at Enron were acting in small groups or alone.
CE: There was no directive issued by Ken Lay or Jeff Skilling or the Board of Directors.
A: No, nothing that overt.
CE: You say you and others committed fraud. How is it that Enron came to hire so many people with latent criminal tendencies?
A: I think when you’re at that level, it’s natural to keep striving for more. That lifestyle is intoxicating. Enron treated its employees very well with bonuses and compensation, and when you get a taste of it, you want more.
CE: So the criminals at Enron are made, not born.
A: If you want to put it that way.
CE: With all due respect, there is one person I know who has been prosecuted and he cares absolutely nothing about money or status. It simply does not interest him. Why would a person like this commit a crime?
A: I can’t speak to that.
CE: Okay, moving on. Scott Yeager just won at the Supreme Court. How do you feel about that? Was it the right outcome?
A: Yes, I think it was.
CE: Do you care to extrapolate on that?
A: The Supreme Court only considers questions of procedure. It was clear to me that double jeopardy applied in his case.
CE: And you knew this was coming. Jeff Skilling has recently petitioned the Supreme Court to take up the issue of Honest Services. Do you have an opinion of whether he should win or not?
A: I have absolutely no ill will toward Jeff, or Scott Yeager for that matter, or anyone else. I hope he wins.
CE: Do you believe 24 years was a fair sentence?
A: No.
CE: Do you believe he deserves a shorter sentence?
A: Definitely.
CE: Do you believe Jeff Skilling committed crimes at Enron?
A: You’re getting a little too specific.
CE: If Jeff committed crimes at Enron, what sentence do you think he deserves?
A: That’s not for me to say.
CE: Did you respect Jeff while at Enron?
A: Very much.
CE: I want to ask about a very difficult subject. What was this whole experience like for you?
A: Horrible. The worst experience of my life.
CE: Did you have a survival strategy?
A: I thought I did when I entered the system but you realize quickly that you have to be flexible. You have to be ready for anything.
CE: Okay, I want to back up a little bit and ask you about the Nigerian Barges deal. I won’t get too specific here, but I’m curious if you witnessed any other deals that were as small as that one.
A: Enron was involved in many deals of all sizes. If you believe it was a legitimate deal, focus on the “secret side deal” aspect and not the fact that it was a small deal.
CE: Was there a secret side deal?
A: Not to my knowledge.
CE: This is a good place to segue to Andy Fastow and my next couple of questions. What was Andy Fastow like?
A: I think it’s impossible to quantify someone in a sound byte.
CE: Okay. How about Fastow’s sentence? Fair?
A: It’s not for me to say.
CE: Are you still in touch with anyone at Enron?
A: Sure.
CE: This is a question like the Nigerian Barge question. It’s specific but broad, if that makes sense. Was Broadband a fraud?
A: There were three components of Broadband. One was intermediation, which was creating a market around broadband, called EnronOnline. One was a fiber optic network. The third was content services, which was video on demand. All three of those business units had problems.
CE: But was it fraud? Did all three of those units exist?
A: Yes, they all existed to some degree.
CE: Okay, back to the culture of Enron. What was the best thing about working at Enron?
A: The freedom and resources to innovate.
CE: What was the worst thing about working at Enron?
A: It was an all-consuming entity. Your whole life revolved around the company.
CE: Did you ever have sex on your desk?
A: Next question.
CE: Did you ever have sex on the board room conference table?
A: Next question.
CE: You said that Enron was an all-consuming company. Do you feel that you will ever give that kind of energy and devotion to any other company? Or are you a nine-to-five kind of guy now?
A: I’m still intense.
CE: You claim that you committed crimes at Enron. Do you think you would now be able to recognize a dangerous potential criminal situation if one arises? And if so, would you resist being a criminal?
A: I would probably recognize a potential situation. I stay far away from the edge. I would resist.
CE: Are business people latent criminals?
A: Not at all. Most people want to do well and they try to get as close to that line as they can. They can go over that line without meaning to.
CE: Would more regulation, say Sarbanes-Oxley, have prevented Enron’s collapse?
A: I don’t think so.
CE: In fifty years, what do you want people to think of Enron?
A: In fifty years, Enron will have no more relevance than Standard Oil does today. That being said, I would want people to know that it wasn’t all bad. Enron had many significant successes.
CE: Thank you for your mini-interview. I appreciate it.
Filed under Enron
I’m not sure I should be telling you this, what with world strife, hunger, and a potential nuclear war on the horizon, but there’s a company that wants to ejaculate on your face.
Seriously.
The hilariously named CMen company boasts of “semen face cream packs” (they also claim to be “discreetly packaged” which cracks me up on at least two levels.)
The clean and washed semen comes
Stop.
How do you “wash” semen? I’m a girl, I don’t know the mysterious ways of the semen. I only have access the equipment on a very limited basis, so maybe you have to wash it like hair or teeth, I don’t know, I’m just asking questions. Do you have to dry it too?
in a small plastic packet which has been frozen and tested for all STI’s and HIV. The test document will be included. You will also receive a set of surgical gloves if you would like to use them.
Oh.
Okay, I’m trying to picture this… and it’s not …. it’s actually nauseating. Why would anyone do this?? I assume there is some belief that the jizz is good for the skin but if that is so – and it was proven – wouldn’t women be demanding semen from their own men before they ask the CMen company for some help?
The product is for EXTERNAL USE ONLY.
“Mom, where did I come from?”
“Well, honey, I wanted beautiful, luminous skin, so I bought a semen face pack and didn’t read the directions.”
The company also sells breast milk packs which actually infuriates me. The jizz pack is kind of funny in a gross way, but breast milk is to feed infants, and there is a huge breast milk shortage in the world, particularly in Africa where AIDS is still rampant. Using breast milk for this crazy non-proven (not even really though of) gimmick is so wasteful, such an insult. It’s a limited resource. Unlike jizz.
Anyway, all this craziness is apparently catching on because another company is also selling the miracle jizz. Nothing better than competitive jizzing, I suppose.
(Anonymous points out that if companies can decrease the taboo of, well, wearing jizz on your face, and increase a demand for it for beauty products, which with effective marketing should not be terribly difficult given the intelligence of most of the population, the next step will be to promote it in energy drinks. And women will never hear the end of it.
“You drink Jizz Cola but you won’t even…”
“Yeah, well Jizz Cola also has electrolytes.”)
Filed under Uncategorized
I enjoyed this article about Chief Justice John Roberts, then a young aide to President Reagan, being all gruff and curmudgeonly about an official letter to Michael Jackson. Two of Roberts’ letters were published. This is my favorite:
I hate to sound like one of Mr. Jackson’s records, constantly repeating the same refrain, but I recommend that we not approve this letter. Sometimes people need to be reminded of the obvious: whatever its status as a cultural phenomenon, the Jackson concert tour is a massive commercial undertaking. The tour will do quite well financially by coming to Washington, and there is no need for the President to applaud such enlightened self-interest. Frankly, I find the obsequious attitude of some members of the White House staff toward Mr. Jackson’s attendants, and the fawning posture they would have the President of the United States adopt, more than a little embarrassing.
It is also important to consider the precedent that would be set by such a letter. In today’s Post there were already reports that some youngsters were turning away from Mr. Jackson in favor of a newcomer who goes by the name “Prince,” and is apparently planning a Washington concert. Will he receive a Presidential letter? How will we decide which performers do and which do not?
I love that Prince is in quotes: “Prince”. I also happen to agree with him. The comments about this are typical liberal blather, excoriating Roberts for not being sufficiently awed by and supplicating to pop culture. But this is the thing that amused me most, and it’s part of the article, not a reader comment:
In addition, it is worth noting that Mr. Roberts and Mr. Jackson had some things in common. Mr. Roberts was born in 1955 and grew up in Long Beach, Indiana. Mr. Jackson was born in 1958 less than an hour’s drive away, in Gary.
Isn’t this the same as saying Roberts and Jackson have nothing in common? The birth years are not alike, nor the birth place. It would seem to me that anyone in Gary, Indiana can claim the same thing. Or I could claim that because I live in the same city where Jeff Skilling lived, we have “something in common.” Actually I could say that about every Enron employee, President George Herbert Walker Bush, Buzz Aldrin and about six million other folks but I don’t find it a particularly charming way to build bridges between people. After all, the blogger and I have something in common: we’ve both written about John Roberts and Michael Jackson on our blogs. Wonder of wonders.
Filed under Uncategorized
Enron Task Force waterboy John Hueston famously questioned Dr. Ken Lay at trial, seething with apparent resentment for all things corporate. But now that he’s in the private sector, he’s joined his fellow ETF alum Sean Berkowitz by now defending high profile corporate defendants. While Berkowitz defends Joe Naccio, Hueston is now defending former Countrywide Financial boss Angelo Mozilo. Hueston is Mozilo’s co-lead attorney against SEC civil fraud and insider trading charges, as well as in a related criminal investigation.
Filed under Enron
Today in 2002, Playboy released its “Women of Enron” edition. The magazine featured comely executive assistants who had lost their jobs six months previous when the company collapsed. The photo spread was generally met with approval and enthusiasm.
It was sort of a surprise to me to see how man Enron women had tats in their bikini area. You don’t have to ask if these women are going to the afterparty.
Dear FERC,
I understand that as a federal agency you probably can not hire the “best and the brightest” so I forgive a lot of the asinine stuff that you issue forth like a Dutch dike on a warm summer evening. I am in an especially forgiving mood when the error works in my favor as it did this evening.
This evening, as my “friend” and I were on the way to have dinner, I checked my mailbox and was pleased to discover a big fat package from you in my box. (You’re welcome.) I had sent a FOIA request some months ago and had largely forgotten it. The FERC return address reminded me that I was furious over your handling of the Enron investigation. I got back into my friend’s car, set the package aside, and did not think much more about it.
When we returned back to my place, just now, I opened the package and found a big fat stack of CLASSIFIED ENRON MATERIAL. I was standing at my bar while the friend was kissing my neck and trying to make me hurry up with the infernal mail. Well, thank you, FERC because I have never in my entire life been so completely consumed with lust as I was that moment. Still, before I gave in to my prurient desires, I had to make sure I was seeing what I thought I was seeing. I handed my friend – who, by the way, was a senior executive at Enron so he knows what’s what (at least about some things) – the package. I asked him, with awe and hope dawning in my eyes, “Is this…?”
He confirmed that it looked like investigation material (what your lawyer folks will call “work product”; you should look into this) from the Enron investigation. The materials are stamped with various warnings, including: DO NOT DISTRIBUTE, CLASSIFIED and even one document that has the spooky and much-beloved phrase EYES ONLY. There are some things censored out – but very few things.
Now, I understand that the Enron collapse and investigation was a long time ago. Oh I remember those days of lawless pleasure-seeking, the freedom of the early 00s. But even someone as careless as I would not be THIS careless.
But I forgive you because, as I said, this is great for me. The friend and I are hitting Kinkos in the next two minutes to make copies. Lots and lots of copies. Lots.
So anyway, I think I need to give in to the friend because he’s been very patient watching me type this out, being willing to go to Kinkos with me, etc. etc. I will rock his world this evening – but for now, FERC, I want you to know that it is you who is rocking my world.
Love and kisses,
Cara Ellison
Return address:
I’m blocking my address but wanted to show that it was indeed a package directed to me, in Houston Texas.
“The Fat Package” with the only stuff that is blanked out.
One of the bureaucratic warnings that were ignored (thank you).
My big ole package of classified Enron material.
|
