All About Rex’s Community Service

Rex Shelby, the last man standing in the Enron cases, remains one of the most popular topics among readers of this blog. A previous post about Paris Hilton and Rex Shelby made me curious about what Rex did for his community service. So I did some investigating — what I discovered is amazing!

Rex Shelby’s community service requirement was 230 hours. I have found that most people get brainless assignments that require little of them (in terms of initiative or creativity) and which have little lasting impact — therefore, the people typically put little effort into the service — they do their time and that’s it. I understand that Rex requested of the Probation Office that it assign him something challenging through which he could really accomplish something useful.

Therefore, the Probation Office assigned Rex to an organization that helps the most desperate people in society learn how to find jobs. The organization teaches people how to search for jobs, how to write resumes, how to interview, etc. It makes sure they have clothes for a job interview. The organization makes sure that the people learn the basic computer skills needed to find jobs in today’s world — it makes sure all the people have an email account, for example. The mission of the organization is to move jobless people into jobs.

Rex Shelby helped the organization in a number of ways, but his core responsibility was to work with people to create resumes and cover letters to apply for jobs they wanted. Rex helped the homeless, veterans, ex-cons, disabled people, people with little education, recent immigrants, etc. — the most needy among us, in other words. Within his 230 hours of community service, Rex worked with more than 200 “clients”. He routinely worked hours that he didn’t count against his official total. He became a popular worker at the organization among the people needing help — people requested him by name because of what they heard from others he had worked with — people gravitated to him because he was kind to them and because he had a high success rate — he became known as “Mr. Rex” among his many Hispanic clients. Rex continued to help the organization long after his formal community service obligation had been met.

I understand that the organization has contacted the Probation Office several times to ask for more people like Rex Shelby. The Probation Office has told the organization that “unfortunately, we cannot find any more people like Rex.”

I am not surprised at what Rex Shelby was able to accomplish at that organization — it is consistent with his professional and personal history. What amazes me is that Rex, an innocent man who was falsely indicted by the government and has reason to be bitter and angry, shows no signs of either emotion and has been willing to contribute so much to others during his inane and worthless punishment phase.

This story just reinforces my disdain for the Department of Justice, the Enron Task Force, and the slimy prosecutors who hounded Rex Shelby and the other Enron Broadband defendants. Rex makes those prosecutors look small.

Enron Broadband Ventures

A Forbes article mentions Enron’s “venture fund”. The line that caught my attention was this one: “[Swildens] acquired Enron’s venture portfolio in a bankruptcy proceeding in 2002.”

I’m not actually interested in Swildens, of course; I am interested in Enron. So here’s some background about Enron Broadband Ventures (with some juicy EBS insider baseball). Enron Broadband Ventures was the investment arm of EBS. It had a few early successes. It invested in FastForward Networks, a software manufacturer acquired by Inktomi. It also invested in Avici, a developer of high-speed, high-bandwidth network routers. Enron acted as the company’s technical advisers to help them develop its products. Meanwhile, Enron used Avici’s routers to power the broadband trading operation.

Avici would later become ensnared in the Enron mess because LJM2 and Raptor 1 did a hedge in September 2000 for the tech firm. The DOJ says the hedge was fraudulent. When Andy Fastow pleaded guilty he stated that he backdated documents to make it appear that Enron locked in the value of its investment in Avici in August of 2000, when Avici’s stock was trading at its all time high price.

Here is an old Forbes article (January 2000) about the deal with Avici. There are some quotes by John Griebling, which frankly surprised me. Griebling, by all accounts, is a hard-core, old-school engineer, someone I personally would not select to make comments to the media. But that is just me. (On the other hand, maybe in a random act of journalism, the writers actually wanted to know about the software, not the gloss. For that, Griebling would be a good choice; I just don’t associate Forbes or Fortune or Business Week with actual journalism.)

For context, John Griebling became head of network operations and engineering about the time John Bloomer became head of products. Bloomer, Griebling, and Collins were Scott Yeager’s guys. (Stan Hanks reported directly to him, for those keeping track of these things.) Griebling was initially pretty close to Bloomer, but it became obvious after a while that Bloomer was using him. Bloomer began to trash Griebling covertly in his emails while pretending to be his friend. Griebling found out about it and the two had a falling out that was never repaired. There are some funny emails from Griebling to Bloomer in which he calls Bloomer’s process nonsense “gobbly gook”.

Griebling meant well, but most accounts indicate that he was overwhelmed by his job at EBS. One person said he was a hothead who thought he could get things done by bullying people. He once, toward the end of 1999, exploded at David Berberian in a meeting (accusing Berberian of wanting to control things, which seemed to be a regular accusation). Joe Hirko, not liking confrontation, walked away. So Rex Shelby – who is very close to David Berberian- jumped in and told Griebling he was crazy, and they needed to talk now.

In the hallway, he schooled Griebling on Berberian’s accomplishments, stating that everything tangible that had been accomplished by EBS in 1999 had Berberian’s name on it. Griebling wrote a letter of apology to Berberian that same afternoon. (A classy move, in my opinion.)

When the company collapsed, John Kroger saw him as an easy target. Griebling initially made some stupid comments to Kroger, but then he tried to backtrack and got threatened by Kroger at the Grand Jury.

Lance Armstrong and Enron Broadband

Okay, here’s what I want you to do: Please read this article about the USADA’s “case” against Lance Armstrong, and, as you read, substitute DOJ in the place of USADA and substitute one of the Enron Broadband Services (EBS) defendants (say, Joe Hirko or Scott Yeager or Rex Shelby) for Armstrong. If you do this, you will find that the article explains the EBS case fairly accurately. Here are just a few of the analogies:

In the Armstrong case, there is no tangible evidence of a crime. All the actual recorded drug tests indicate that Armstrong was drug-free. The USADA has built a case largely on verbal testimony from tainted witnesses.

In the EBS case, there was no tangible evidence of a crime — the only tangible evidence, the actual network and software, was disassembled and auctioned off before anybody was indicted, with the explicit knowledge and permission of the federal prosecutors. The DOJ made sure that this tangible evidence was not available to the defendants before they brought their indictments!

In addition, the written evidence, the technical documents and weekly status reports, also indicate that there was no crime at EBS. Yet, in his autobiographical Book, Convictions, federal prosecutor, John Kroger, said that he decided to ignore the “more than ten million documents” of available written evidence and to build a case “primarily on the testimony of witnesses.” These witnesses were incredibly tainted, having largely been coerced and coached into testifying by the federal prosecutors.

Study after study has shown how unreliable oral evidence is, even in simple situations. In complicated white-collar cases, oral testimony is essentially worthless. And when the witnesses are expressly testifying only because they are under the thumb of the prosecutors, as they were in the EBS case, then the oral testimony is worse than worthless — it is coached, tainted, and deliberately misleading.

Look, I have no idea if Lance Armstrong is guilty of doping. All I can say is that the USADA has not made a case and has shown no tangible evidence. The idea that Armstrong could be arbitrarily stripped of his titles by such an organization is ridiculous. Lance Armstrong is being presumed guilty by the USADA and being asked to “exonerate” himself.

Sorry, USADA, it does not work that way in a just society! The burden is on the USADA to make a public and compelling case against Armstrong. Armstrong has no obligation whatsoever to participate in the farce. Declaring that a person is guilty of a crime and then telling him he must prove his innocence is not justice — it is a witch hunt.

The press and the public let the DOJ get away with a witch hunt in the EBS case. Let’s hope we can show more grit and indignation and sense of justice in Lance Armstrong’s case.

About Enron Broadband Services (From The EBS Website)

This is the text that was on the Enron Broadband Services website:

About Enron Broadband Services
Enron Broadband Services (EBS) delivers the intelligent platform for the emerging Net economy: the Enron Intelligent Network™, which is a Pure IP™ broadband overlay to the Internet. We also provide rich multimedia ePower™ application services that enhance online commerce and communications.

We offer ISPs and content providers a range of bandwidth transport solutions that enable businesses to scale capacity quickly to handle high traffic and high bit rate needs. A wholly-owned subsidiary of Enron Corp. (NYSE:ENE), Enron Broadband Services is headquartered in Portland, OR and has offices in Houston, New York and London.

Our vision is to create an intelligent network platform that is optimized to deliver high-bandwidth products and services quickly and effectively, enhancing the way people conduct business online. Optimized for data and with intelligence designed directly into the network layer, the Enron Intelligent Network extends beyond the classic definitions of a static infrastructure of fibers, switches and billing systems. The Enron Intelligent Network is a dynamic communications environment designed to optimize high-bandwidth ePower application services.

Together, the Enron Intelligent Network and the ePower™ application services it delivers will extend and redefine the capabilities of the public Internet. We’re revolutionizing the types of information that can be efficiently sent and received, enabling businesses to communicate and collaborate more efficiently and effectively online.

EBS also provides bandwidth transport solutions to enable businesses to scale quickly and easily to meet the demands of high traffic, high bandwidth communications. Our solutions include bandwidth on the commodity market, dark fiber sales, and strategically located windows of fiber, Advanced Fiber Transport Solutions. Enron Broadband Services is delivering the platform for the emerging Net economy. We are rapidly building our Enron Intelligent Network-a global fiber backbone and data network — and furnishing this network with advanced, ePower™ application services for sale via our channel partners. By the year 2000, our backbone will cover approximately 20,000 miles and will carry data, video and multimedia content at speeds up to 10 gigabits-per-second (OC-192).

We serve carriers like Inter Exchange Carriers (IXCs), Regional Bell Operating Companies (RBOCs), Local Exchange Carriers (LECs), wireless data network providers and Internet Service Providers (ISPs). Enron Broadband Services serves major content providers and end users who expect more from the Internet. Our ePower™ applications and services are delivered over the most flexible, high-speed, reliable and fault tolerant network available, our Enron Intelligent Network.

Who are the People at Enron Broadband Services?
Our seasoned team of telecommunications, internetworking, and Internet experts come to us from such organizations as MFS/WorldCom, MCI, GTE, Netscape Communications, UUNet, Tektronics, US West Enterprise and Electric Lightwave. We are continuing to add energetic, enthusiastic professionals in all areas of the organization, including network engineering, operations, marketing and sales.

Today In Enron History

On April 18, 2005, the first Enron Broadband Services (EBS) trial began. I have written about this trial many times before, for example, here. I think what I need to do today is put it in historical perspective.

John Kroger was the federal prosecutor who wrote the original EBS indictment, as well as five of the incredible eight superseding versions of the indictment. Yes, you read that correctly — the government had such trouble coming up with a description of a “crime” at EBS that they wrote an unbelievable nine version of the indictment! According to Kroger’s own words, he rushed to write the EBS indictments because his huge ego made him want to beat the other prosecutors in getting an indictment “on the boards”. Thus, Kroger is the main villain in the EBS prosecution tale — he is the guy who wasted taxpayer money and tormented the families of innocent men, all to serve his own ego which had been bruised when his girlfriend left him for another attorney.

At the time of the EBS trial, Houston, and the entire country, were at the height of the anti-Enron hysteria. The government, even though they had no factual case, was confident that the EBS trial would be a “slam dunk” for the prosecution because of the solid jury bias against Enron. The government was certain that the convictions they believed they would get at this trial would be a perfect segue to the future trial of Ken Lay and Jeff Skilling. The government had reason to be cocky — polls showed that about 90% of the jury pool believed that any Enron executive who was indicted was automatically guilty and should be convicted immediately. In addition, Ken Rice and Kevin Hannon, EBS’s CEO and COO, had given up their defense and entered into plea deals with the government because they believed that the anti-Enron bias was too great to overcome at trial. So the EBS defendants who were bold enough to actually defend themselves, Joe Hirko, Scott Yeager, Rex Shelby, Kevin Howard, and Michael Krautz, faced incredibly long odds at trial.

However, the shallowness of the government’s case became apparent with their first witness. Shawna Meyer, a journalist major, was the lead prosecution witness — the government tried to use her to explain technology to the jury — she attempted to define terms such as “router”, “server”, “network”, etc. As I read the transcript of her comments, they are just laughable. And all the rest of the government’s witnesses had similar issues — they are like a rogues gallery of the EBS rejects: John Bloomer, a guy who tried to steal EBS technology and was fired; Bill Collins, an unbalanced liar who accomplished nothing at EBS but wanted a raise anyway and who was fired; David Reece, a guy who commented on technology but then admitted he had no actual technology role at EBS and was fired.

And then the defense witnesses spoke out: Larry Ciscon, the Rice University PhD software engineer who created the EBS technology in question and had authored a patent on it; Mark Palmer, the head of application development at EBS who was intimately familiar with the technology; Ellis Giles, the software engineer who actually wrote the software code which the government claimed did not exist; David Leatherwood, the engineer who headed the construction of the physical EBS network and facilities; etc. Even the most biased of jurors surely could see the obvious distinction between the credibility of the prosecution and defense witnesses.

But the coup d’etat for the defense was the defendants themselves — they turned out to be compelling witnesses in their own defense. Rex Shelby went first, a brilliant move by the defense team because it set a good tone for the entire trial. People tell me that Rex was eager to take the stand and that he was relaxed, natural, and totally un-intimidated by lead prosecutor, Ben Campbell, who cross-examined him on the stand. I am told Rex’s performance emboldened the other defendants and set the pattern for their testimony.

The trial lasted until mid-July when the jury returned from their deliberations with zero convictions, a number of acquittals, and many hung counts. I hear through the grapevine that the jury was very close to complete acquittals of the three technology defendants, Hirko, Yeager, and Shelby. So the trial was an unmitigated disaster for the government. So spooked was the government by the EBS experience that the it stipulated before the Lay/Skilling trial that it would not even get into the subject matter of the EBS case at the Lay/Skilling trial!

There are so many stunning moments in the EBS trial that I suspect that we will be hearing a lot about it, and the EBS case in general, over the next couple years. The EBS tale would make a great film. With a movie version of “Atlas Shrugged” about to be released, maybe it is time for a film about real businessmen being hounded by the an incompetent and arrogant government!

Incidentally, today is also the anniversary of the daring bomber raid by Doolittle’s pilots on Tokyo in 1942 during WWII. It is like the anniversary of the Enron Broadband trial in this way:

The Japanese Imperial Army thought they had the war sown up and that Tokyo was untouchable by American aircraft. The Enron Task Force thought convictions against the Enron Broadband defendants would be a “slam dunk”.

Both the Japanese Imperial Army in 1942 and the Enron Task Force in 2005 were wrong.

How Many Prosecutors Does It Take To Fight A Software Engineer?

Here is the list of the lead prosecutors (each of which had their own team of additional prosecutors and other DOJ/FBI staff) that Rex Shelby beat or exhausted before he himself ran out of money for his defense:

John Kroger – Presently the Attorney General of Oregon.

Sean Berkowitz – Presently Global Chair of Litigation at Latham & Watkins, based in the Chicago office.

Ben Campbell – Presently a Partner in the NY office of Latham & Watkins.

Lisa Monaco – Presently Assistant Attorney General for National Security, Justice Department.

Van Vincent – Presently Assistant U.S. Attorney, U.S. Department of Justice, Nashville, TN.

Jonathan Lopez – Presently Deputy Chief, Money Laundering and Bank Integrity at U.S. Department of Justice, Washington, DC.

Jack Patrick – Senior Litigation Counsel at the DOJ, recently prosecuted Allen Stanford.

Peter Katz – Principal at Berkeley Research Group in New York, NY.

The heads of the Enron Task Force that Rex also beat were:

Leslie Caldwell – Presently co-chair of Morgan Lewis’s Corporate Investigations and White Collar Practice, New York, NY.

Andrew Weissman – General Counsel for the FBI.

Sean Berkowitz- See above.

Wow, no wonder the DOJ was so eager to do a plea deal with Rex. Would you want to face the guy at trial who beat this list of prosecutors?!

Who Is Rex Shelby?

This was a search term on my blog recently. It reminded me of “Who is John Galt?” from Atlas Shrugged. This fits because Rex Shelby is like a character from an Ayn Rand novel. Rex is the guy who battled the Feds the longest — he fought tooth and nail until he depleted his personal savings. Rex was the first of the Enron Broadband defendants to take the stand to speak in his own defense and the last to resolve his case.

As I’ve pointed out before on this blog, I have never talked with anyone, including prosecution witnesses, who believe that Rex Shelby is guilty of any criminal activity. And the people who know him well and have worked most closely with him insist that he is simply incapable of anything criminal. And, based on the plea deal he negotiated and the sentence he got, the prosecutors and the judge did not believe him to be guilty of anything either.

Anyway, today is the one-year anniversary of Rex Shelby’s sentencing hearing. How time flies when you’re being punished! Rex has flown through all the most onerous parts of his sentence — halfway house, home confinement, community service — all while maintaining a full-time job in a small software company. Rex has been more productive while under punishment than most people are in their normal lives!

I also find it appropriate that this anniversary falls on the same day as a hearing on the Stevens bill in Washington, D.C. The Stevens bill is an attempt to force prosecutors to actually uphold their Brady obligations which require them to identify evidence favorable to the defendants. The failure of the Enron Task Force prosecutors to uphold this basic obligation is one of the abuses that Rex identified in the prosecutorial misconduct motion he filed during his case. Let’s hope that the Stevens bill will help prevent prosecutors from doing to others what they got away with doing to Rex. I encourage you to write your Senators and Congressmen in support of this legislation.

No, Scott Yeager Was Not In Smartest Guys In The Room

This query has been asked at least fifteen times, probably more like twenty-five. Here are a few:

(This one I included because it has a very strange search term about Kevin Hannon)

Whoever is asking is obviously in distress so I figured I would help. No, Scott Yeager is not in Smartest Guys In The Room. As for why he was not “cast”… basically nobody accused of crimes was going to willingly sit down and explain themselves before trial. And the fact that “cast” is being used sounds like my pet peeve, mistaking Enron people (or anyone else for that matter) for cartoons and “characters”.

As for why Scott did not “appear” in the movie (as opposed to being “cast”), not every Enron executive was discussed in the movie. In fact, most Enron defendants did not appear. Only Ken Lay, Jeff Skilling, Ken Rice, Timothy Belden* and Andy Fastow were actually discussed in the movie – and what was said about them was koo-koo bananas. I’ve documented all those lies here. Scott Yeager would have ultimately destroyed the credibility of Bethany McLean since he was vindicated at the Supreme Court. Bethany and her cohorts chose to focus on the lurid, manipulatable aspects of Enron.

I hope this has helped.

*Corrected from original to include Timothy Belden.

How The DOJ Got Luitgard Fischer

One of the most sympathetic prosecution witnesses is Luitgard Fischer, a German citizen who was a finance director in EBS. John Kroger had his sites on her, but before he could make his move and indict, she got spooked with the threat of deportation and came forward. Kroger discusses this in his autobiography:

There is just so much evil packed into these paragraphs, it is difficult to believe that he had the audacity to publish it. I’m curious why the ETF was not interested in prosecuting low-level executives/employees. Surely if they were guilty, they should go to prison, right? But it isn’t true anyway. Look at Lea Fastow, William Fuhs, Chris Calger, Sheila Kahanek, and Michael Krautz. None of them were hugely powerful inside Enron (or Merrill Lynch, respectively.)

Furthermore, I find it amusing in an ironic way that Kroger would be shocked that people who might be under his microscope would do some research of their own. He calls it “creepy.” I wonder if he thought it was creepy when FBI agents took photographs of Joe Hirko’s house without a search warrant. Does he think it is creepy at all to publish a book in which he says he chose to come aboard the Enron Task Force because he was craving power after his girlfriend left him for another man. In fact, he even says that he was stalking her toward the end of their relationship; was that creepy at all? I think Luitgard’s googling of the “Professor” (hahahah) is completely and totally rational.

Luitgard Fischer testified that Project Braveheart – the project with Blockbuster – was fraudulent because Enron guaranteed a partner, nCube, a profit with no risk.Had such a promise been offered, it would have violated accounting rules (incidentally, it would have been a duplicate of the Nigerian Barge Deal – but with video on demand instead of electricity barges.)

“This transaction was based on accounting rules that I feel we violated,” said Fischer. She blamed Michael Krautz and her boss, Kevin Howard, for issuing promises to nCube. The jury disagreed; Michael Krautz was acquitted and Kevin Howard went to trial two times. Finally he accepted a plea deal to make it go away.

It was certainly not quite the slam dunk that Kroger had hoped.

Seven Pivotal Events At Enron Broadband Services

1. Enron acquires PGE and (unknowingly) enters the communications business.

2. EBS acquires Modulus Technologies.

3. EBS announces the EIN.

4. EBS announces that Sun is licensing InterAgent.

5. Enron brings EBS into a “core” business and kills all hope of an EBS IPO.

6. Enron announces that it was proposing an open standard for bandwidth trading.

7. Enron formally announces the “BOS” name and delivers a BOS SDK.

Best Enron Picture Ever

Michael Krautz hugs his mom after he’s acquitted. What a total sweetheart. He’s good people.

Stupidity Run Amok: Ken Rice and Kevin Hannon Slandered In Crazy Book

The other day I was waxing poetic about how awesome it would be for James Spader to play Jeff Skilling in a movie about Enron. I actually got the idea from watching the trailer for Brian Cruver’s “Enron: The Unshredded Truth”, which was just fantastical and crazy. It was like Corporate America on peyote. Just so outrageous. Here’s the trailer:

Cruver’s book and movie didn’t even touch Enron. It was way too crazy to be believed, and even those who wanted to believe it didn’t – it just didn’t line up with the facts.

So tonight I was googling for something unrelated and came across some more crazysauce in the vein of Cruver’s book. I actually owned the book Broadbandits at one time but I never got around to read it, which was probably a good thing. Check out the crazy here:

I’ve spoken to people who know Ken Rice, and I can assure you, they do not think of him as a six year old in a forty-year old’s body. He is as self-possessed as the moon. Secondly, he watched cartoons during meetings? Nobody has ever mentioned this to me before, and let’s face it, if it were true, that would be awesome and thus, I’d have heard about it by now. Third, I’m not sure what’s wrong with wearing jeans and cowboy boots if that’s what the man wants to wear. Is this person appalled that Ken Rice wasn’t in a tux? That he dressed like a farmer? What? What’s the problem here? Fourth, it is true he went to work whenever he felt like it. He had been there for twenty years and had made Enron a ton of money. He was a little burned out, and wanted to play. Can’t blame him for that. Fifth, he did not marry Amanda Martin. Sixth, I hate this subject; it is so not our business. And by the way, I am sure he is the only person in the whole history of corporate America to fall for a coworker. Anyone who mentions this is just being a lascivious fucktard. Seventh, Kevin Hannon by all accounts is a very smart guy. I have no idea if he’s a know-it-all (I don’t think so, I’ve never heard that accusation before) but what bugs me is that every conversation about “know it alls” requires someone to NOT know it all. And that is usually the person making the accusation. Just saying. Eighth, I’m not sure how this moron can make the argument that Ken Rice and Kevin Hannon’s presence at Broadband would ensure it was a colossal mess because when they were in Wholesale, it was on fire. Both their careers had been one success after another. So maybe if you publish a book with real people in it – people with families and children and peers – you might want to be a little more careful about throwing around careless accusations. Ninth, the motorcycles. Lord have mercy. Why people get their panties in a twist about the motorcycles I will never know. First of all, the architect who built out the space suggested a metaphor for speed, thus the motorcycles were bought. Ken Rice did not buy them on his AmEx, the way some people have suggested. The architect did and Enron reimbursed them with a check. They cost $20,000 which was far less than other departments were spending on art. And tenth, that stuff about his cars just reeks of class envy. What business is it of anyone’s if he liked Ferraris? It always amuses me that people who don’t have money always think they would have spent someone else’s money better. No Ferraris! Just nice sensible Buicks. Whatever, dickface. This whole passage is just garbage — class envy, lies, and stuff that is none of your beeswax.

But the truth isn’t even relevant in this book. They’re on the warpath to create a narrative about Enron. Ken Rice is supposed to be a certain way, and if in real life he isn’t that way, well who’s gonna know about it, right?

UPDATE

Omigod, y’all, it gets even more ridiculous. Check this:

His Asian connections? I have no doubt that Ken Rice knows people all over the freaking world, but “his Asian connections”? Where would he have Asian connections? His whole life was spent at Enron in the Wholesale division. There weren’t any great big Asian assets – even Dahbol was in India and he had nothing to do with that. His Asian connections? This was really driving me nuts. Plus “SynerG” doesn’t sound like Ken Rice. I don’t know why but that just doesn’t seem right. He’s the dude who named “Enron Broadband Services”. He’d spell it out at least, and I don’t think he’d use the word “synergy” – a vague word – in the name of a new company.

So I googled.

Of course, Ken Rice is not using his vast “Asian connections”. This kindly looking gentleman from Minnesota who shares the name “Ken Rice” is President/CEO of “International SynerG Communications”.

That’s how awesome this book is. LinkedIn has busted him. Oh my god, I’m having so much fun with this, I might just keep reading and correcting that freaking book of lies all night.

Update 2
The Ken Rice from Minnesota has been president/CEO of the SynerG company since 1994. DO THE MATH. I’m enjoying this way too much.

Enron Year 2000 10-K Disclosure: Broadband

I found an interesting risk related disclosure in Enron’s Year 2000 10-K. It is regarding Broadband.

In 2001, Broadband Services expects to continue
to expand the commercial roll-out of its content service
offerings including video-on-demand.

There are literally hundreds of examples of statements like these (i.e., “forward looking statements”) spread through analyst conference books, financial disclosures, press releases and other media. Enron – and Jeff Skilling – were very clear about the status of Enron Broadband Services.

A version had been up and running since 1999. The company streamed the Country Music Awards, an Andre Agassi tennis match and a Drew Carey show. But like Rex Shelby said on the stand, “Software is not complete until it is obsolete.”

Yet prosecutors and even some ordinary folks still claim that the EIN was vaporware. It doesn’t make Enron look criminal; it makes the accusers look foolish.

The Skinny on Rex Shelby

So Rex Shelby has completed the guts of his sentence. I understand that there is still some ordinary probation to endure, but the tougher stuff, the halfway house and home confinement, is over for Rex. It was stupid and useless for the Feds to put him through that nonsense, so I am happy for him that it is over.

It is poetic that Rex Shelby ends his sentence right in the middle of the Enron ten-year anniversary events. Rex fought the federal prosecutors of the DOJ longer than any other Enron defendant. Yes, there are still some appeals ongoing in other cases, but those are occurring after a decision of some kind was made in those defendants’ cases. Rex fought the DOJ to a standstill for more than eight years before there was a conclusion of any sort in his case! And he faced down nine lead federal prosecutors in charge of his case over time, each with their own staff of additional prosecutors, agents, clerks, and office workers. I marvel at this because I cannot comprehend how he did it without collapsing from exhaustion.

Rex Shelby was first interviewed by the FBI in August 2002. He was indicted on 20 criminal counts in May 2003. He endured a 3-and-a-half month trial in 2005 after which 14 of the 20 counts were acquitted by jury or judge. This left 6 counts on which the jury hung (I hear the majority of the jury voted to acquit on those 6 counts as well). The DOJ refused to dismiss those remaining 6 charges because … well, because this was Enron and they could not face the embarrassment of admitting they had no case against Rex.

Rex Shelby then went through two long appeal proceedings, each of which ended with a request to the U.S. Supreme Court to hear his case. The Supreme Court did not select Rex’s case, but they did select the case of Rex’s co-defendant, Scott Yeager, who had a similar appeal. Rex actually authored an amicus brief, in his own name, in support of Scott’s appeal, and Scott won in the Supreme Court. The Supreme Court actually supported the arguments in Rex’s amicus brief in their written decision on Scott Yeager. However, on appeal, the 5th Circuit refused to apply the Supreme Court ruling on Scott Yeager to Rex’s own case. This has to be one of the most heinous injustices of a case filled with misconduct and incompetence on the part of the DOJ and the courts.

With no money left to prepare for a second trial (which I understand Rex Shelby desperately wanted), he then negotiated his own plea deal with the DOJ. Most people would say that Rex beat the DOJ because the deal was “favorable” to Rex, but I suspect that Rex is humiliated by the fact that he eventually had to lie for the government about being guilty on a single count, something that he had dedicated all his time and money fighting to avoid for eight years. He could have negotiated a deal at any point during that fight and retained most of his life savings. Or he could simply have lied in the beginning about somebody else at Enron as the prosecution witnesses did — this would have enabled him to avoid an indictment altogether. Instead, he chose to fight the DOJ and, in doing so, he lost his life savings. But, in my opinion, he retained his integrity.

I hear that Rex Shelby harbors no bitterness about his experience and that he has already jumped right back into the high-tech entrepreneurial world that he gave up during his fight with the Feds. This is just amazing to me!

And — oh yes — I also hear that Rex Shelby is a good writer and that everybody wants to hear what he has to say about Enron Broadband. I suspect that there are few people who can be more effective at popping the bubble of the Enron Myth than Rex. I hope, hope, hope he starts writing soon!

2000 Analyst Conference Back Online

After a short delay, the 2000 Analyst Conference is back online. (Some of the tapes are still uploading so if it doesn’t work right away, try again in a few minutes). I will also have transcripts up in the next day or so.
[Update: I'm having internet connectivity problems; some of these videos are only seconds long when they should be hours. It will just take some time to get them up as I fight with my internet connection.]

EBS Part 1

EBS Part 2

EBS Part 2, Retail Part 1

EBS Edited Tape 4

EBS Clips

Rex Shelby

John Bloomer

Shawna Meyer Part One

Shawna Meyer, Part Two