John Hueston Loses First Trial Ever In His Career

Via LA Observed:

John C. Hueston, the former federal prosecutor who secured the convictions of Enron executives Kenneth Lay and Jeffrey Skilling, lost a case in an Orange County courtroom last week. That’s only news because he had never before suffered a trial defeat, the Los Angeles Daily Journal reports tomorrow. “I guess now I’m a real trial lawyer,” the Irell & Manella partner told reporter Don J. DeBenedictis.

If only that landmark was made during the Enron trial.

Enron Showdown at the New York Times

Maureen Dowd concludes a column ostensibly about Catholic sex-abuse scandals as follows:

Vatican lawyers will argue in negligence cases brought by abuse victims that the pope has immunity as a head of state and that bishops who allowed an abuse culture, endlessly recirculating like dirty fountain water, were not Vatican employees.

Maybe they worked for Enron.

James Taranto of the Wall Street Journal opines excitedly:

That last line is unmistakably a shot at Dowd’s Times colleague Paul Krugman. If you know the backstory behind this, please email us!

I like James Taranto and read his column every day. But with his constant note that Paul Krugman worked for Enron, he is guilty of the same snarkiness Dowd exhibits.

Former Enron employees, even the evil or stupid ones, like Krugman, should be proud to have worked in a place that was so good. I can’t help but believe that Krugman’s mortal soul was actually elevated the few times he interacted with Enron executives.

Enron was a good, ethical place to work. The fact that it is used as a punchline now speaks more to the creative bankruptcy of political pundits than it does of the company itself.

How Much Do You Know About Enron?

CNBC has a quiz entitled “How Much Do You Know About Enron?” Weirdly, this was published today. Furthermore, there’s a giant banner that says “The Smartest Guys In The Room,” as if that’s some sort of “official” Enron tagline.

I don’t get it. Why now?

By the way, I scored a 100. Of course.

Horoscopes of Enron Executives

Jeff Skilling

To take away the energy of your enemies, capture the hearts of their generals.

Kevin Howard

Things are exactly as they appear to be, and behind them is nothing. But behind that, there may be something.

Ken Rice

To plunder a locality, divide your troops. To expand your territory, divide the spoils.

Rex Shelby

Out of clutter, simplicity. Out of discord, harmony. Out of sight, out of mind.

Scott Yeager

Three lesser networks subordinate themselves to the backbone. All networks are not created equal. But on the desktop, it all looks the same. E Pluribus Unum, baby: the network is the computer. Today’s themes are synergy, cooperation.

Michael Krautz

Finding a needle in a haystack is a lot easier if you burn down the haystack and scan the ashes with a metal detector. Use technology to your advantage.

Andy Fastow

Less solitary confinement, more hard labor. Responsibility, loss of autonomy.

Why Would Ken Rice Join A Conspiracy?

I’m reading some of the Official Record of the EBS trial, and I found a certain motion by the government arguing against Yeager and Hirko’s motion for a summary judgement of acquittal (Shelby did not jointly file with the motion.) As I’m browsing along, I found this and it jumped out at me [I've taken a screenshot because I don't want to be accused of taking anything out of context.]

So, according to the United States government, Ken Rice joined a conspiracy already in progress, ostensibly among Joe Hirko, his co-CEO, Scott Yeager, Rex Shelby, and also, in a different sector of the same company, Michael Krautz and Kevin Howard. Joe Hirko, the Boy Scout with a record of prudent business practices, Scott Yeager who didn’t give a crap about anything but technology, and Rex Shelby, an entrepreneur who sold his company to Enron, were already involved in a conspiracy. There is a problem with this, as I’ve demonstrated many times. They weren’t friends. They didn’t know each other outside of work. A conspiracy only works if you trust the guys you’re conspiring with. They never even had a beer together outside of work.

Okay, whatever, the gov alleges that they’re all involved in some nefarious plot. Then Ken Rice shows up. Ken RICE! The very best friend of the company’s CEO! Did they invite him in? If they did, why didn’t Ken Rice tell Jeff Skilling what was happening? The government alleges that Ken Rice was also misbehaving before he got to EBS. How lucky does this bastard have to be to go from one conspiracy, in Corporate, only to discover – hold on to your hat – that there’s another conspiracy almost exactly like the one in Corporate happening in EBS! Either Ken Rice was the luckiest man alive, or the government is just full of crap because real life doesn’t work that way.

This is a small thing, but these small things add up. These documents mean something and since the government won’t actually be accountable for its blather that it passes off as some sort of conspiracy among ordinary guys, then I will do the best I can to expose its arrogance and ignorance.

Ken Rice is not a boy scout. But he’s also not a conspirator in some elaborate company-wide plot at Enron either.

No Indictment For The Jury

I am amused by this exchange. This was before the EBS trial, and Zimmerman is asking the judge about showing the indictment to the jury. Judge Vanessa Gilmore replies that no, the jury can’t see the indictment because it says unkind things about the defendants. Cray-cray.

I actually took a screen shot because I figured if I typed this out, I’d never be believed.

Enron Logo Remix

I saw this today. It amused me.

Andy Fastow, Release Dates, and RDAP

I thought it would be useful to discuss RDAP and release dates.

RELEASE DATES

Andy Fastow’s release date is 12/17/2011. This date has good behavior already factored in. The way BoP works it, (it doesn’t always work out this way, but usually) is they enter people into RDAP (Residential Drug Abuse Program) based on their release date such that they finish RDAP just in time to go to the halfway house. RDAP participants are required to do 6 months at a halfway house (part of that can be home confinement; up to 10% of your incarceration can be spent at home. In Andy’s case, probably 4-5 months). So, assuming Andy gets the maximum 1 year off for RDAP participation, that will make his release date 12/17/2010. Subtract 6 months from that and he could be going to the halfway house as early as 6/17/2010. This is the absolute best he could do. RDAP takes 9 months – you have to do the full 9 months – therefore for Andy to hit the 6/17/09 date he would have needed to start his RDAP class by 9/17/09. So notice he was nearly finished with the program; he had only three months to go when the DOJ finessed his exit.

BoP does not make mistakes or adjustments that EVER let someone out early (they make plenty of mistakes that delay release dates).

Also, there is sometimes a waiting list for a halfway house. This doesn’t reduce the time an RDAP person spends there. For instance, Andy may have had to wait past 6/17/10 for a bed and would still have to spend 6 months in the halfway house.

RDAP

Residential Drug Abuse Program is intended to be an intense drug treatment program. All RDAP participants live in the same housing unit. You go to class 3 hours/day, 5 days/week for 9 months. It is called the 500 hour program because you have to complete 500 hours of classwork to complete the program. It is not really “intense”. Like most BOP employees, the instructors are either lazy losers or psycho nut jobs. Laziness guarantees you’ll have little to do.

Plus, the BOP gets around $4,000 for each inmate that finishes RDAP, so it is almost impossible not to get through. The only people who don’t make it through are the ones that test positive for drugs. At BOP it is all about the money.

Andy Fastow’s Fate

When you consider the dual issues at play (DOJ wants to look good, BOP wants to make money), you see why there would be some inside baseball. I’ve never pretended to be a fan of Andy Fastow, but I don’t like him (or anyone else) being used by the DOJ to score political points. The DOJ bringing pressure on the BOP to withdraw Fastow is a chilling sign of things to come as they attempt to salvage what was clearly an overreach in the Enron prosecutions.

It will be interesting to see if Andy gets his time off for good behavior. I’ll keep an eye out for that.

I will also watch for Andy to start retracting some of his statements now that the DOJ has screwed him over.

Andy Fastow Yanked From RDAP

The DOJ has pulled Andy Fastow out of the RDAP program because they did not want him to get a year off his sentence. The Bureau of Prisons hates DOJ (even though it is part of DoJ) and it is surprisingly difficult for DOJ to get BOP to do something like this. Because of the political horse trading involved, I speculate that the publicity over the Skilling appeal could be causing the DOJ to be tougher because Enron is back in the public eye. Thus they do not want to appear weak by allowing Andy out after what amounts to about four years and change.

The DOJ was Andy’s best friend during the Skilling trial. They needed him to help hang Skilling. They cajoled, coaxed, pet, wheeled and pleaded with him for info and shaped his story in order to get Lay and Skilling. He committed perjury to appease the DOJ. The DOJ did some of the same stuff with almost every other prosecution witness, but with Andy it was so over the top, it was just ludicrous. (A “Global Galactic” list? Are you serious?)

But now Andy has outlived his usefulness. Promises can be revoked. The DOJ is not honorable even with the people it ruins to destroy other people’s lives.

The Fastow Correction

Remember how I waxed poetic about the Fastow marriage? Um, I was wrong. Way, way, way wrong. It turns out Andy has a girlfriend who regularly visits him in prison – in addition to his wife. And in true situation comedy style, one day, both ladies showed up at the same time. Much hell ensued. Long story short, Lea and Andy are still married … but wow.

This came from an unimpeachable source. And it cracks me up.

The EBS Conspiracy

This is a screenshot of some of the search terms used to find my blog.

You know you have hit the big time when the conspiracy people question your very existence.

Today In Enron History

March 5, 2001, Fortune published Bethany McLean’s article, Is Enron Overpriced? The backstory of this article is as interesting as the actual article. She was prompted by Jim Chanos to look into “irregularities”. Conveniently, this is also when Chanos began to short massive amounts of Enron stock. McLean did as she was told and began to write the skeptical article about Enron. She phoned Jeff Skilling to get some comments and Jeff was about to walk into a meeting so he said he’d fly some people to New York to chat with her about Enron. Andy Fastow, Rick Causey and a few others were called on for the fun task.

I would be very curious to see the actual notes from that meeting. Andy Fastow has never talked about it. Rick Causey certainly never has either. So basically we have to take McLean’s word for the proceedings, something I am not inclined to do.

McLean claims that as the Enron executives were leaving, Fastow quipped, “Say whatever you want about the company. Just don’t make me look bad.”

I’m just not believing that Fastow had the foresight to say any such thing.

Skilling would point out that Business Week wrote a favorable article about Enron that same week, and the two magazines were rivals – thus if BW said something complimentary, Fortune had to counter it with something negative. But I think even Skilling couldn’t see all the pieces at that point. He had no idea that people were out to get him, destroy his company, and make lots and lots of money.

Notes On Skilling’s Oral Arguments

* Why is Michael Dreeben getting all the Enron cases at the Supreme Court? He argued in Arthur Andersen, Scott Yeager, and Jeff Skilling for the government. He must be so tired of losing.

* The best Dreeben could when arguing against Skilling on March 1 to lamely recite the bromide that “Skilling betrayed the stockholders.” Even if he did (and he didn’t), that doesn’t come close to arguing how the venue (Houston) was appropriate for a fair trial or why Honest Services is fair, balanced, and good law. Basically, Dreeben received a list of talking points which he numbly recited like a parrot on lithium. Not good enough.

* Most justices seemed at least somewhat sympathetic to Skilling.

* At one point Justice Scalia quipped that it sounds to him as though the law says, “It’s a crime to do any bad thing.” His rapier wit aside, Scalia basically sums up with I’ve been saying about Honest Services since the verdicts came down. Not every bad thing is a crime. Business judgement is not a crime – even when it’s wrong or results in disaster.

* I think the appeal is going to result in Skilling getting a new trial. It will not have as much media coverage, the DOJ will cover few accusations, and it will not take place in Houston. Oh, and Skilling will walk out of there a free man, with a smile on his face and a calm, factual statement about his innocence.

Skilling Coverage Already Wrong

Here is Mary Flood’s article this morning in the Houston Chronicle — it made the front page. Note the error in the sidebar about Yeager:

“Prosecutors eventually decided not to retry him.”

No, the SCOTUS and the 5th Circuit compelled the dismissal of his remaining charges! Sheesh, the difference is significant!

Skilling made Fox News this morning, complete with videos of him and Petrocelli. It is interesting that the news coverage seems a bit more balanced now. However, the comments on Flood’s article are the same “burn Skilling” stuff as always — this is good support for the change of venue argument.