Today is National Lipstick Day, and, believe it or not, lipstick played a key role in the Enron Broadband Services (EBS) indictments!
John Kroger was the federal prosecutor on the Enron Task Force (ETF) who was charged with finding a crime at EBS. We know quite a bit about Kroger and the ETF because Kroger wrote an autobiography titled Convictions in which he describes the ETF’s tactics in pursuing convictions of Enron executives. Kroger wrote the book because he was running for Attorney General of Oregon, and he thought the book would be good PR. But the book backfired on him because it reveals abusive prosecutorial tactics — in fact, it irritated the other prosecutors of the ETF because it reveals that abusive tactics were widespread within the ETF and not limited to Kroger.
Kroger tells us that the Bush administration charged the ETF with “getting scalps quickly” at Enron. Kroger tells us how there was no evidence of any crimes at EBS, but that he was charged with finding some criminals anyway. He describes how everyone he talked with told him that there were no crimes at EBS. He explains how he decided not to use any of the EBS technical documents (even though this was a case about technology), including weekly status reports, because he could not understand them — therefore, he decided the only way to build a case against EBS was to find “witnesses” who he could strong-arm into “cooperation”.
After being completely unable to find any evidence of criminal activity at EBS, Kroger finally interviewed Bill Collins, a former sales guy at EBS who had been fired by Scott Yeager due to incompetence. Collins, who has a history of work issues and who is described by the people who worked with him as “crazy”, “a total liar”, and “paranoid”, was just what Kroger was looking for — a person he could manipulate. After all, Kroger shares a lot of Collins’ traits — journalists, attorneys, and witnesses describe Kroger as “arrogant”, “amoral”, and “mentally imbalanced”. Indeed, Kroger admits in his book that he joined the ETF because his girlfriend had left him for another attorney, and he wanted to feel the “power” that being on the ETF gave him where, he writes, he “wore power like a second skin”. And this is where the lipstick comes into play …
Kroger wrote that the email that most impressed him — the email that caused him to indict several innocent men on security fraud charges — was an email from Collins to a few EBS people in which Collins compares the Broadband Operating System (BOS) to “a bitch on a sofa wearing lipstick”. Tellingly, nobody responded to the email at the time because, as they said on the witness stand, they considered the email nonsense. And, more tellingly, Collins did not send the email to any of the engineers actually working on the BOS who could have straightened him out. And yet, that loony, ridiculous email was enough to cause Kroger to indict several innocent men and launch them and their families on a multi-year struggle against the ETF.
And did any of the people who Kroger accused of crimes ever get the opportunity to face him in court? The answer is NO! After Kroger brought the indictments, he left the ETF and scurried away to the West Coast to teach at a college. So the defendants of EBS never had the opportunity to face their real accuser at trial.
If you ask me, the biggest villain and wimp in the EBS story is John Kroger — he is the “bitch on the sofa wearing lipstick”!