Monthly Archives: October 2009

Jeff Skilling “Cracking”?

NYT reports that the Bear Stearns trial progresses apace. Dan Slater, however, compares the flat demeanors of the Bear witnesses to Jeff Skilling: “Nothing, for instance, like Enron’s former chief executive, Jeffrey K. Skilling, cracking during cross-examination and karate-chopping the air during his 2006 trial.”

What?

Jeff Skilling did not crack. Jeff Skilling does not crack. I find this a weird statement because even a cursory glance back at the 2006 trial will reveal a calm, composed Skilling. He did not crack. I don’t know where he got that idea.

As for his “karate chopping”, I think he’s referring to a Skilling gesture that does not look like a karate chop at all. I can visualize it better than describing it but here goes: both hands in front, fingers straight, facing each other , and then slanting outward in a brief, cutting motion.

Anyway, I find his mention of Skilling gratuitous and mean – and inaccurate.

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Sean Berkowitz Campaigning For Senate Hopeful

Sean Berkowitz and other former US attorneys are shilling for David H. Hoffman for US Senate. Hoffman, who was most recently the inspector general for the City of Chicago, is seeking the Democratic nomination for the Senate seat currently occupied by Sen. Roland Burris.

I wonder what inspired Berkowitz to open his wallet for this guy. It seems to me most of his money – and certainly his big celebrity case prosecuting Jeff Skilling and Ken Lay – happened under a Republican administration.

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Heads Up

Change is upon us.

I will be changing the title of this blog to “Cara Ellison On Enron.” This blog will only be about Enron. I’m going to remove all the non-Enron material.

I’ve created a new blog at ellisonblog.wordpress.com, which will be where I post political stuff, daily chitchat type of stuff, and book stuff.

I will still update this blog every day. It’s still active. It’s just become very popular and I feel like I need to separate out all the other stuff.

UPDATE

I’ve exported this blog to EllisonBlog. I’m removing all non-Enron posts from caraellison, but they can be found at Ellisonblog. Ellisonblog, however, will not have Enron updates after today. Cara Ellison as of right now is purely dedicated to Enron.

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The Complete Humiliation of the Enron Task Force

Joe Weisenthal has written a great article,The Complete Humiliation of the Enron Task Force for Business Insider. It covers ten ginormous disasters for the ETF, including the Nigerian Barge trial, Arthur Andersen, and Enron Broadband Services.

It quotes a lot of Tom Kirkendall’s work on Enron, and is a succinct catalog of ETF blunders.

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Today In Enron History

Today in 2001, everything was falling apart at Enron. Andy Fastow had been fired two days previous amid allegations of theft and fraud. Stock was diving; at the beginning of the week – October 19 – the stock price was $26.05. By October 26, the price had fallen 40%, to $15.40.

Dr. Lay was starting to get nervous. He called Alan Greenspan, chairman of the Federal Reserve, to keep him apprised of Enron’s diminishing condition, and to feel out the possibility of a bailout. After his conversation, he met with Dynegy chairman Charles Watson.

The end was near. You could feel it. A giant tectonic plate of the company was shifting, though, because the employees of Enron were optimistic Alpha types, they still believed they had a chance. They would continue to expend frenetic energy from this day to the collapse, fighting this huge invisible force that was dragging them down.

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No, Really, McKinsey Is Evil

I had a funny email conversation with a friend who, like approximately 88% of the Enron staff, worked at McKinsey before Enron. I thought you’d find this amusing:

Cara:

After the Enron book, my next amazing trick will be….

MCKINSEY EXPOSED! Learn how this global consulting firm makes its billions of dollars. What was its relationship with Enron and Halliburton? Why do so many executives begin there? ARE THEY TRYING TO TAKE OVER THE WORLD? (Or is it just an accident???) Find out in Cara Ellison’s amazing bestseller revealing all the juicy secrets of MCKINSEY & CO!

Friend:

Maybe McKinsey is like the Illuminati or the Skull & Bones Club!

Cara:

I think it is! It’s craaaaaaaaaaaaaaazzzzzzzzzzzzy creepy! Like ENRON! Enron was really the Taliban and they were paying Dick Cheney. Hey, did you know that Ken Lay actually MET WITH THE PRESIDENT???????

Evil, I tells ya.

And I hear McKinsey only hires, like, smart people so it’s like this club of the wealthy smart elite and they’re trying to take over the world.

I shall expose them!

Incidentally, I am only half kidding about the McKinsey book. I think people think it’s a mysterious, nefarious organization (like Enron) but I could de-mystify it.

But maybe McKinsey likes its mystery?

Friend:

Actually, there is a spooky quality to McKinsey (or was when I was there).

Cara:

I’m a little disappointed that even a McKinsey employee thinks McKinsey is evil. Please tell me I’m right about Enron.

Friend:

Enron was practically Toys R Us compared to McKinsey.

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Scott Yeager’s Victory Means More Than You Think

Scott Yeager, one of the finest human beings to ever walk the planet, was set free on October 20, 2009. The Fifth Circuit basically told the Government to go fuck themselves by clearing all the counts against Yeager. So basically after eight years, how many millions of dollars in lawyer fees, and the cost of passing up eight years of other business opportunities, the man can finally breathe.

It is interesting how the real milestones of life have a tendency to avoid the pomp and circumstance allotted to relatively unimportant things. Graduation from various generally indistinguishable steps of a fairly continuous educational process are celebrated with the fervor that only worthless things seem to provide, but the real changes sit in the corner, and are often only realized after the fact. I honestly believe that Yeager’s victory is one of those deeply profound events whose full impact may not be realized for years. His victory is not just about him – a fact evidenced by his victory at the Supreme Court, which law students will study and absorb and hopefully propagate as working attorneys, to preserve the sanctity of collateral estoppel. It’s not even about Enron. Yeager vs. USA is the turning point when businessmen finally stopped being victimized by the government. In the future, we will recognize Yeager as the first American businessman to successfully fight back against prosecutorial abuse that has become shamefully casual in this country.

It is my hope (and belief) that the Nigerian Barge case, and the Skilling case, will benefit, if only tangentially, from Yeager’s victory. The Nigerian Barge case, on the facts, actually has a lot in common with Skilling as they both involve “honest services”. But the larger implication is that in all three cases – Nigerian Barges, Skilling and Yeager – the government believed that because it was the government, it had the right to trample people, ruin people’s lives, bankrupt them, humiliate them, pressure them, and break them, in order to create a public perception that they were making progress.

And the public is not innocent in this. When Enron collapsed, the public was outraged. They wanted scalps, and did not care to hear any explanations, much less any defendant exert their innocence. The public wanted somebody – Daddy Government – to come in and spank the bad guys. Shame on the masses. Shame on them for making cretins like John Kroger and Andy Weismann necessary. Shame on them for being reactive instead of thoughtful.

The public, even now, wails with outrage (is it faux outrage? I honestly don’t know) when any white collar defendant is accused of a crime. The first cure for that outrage is simply examining the facts. Look at the record. Look at what Scott Yeager actually did, not what the government said he did. One example of this that amused me at the same time it infuriated me was a stupid little nothing event in which the government put on the stand some asshole to testify about Yeager’s calendar. Yeager did not know the guy, did not share his daily agenda with him, or anything like that. But this guy testified that Yeager had called for some meeting or something. When Yeager actually testified, he explained that the document in question, showing that he had “called the meeting” was written in his Lotus Notes calendar, and when you write in an event, the program automatically made you “Chair” of the event. Scott didn’t call the meeting. It’s a silly, stupid example, but the entire case was built on crap like this. Scott Yeager didn’t fucking call the meeting! The record shows that. And the record also shows he didn’t trade on inside information. It shows that Joe Hirko (bless him) was acting ethically when he signed off on that Warpspeed press release. It shows that Rex Shelby was correct when he said that the BOS was working – but that no software is complete “until it’s obsolete.”

The men were telling the truth. The record proves it.

Jeff Skilling was telling the truth, too. You know, there’s a weird little theory the government had that Scott Yeager was actually the puppetmaster, controlling Jeff Skilling. It’s preposterous, but I swear, that’s the government theory. Well, it’s sort of ironic that Yeager the “puppetmaster” has cleared the way at the Supreme Court for Jeff Skilling. There’s a certain poetry in that.

Scott Yeager is not an ordinary man. He would probably say he is, but he’s not. He’s an extraordinary individual, a man of such strength that we should all try to be more like him.

I’m so happy that he’s free now. It is good for him, good for the other Enron cases, and it is good for America.

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Chron Finally Mentions Yeager Decision

Mary Flood at the Chronhas finally gotten around to writing a few words about Scott Yeager’s victory. Some good quotes by Canales.

We here at Cara Ellison Corp. still heart Canales.
We never stopped hearting Yeager or Shelby.

Great, great day for victory!

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The Yeager Silence

The news of Scott Yeager’s freedom has apparently not yet hit the news. I’ve googled “Scott Yeager” and “Scott Yeager Enron” this morning but the only thing to come up is the news of Jeff Skilling’s Supreme Court win.

I wonder why this is. What possible reason could the media, particularly the Chron, have for keeping quiet about this?

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Scott Yeager Decision

Here is the Yeager decision from the 5th Circuit.

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What About Rex?

Now that Scott Yeager has won, and is forever free, the question that springs to mind is: What about Rex Shelby?

Rex Shelby is now the last man standing. At present, Rex is appealing to Judge Gilmore to dismiss his case. I’ve speculated before that Gilmore is waiting for the 5th Circuit to decide Yeager’s case before she rules on Shelby. If she does dismiss, then the government may or may not appeal to the 5th. My belief is they won’t bother. If she does not dismiss, then Shelby appeals to the 5th. And after this judgement today in Scott Yeager’s favor, I feel very optimistic that Shelby would have a sympathetic ear at the 5th Circuit.

I pray Gilmore dismisses the case against Shelby and Shelby is free too. It is the right thing to do.

Not incidentally, this decision must also be very heartening to Jeff Skilling.

Just a good, good day all the way around.

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Scott Yeager Won (Again!)

In a stunning blow to government overreach, Scott Yeager has finally won his long battle for his freedom. The Fifth Circuit this morning decided that they will NOT review, for the second time, the question of whether Scott Yeager had insider information when he traded Enron stock.

The government has nowhere to appeal, and the matter is now dead.

Scott Yeager is simply free.

I am so happy to write those words that I’m shaking. I’m not very good at containing myself in moments of extreme joy or sorrow, so I hope I can maintain some semblance of coherence as the morning progresses. Updates will follow.

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Loren Steffy On Jeff Skilling’s Supreme Court Win

Loren Steffy stoops to the worms again today with an article as devoid of facts as anything you’ll ever find by him. I’m passing on the link just so you know what I am talking about when I point out the irony of Jeff Skilling arguing that he did not get a fair shake from the media, and Steffy slandering him for it.

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Jeff Skilling Gets Supreme Court Review

I’m surprised I’m getting to this as late as I am; today has been an insane day and I’ve had no time for blogging. But I’m going to fix that right now.

I am thrilled that the Supreme Court will hear Jeff Skilling’s appeal. It is the right thing to do. Of course, others don’t see it that way, as evidenced on the Chron’s website where the comments are hilariously vitriolic, proving one of Skilling’s points that Houston residents found him guilty long before his trial. I chose to specify the Chron because it is local; and despite the brouhaha of Enron’s collapse that was echoed worldwide, here in the eye of the storm, it was intense, brutal, unrelenting.

In 2001, when Enron collapsed, Loren Steffy of the Houston Chronicle, posted nasty commentary every day. He declared Skilling guilty before he had even been indicted. When he was finally indicted, Steffy and his fellow reporters lost all pretense of objectivity and went nuts accusing Jeff Skilling and Ken Lay of a litany of crimes, indulging in speculation, spreading rumors, and generally committing media malpractice. Steffy wasn’t alone. TV news shows ran stories about the Enron collapse every day, insisting that Skilling was guilty. Stories about the loss of retirement accounts ran every day. One former employee, Charles Prestwood, was trotted out every day to make some coo-coo bananas statement about Enron. He originally said he lost $200,000 in the collapse of Enron, then it was $800,000, then it was $1.2 million. He said that the death penalty was too good for Lay or Skilling (and this was before they had been to trial.) He said all kinds of things that were just patently absurd, but the media loved his outrage, so they put him on television and got him all upset so his eyes were wild and spit flew out of his mouth when he talked. It wasn’t just unfair to do that to an older gentleman, it was unfair to Jeff Skilling and Dr. Lay.

How could he have a fair trial? Even now, nine years later when supposedly cooler heads prevail, he is the whipping boy of anyone who ever lost a penny in the stock market. Houston in 2006 was not a safe place for Skilling. His trial was an absurd Kabuki theatre, made even more absurd by Daniel Petrocelli’s inability to get a change of venue. (Not Petrocelli’s fault at all. What judge wouldn’t want the Skilling / Lay case? That would make your name.)

In his original supplemental brief for his appeal at the 5th Circuit, Skilling touched on these facts. He also touched on the fundamental flaw that the government charged him under Honest Services. One thing we know for sure: Skilling did not personally benefit from the so-called illegal things he was convicted of doing. That is the standard. Not whether or not you like him, or whether he was a good CEO, or even whether he stole anything (which he did not and was never accused of doing. I am only using that to illustrate a point.) Whether he acted in his own interest. And he did not. He left money on the table not once, not twice, but at least three times. If he were ripping off the company, why not do it when they were offering him money?

Jeff Skilling is a very ordinary man who had an extraordinary ability to create markets. He saw things other people didn’t see. Enron compensated him well for that. He never took advantage of Enron’s generosity. He was never materialistic, as everyone likes to think. He had moderate tastes. His favorite place to eat was Arby’s. He didn’t care about clothes or real estate or fast cars.

He had no motive to commit fraud, and he didn’t. And even if he did (and he didn’t!), the government did not prove – and could not prove – that he failed to give Enron Corporation his honest services. He was an employee, not an emperor. He did not make all the rules. He followed them. He made some mistakes, as I am sure he would admit to you today. But he never committed honest services fraud.

Jeff Skilling loved Enron Corporation. He wouldn’t do that. More people are agreeing with me now. Nine years after the company’s collapse and three years after the trial, I am pleased that many news organizations, bloggers, and ordinary citizens are starting to listen to the truth, review the record and come to the correct conclusion that Jeff Skilling did not do the things the federal government is accusing him of doing.

I believe when the Justices review his case, they will have no choice but to overturn those hateful convictions.

The record is clear. His conscience is clear. Jeff Skilling is innocent.

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Supreme Court Will Hear Jeff Skilling’s Case

Finally, some good Enron news!

The court said Monday it will hear Skilling’s appeal of lower court rulings that upheld all 19 of his 2006 convictions of conspiracy, securities fraud, insider trading and lying to auditors involving the 2001 collapse of Enron.

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