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!

Bill Collins As Background

Bill Collins was becoming dangerously erratic. He was literally endangering Enron’s reputation by telling outrageous lies to Enron’s partners such as Microsoft and Sun. One of his bosses described him as the “highest maintenance employee ever”. And his relationship with Scott Yeager was just… it makes me feel sorry for Scott Yeager. Scott brought him on board because he had one pretty good idea, and then he quickly turned into a crazy person. He was alternately angry at Scott and trying to kiss up to him. One of the best exchanges during the Broadband trial was when the amazingly talented attorney Tony Canales had this exchange with Mr. Collins:

Q. Did you, sir, at any point in time describe your relationship to Mr. Yeager as a marriage without sex?

A. Yes.

Q. Now, was that ever a good marriage, by the way?

A. Indeed, it was.

Q. Did the marriage turn sour?

A. At times.

Q. Was the marriage confrontational?

A. Oftentimes.

Q. Were you the cause of the break up of that marriage?

A. I believe there’s two sides to every story.

Q. Yes. Do you agree, sir, that you are the kind of person that — at least you’ve described — have you ever described yourself as a person with a chip on his shoulder?

A. Yes.

Q. What does that mean?

A. It means I struggle emotionally with all kinds of things.

So you can see at the minimum he has no idea how he’s perceived by others.

This gem goes on to emphasize the point. It is a letter from Bill Collins. Backstory: at a meeting, Bill Collins threatened Joe Hirko. The thought of that alone cracks me up. I can just imagine Hirko sitting there in his calm composure and Bill Collins becoming every more insane by the second. Anyway, as a result of the threat, Scott Yeager dismissed him for a week. When he came back to work he had that little note prepared.

To my ear, these words sound so whiney and manipulative and passive-aggressive. He basically seems to be saying that “you’ve forced me to be quiet so please don’t punish me for being quiet, boo hoo.”

His next bullet point actually comes close to demonstrating that he has some perception of what he’s done wrong, but then he fumbles and it becomes pretty standard Bill Collins fare: whiney, manipulative, passive-aggressive:

Obviously he knows there’s something wrong with going over the heads of his managers, but he seems to think that if he is more collaborative, it’s all good. The problem was bigger than that. Bill Collins regularly took credit for other people’s work. He claimed to have invented InterAgent, the brainchild of Rex Shelby, Larry Ciscon, and David Berberian, and the cornerstone for their company, Modulus, which Enron acquired. In other words, Bill Collins wouldn’t know InterAgent if it punched him in the nose. Copypasting from this post about Bill Collins, here are more of his crazy lies:

Collins was impeached numerous times on the stand. But let’s remove that fact. Let’s just agree for a moment to conform to Bill Collins’ world where everything he says is true. These are some of Bill Collins’ claims:

He invented InterAgent.

He was going to start a company with Rex Shelby, David Berberian, Scott Smith, Scott Yeager, and some others (this one has a lot of tangents, so I will refer back to this.)

He was responsible for the idea to attend a trade show in Las Vegas. (This, incidentally might be true. What grates on my nerves about it is that he is bragging about it. He does that a lot. Everything is his idea.)

He was responsible for designing the trade show booth.

He was going to make $100 million “in the next few months”.

He also admits that “I was intolerant of opinions besides my own.” And in one of his many temper tantrums when he wanted to be made Vice President, he threatened Joe Hirko.

The big problem with Bill Collins is that he was a know-it-all and a man who just didn’t think it fair that he wasn’t getting what he deserved. He believed that because he had a journalism degree, he should be put in charge of all the press releases for Enron Communications. He believed that because he had written his stupid little plan, he should be Rex Shelby’s boss. Oh, and he hated Rex Shelby.

The fact that the DOJ manipulated him like a fine Italian puppet is shameful. Though I find his actions at Enron ridiculous, he is in fact a sad figure. He obviously had very real problems and the fact that the DOJ used him to attempt to impeach the Enron defendants speaks to the desperation of the prosecution’s case.

This is what you need to know before we discuss John Bloomer.

(Oh, and Bill never apologized to Joe Hirko for threatening him or anything else.)

Were Sun & Cisco In On The Conspiracy?

Rex Shelby’s Enron emails are something to behold in their utter brain-melting, stupor-inducing boredom. For a company that was known to be completely saturated in sex, drugs, and corruption, apparently Rex Shelby thought people were actually there to work because that’s what all his emails were about. And they were coherent and all the words were spelled correctly. What a square.

You know who could help Rex Shelby learn to write entertaining emails? Bill Collins. Bill Collins could school the hell out of Rex Shelby in this regard. Collins could teach him how to add some paranoia, sprinkle in a few bitchy comments about his coworkers and really liven these emails up for posterity.

Basically Rex’s Enron emails are only valuable as insight into the work, not the culture. In fact, all the Modulus guys were like this. I’m looking at you, Larry Ciscon, Mark Palmer, Ellis Giles, and David Berberian.

And thus, we have Exhibit 0001.

If you’re still awake you will notice that the email mentions Sun, Bulldog, Inktomi, and Cisco. I find it fascinating that these big companies would Beta test a product that didn’t exist.

Oh, and though I hear that Rex Shelby is a total bore, I’ve seen his picture. What he lacks in crazy, he more than makes up for in yumminess.

Bill Collins’ Long Goodbye

Bill Collins’ emails never fail to cheer me up. They’re utterly perfect in their craziness. Oh sure, I feel bad for Scott Yeager, having to deal with this guy’s PMS mood swings, but I’m confident in Scott’s ability to handle it.

Stay classy, Bill Collins.

In A Corn Field With My Shorts Around My Ankles: More Bill Collins

Back in the day, when Bill Collins was literally losing his mind, he went around two of his bosses and talked to Microsoft, and flat out lied to Microsoft; this is not in doubt. He admitted under oath that he lied. Anyway, his cracked-up self was starting to make Enron and EBS look bad, so Joe Hirko stepped in and told him that from now on, only Jeff Skilling would be talking to Microsoft. He viewed this as Joe getting between him and success, and he threw his hissy fit about it.

So not only are these emails funny, they demonstrate a very salient point about an incident that came up again and again.

Here, Bill does what he always did: ran to Scott Yeager and begged him to kiss his boo-boo. Also notice the paranoia in his reply, claiming Joe Hirko was “hostile” when he only asked to see where Bill was getting these cockamamy numbers.

With everyone babysitting Bill Collins, I’m shocked any work got done at all.

In A Bill Collins Mood

Bill Collins was an epic email writer. In all my days, I’ve never seen anyone write such amazing, crazy-ass emails. He was very prolific, very unorganized, very crazy, and very passionate – a cracktastic combination of self-delusion, illusions of grandeur, petty jealousy and greed. If he were a party, he’d be Burning Man. He was just awesome in the best, most hilarious way. Those who worked with him have told me, in no uncertain terms, he was a whack-job. I think I would have enjoyed working with him just to observe the slow unraveling of a human being but I am cold that way.

This is part of one of his crazy-mails to one of his favorite email victims, Scott Yeager. As usual, he is unhappy about his job, and he has some ideas how he can get happy.

Poor Scott Yeager. He had to deal with this day after day after day. If that does not demonstrate his strength of character, nothing will.

FBI Form 302

When the DOJ launches an investigation, FBI agents are dispatched to basically get a read on the subject. They might try to judge whether this a friendly witness (meaning one who will agree with the DOJ) or an antagonistic witness. They will ask questions, and write down the answers, and later – sometimes weeks later – write it all down in a narrative. This document is called a 302. It is a spin document, the first chance an FBI agent has to write down the story he will want to tell a grand jury or, later, a judge.

Efforts to get the raw notes are often futile; you will recall Jeff Skilling’s long battle for the Fastow Notes. So the 302 becomes the “official story”. Thus, when agents interviewed Joe Hirko, it must have been even worse than the write-up. Imagine having FBI agents with handguns come to your home and tell you not to talk, but just listen!

It is also interesting that the agents told Hirko that EBS was under investigation and then two weeks later told Rex Shelby that it was not. That is not just a small lie — it is a major lie.

In one of the Bill Collins 302s, Collins says that Joe Bloomer called him one night all in a panic over the ETF. He was afraid of the ETF prosecutors, afraid that they would indict him. When the defense attempted to use the 302s at trial to show this, and demonstrate the fact that Bloomer was testifying because he was scared out of his mind of being indicted, Judge Gilmore simply said no.

These are powerful documents because no matter how something sounds when you say it, it looks truer when it’s written down. And if the agents want to say something horrible, like, “So-and-so confessed to XYZ”, there is absolutely no recourse to correct the record. In some cases – like the Bloomer/Collins situation, they accidentally write too much and then cover it up at trial.

Collins-Bloomer Email

This is a typical email from Bill Collins. He wants to “have fun” and has figured out a way of making $100 million dollars. That’s just awesome.

Frankly he’s not even living in reality.

Bill Collins’ Employee Evaluation

I spoke to one of Collins’ former bosses at Enron today and this is what he had to say about Collins:

We all knew he was nutty… every day was some new crazy thing with him. The highest maintenance employee ever. Also, any employee who asks to be given $18 million after he has already quit is probably not going to do well on the ‘Good Employee’ scale. So, I would have to say no, he was not a good employee.

I love that statement: the highest maintenance employee ever. That cracks me up.

Bill Collins’ Regret

I’ve described Bill Collins before, and indeed even described this letter. This is part of a letter that Bill Collins sent to Ken Rice. Collins had sold stock right before the analyst conference, and when he saw how the stock had increased, he had second thoughts. So he thought he’d just jot a note to Rice and Rice would happily write a check for $18 million. It didn’t happen that way. I’ve cut out the first four pages of this letter because it’s a bunch of EBS political stuff, and centered on the request for $18 million because it is one of the very few funny things that happened because of the 2000 Analyst Conference.

UPDATE
Updated to add Kristina Mordaunt’s reply to this letter to Ken Rice. I’ve blotted out Collins’ personal information.

Canales Setting Them Up And Knocking Them Down

At EBS, Bill Collins wrote an almost incoherent email in which he said that BOS was a “bitch on the sofa”. I think the poor guy was thinking of “the lipstick on the pig” concept but got confused. For some reason the government loved that email. Strangely, the email did not go to any engineers who could actually have set Collins straight. Scott Yeager, however, was a recipient.

Yeager’s attorney, Tony Canales, always referred to the email as “the pig on the sofa” email instead of “bitch on the sofa”. For some strange reason, this irritated prosecutor Ben “Opie” Campbell terribly, so of course, Canales being Canales, he kept doing it. At one point, Campbell stood up and declared, “Your Honor, there are no pigs in this case!” Everyone at the defense table started laughing.

David Angeli v. Bill Collins

As much as I focus on the Broadband Three and indeed all the Enron defendants, the attorneys are also colorful, interesting and brilliant folks. To illustrate some of this, I’ll be adding more posts about the testimony to show how these men did such great jobs.

Here is funny insight about Bill Collilns’ cross by Joe Hirko’s attorney, Dave Angeli. Angeli did a brilliant job with Collins.

Angeli had a big black notebook with Collins’ 302s and Grand Jury testimony in it. These are not exhibits but can be used with a witness to show he is lying. During the cross, Collins would say something and Angeli would pick up the black notebook, and say “But previously, you said xxxxx, did you not?” The first couple times Angeli used the notebook and Collins resisted, Angeli would hand him the notebook and have him read his previous statements to “refresh his memory.” But eventually, Angeli had Collins trained like Pavlov’s dog. All Angeli had to do eventually is put his hand on the notebook and Collins would agree with Angeli. It was both funny and sad to see a grown man behave like Collins.

Collins is simply a congenital liar or medically delusional. What does it say about Kroger that he would shape his case on the words of a man in that sorry condition?

Let’s Get To Know Bill Collins

Bill Collins was Director of Business Development for Enron Communications. I can not emphasize enough how very important this is: DIRECTOR. Not Vice President. Mr. Collins problems at Enron Communications began almost as soon as Scott Yeager brought him aboard. He had written a document which he called a business plan; it was not actually a business plan, it was a vague idea for two very specific functionalities of software. But he had this plan and he brought it to Enron and Joe Hirko agreed to pay him $150,000 for this plan, plus an annual salary of $105,000. He also received 70,000 stock options.

And the title of Director of Business Development.

Do you know how sometimes it’s the little things that drive you up a wall? How everything can be great but that one little glitch is the thing you obsess about? For Bill Collins, it was his title.

Bill Collins wanted that Vice President title so badly that he could taste it. He complained to Scott Yeager; he complained to Joe Hirko; he complained to anyone who would listen that he wasn’t VP. When he wasn’t complaining about his title, he was complaining about his compensation. Oh, and lying to customers. And his peers. And his bosses.

I normally have compassion for the mentally ill, so I do not take much glee in writing about the experiences Bill Collins had while at Enron. I understand that he is not in full control of his faculties.

To get an idea of what kind of personality Bill Collins was strapped with, let us turn to the Form 302 notes – that is the FBI document that is created after interviewing a subject. In this case, the 302 was from a woman who formerly worked with Collins at MFS Datanet. She told FBI agents that her job was to go with Collins on customer calls because Collins would sometimes undergo radical personality changes at unpredictable times. Her job was to calm the customer down when Collin went from smiley face to hyper-jerk in half a second. It sounds like fiction; alas, it is the sad reality.

Collins was impeached numerous times on the stand. But let’s remove that fact. Let’s just agree for a moment to conform to Bill Collins’ world where everything he says is true. These are some of Bill Collins’ claims:

He invented InterAgent.

He was going to start a company with Rex Shelby, David Berberian, Scott Smith, Scott Yeager, and some others (this one has a lot of tangents, so I will refer back to this.)

He was responsible for the idea to attend a trade show in Las Vegas. (This, incidentally might be true. What grates on my nerves about it is that he is bragging about it. He does that a lot. Everything is his idea.)

He was responsible for designing the trade show booth.

He was going to make $100 million “in the next few months”.

He also admits that “I was intolerant of opinions besides my own.” And in one of his many temper tantrums when he wanted to be made Vice President, he threatened Joe Hirko.

The big problem with Bill Collins is that he was a know-it-all and a man who just didn’t think it fair that he wasn’t getting what he deserved. He believed that because he had a journalism degree, he should be put in charge of all the press releases for Enron Communications. He believed that because he had written his stupid little plan, he should be Rex Shelby’s boss. Oh, and he hated Rex Shelby. Rex Shelby does have a tendency to drive people insane with all that hot, sexy competence and honesty. It’s a real bitch being exposed to that kind of goodness and genius every day. I love to talk about Rex Shelby, so please indulge me.

From the trial transcript:

On Direct:

Q. And are you friends with Mr. Rex Shelby?

A. Yes.

On the cross with Tomko, Shelby’s counsel:

Q. Mr. Collins, my name is Ed Tomko and I represent Mr. Shelby. You didn’t like Mr. Shelby very much, did you?

A. At the time I worked at Enron?

Q. Yes, sir.

A. We didn’t have a personal relationship.

And later, still on the cross with Tomko:

Q. Now, were you trying to get rid of Rex Shelby?

A. Yes.

Q. Why?

A. I — I was holding him and his organization accountable for the lack of progress that we were making, and I’m expressing the view that we could be better off without
them.

Q. Now, did you discuss this idea with Mr. Yeager?

A. Yes.

Q. And what was his response?

A. He was not in favor of it. He wasn’t in favor of it.

Later, he claims that he and Rex Shelby, Scott Yeager, Scott Smith and the gang were going to start a business based on his great business plan. Now, at the time, Mr. Shelby already had a very successful company called Modulus. But this is actually an unwittingly great point for the defense. If Mr. Shelby is greedy and wants to pump and dump the stock, why start another company with Yeager, Collins and the gang instead of selling his company to Enron? Well, we don’t have to worry about that because there was never a plan for these guys to go into business together and indeed, once they were all at Enron, Collins tried mightily to get Rex and David Berberian kicked out.

How? By trying to sell Modulus to Sun.

At this time, Modulus and Sun had been in bed together for years. Sun loved Modulus. The executives and engineers at Sun thought the Modulus gang was the cat’s pajamas. Modulus created the industry’s first JMS-compliant toolkit. Sun had them demonstrate it on stage at the 1998 JavaOne conference. Any of the Modulus guys could have walked in the front door of Sun and been feted like a king. Sun even offered to buy Modulus. Shelby declined that offer and went with Enron.

Bill Collins trying to encourage Sun to take over Modulus would be like somebody asking me to please, please, I beg of you, write about Enron.

Obviously, Bill Collins had a problem with the Modulus gang. Meanwhile, Bill Collins was not even a blip on the radar of the Modulus men; they were too busy working and building the Broadband Operating System to pay much attention to him. Collins tended to alienate people easily – undermining them and their projects when he felt he should get more credit for his contributions. You will find this a common theme with Bill. It’s all about his title, his compensation, his stock, his visibility, his worth. (I described Bill Collins recently as, “Toxic, the kind of guy you can’t get away from. I get the sense he would follow you into the bathroom to remind you that he deserves a promotion and a raise.”)

In December 1999 Enron Communications wanted a deal with Microsoft. Collins believed that Microsoft would not want the deal if it knew how cozy Enron and Sun were together (because Sun and Microsoft were obviously very competitive.) In his interactions with Microsoft, Collins never used the words “Broadband Operating System” or “BOS”, believing this would somehow tip them off that they were in bed with Sun. (Please do not look for logic in this; there isn’t any.)

One afternoon while Collins was meeting with a guy in the Microsoft CFO’s office, Jeff Skilling and David Berbarian were meeting with Steve Ballmer. Skilling did not care to obfuscate the issue and told Ballmer about the BOS (as any honest executive would, I might add.) Shortly after that meeting, Mr. Hirko informed Collins that all communication with Microsoft would go through Skilling or another executive, Managing Director Rich DiMichele.

But Collins felt he had a better handle on the situation that either CEO Skilling or CEO Hirko. After Hirko took the Microsoft deal from him, Collins sent the Microsoft CFO an email stating, “we are prepared to take ECI public with Microsoft as a shareholder of something on the order of 3 percent of the company for something on the order of $200 million.”

At trial, Hirko’s attorney, David Angeli, dug in to this.

Q. So, you were communicating with Microsoft here about the equity issue, right?

A. Yes.

Q. And, in fact, you weren’t being truthful with, Microsoft were you, when you said that you were prepared to take ECI public?

A. I was not being truthful.

Why lie, particularly after you’ve been pulled off the entire project? Who knows. You’re in Collins-ville, it doesn’t have to make sense.

While he disliked Rex Shelby and the Modulus gang, he had more ambivalent feelings for Scott Yeager.

Tony Canales, counsel for Scott Yeager, is a fine attorney and very unusual in that he often uses humor to make his point. Very few attorneys can do that gracefully, and Canales excels. But anytime I see him being funny, I tense up. I know he’s about to come out of nowhere and rip some guy’s head off (which is why I love Tony Canales the way I do.)

Canales asked Collins to describe his relationship with Scott Yeager. Collins said, “It was like a marriage….I would describe it as a relationship with a lot of ups and a lot of downs.”

Well, that’s all Canales needed. I’ll let the transcript speak for itself for the rest of this:

Q. Did you, sir, at any point in time describe your relationship to Mr. Yeager as a marriage without sex?

A. Yes.

Q. Now, was that ever a good marriage, by the way?

A. Indeed, it was.

Q. Did the marriage turn sour?

A. At times.

Q. Was the marriage confrontational?

A. Oftentimes.

Q. Were you the cause of the break up of that marriage?

A. I believe there’s two sides to every story.

Q. Yes. Do you agree, sir, that you are the kind of person that — at least you’ve described — have you ever described yourself as a person with a chip on his shoulder?

A. Yes.

Q. What does that mean?

A. It means I struggle emotionally with all kinds of things.

And there he goes, bleeding all over the courtroom. Huge, giant red flag for the jury to see, and Tony Canales standing there looking innocent as a choir boy. Canales didn’t let this go. Oh no, he would ask about “the marriage” a few more times, and each time, it seems more and more emasculating for Collins (and each time, Canales is increasingly funny.)

Q. At some time you liked Mr. DiMichele, you wanted to go — transfer from the section you were in, sales, to corporate development, correct? That’s what you are expressing in
your thoughts here?

A. Generally speaking, yes.

Q. What happened to Scott? What happened to that marriage? You got divorced by this time?

A. No.
I have to wonder what Scott Yeager was thinking – especially with his lovely wife in the room – listening to this. Hopefully he found it as amusing as I did.

In February of 1999, Bill Collins received a formal reprimand. In a meeting with eight people, he began undermining other groups and people, and promoting himself, complaining that he wasn’t getting the credit he deserved, and he ended up threatening Joe Hirko. Scott Yeager wrote up a formal reprimand and asked Collins to take a week to cool off, which he did. When Collins returned, he wrote an apologetic letter, stating that he would try to improve his attitude and he was committed to the success of the company.

He lasted about another year. Right before the analyst conference of January 20, 2000, Collins decided that Wall Street was going to hate EBS and their silly Broadband Operating System so he sold the stock that had vested. He received about $240,000 for that stock sale. At trial, he openly admits he traded on inside information:

Q. And when you sold your stock, did you have information about the status of the products and the business that had not been made public?

A. Yes, I did.

Q. And was that information that you thought was important?

A. Yes.

Q. Were you concerned at the time you sold that you were doing something wrong?

A. The thought crossed my mind.

Q. But you sold anyway?

A. Yes.

So he sold his stock and of course, we all know that soon after the conference: Enron’s stock skyrocketed. Collins missed out. He violated his non-compete agreement to go work for another company Vectrix, with Shawna Meyer and her lover Jim Irvine. The reason he left? Vectrix would give him the title of Vice President.

Canales asked what else Collins would receive at Vectrix, a pre-IPO company. Collins replied he would receive 1% equity in the company. Canales asked what happened to the company. It went bankrupt.

Collins never made as much money as he did at Enron. But he did have the title of Vice President, finally, for about six months.

Two months after he left, he got in a reflective mood and then he got chatty. He sent Ken Rice a letter stating that as part of his compensation, he wanted the stock options that had not vested when he left Enron, and would Ken Rice please be a gentleman and give him the reasonable 85 percent of the value of the stock – about $15 million dollars.

When he could stop laughing, Ken Rice forwarded the letter to the EBS attorney, Kristina Mordaunt. Mordaunt replied, very reasonably, that he was not entitled to options that had not vested after he voluntarily departed the company, and she added that she would like him to forward a list of his current job duties because it sounded, from the letter, like he was competing now with EBS.

He did not reply.

But in his mind, Bill Collins had been snubbed by Enron Broadband Services once again. He didn’t get his title, he didn’t get the compensation he so richly deserved, he didn’t get compensated fairly for his business plan and he didn’t get the $15 million he would have made if he had held on for three more weeks. Enron was robbing him blind!

Oddly, Rex Shelby was partially to blame for this. (I get the feeling that everytime Collins turned around, he sneered, “Shelby!” like Seinfeld sneering, “Newman!”)

From the trial transcript:

Q. And what was the purpose of writing this letter to Mr. Rice?

A. Well, obviously, I guessed wrong about the effect that the announcement would have on the stock price. And I told Mr. Rice that — I argued that there was a case to be made
that I was still entitled to some of those shares and that wanted him to agree to give them to me.

Q. Sir, did you not tell — did you, sir, or did you not in this letter tell Mr. Ken Rice that your concepts and your ideas regarding the BOS and so forth were taken over by Rex Shelby?

A. I believe I said Mr. Shelby and Mr. Berberian, yes.

I would like to list for you Modulus’ client base:

Nortel
Motorola
NASA
Daimler-Benz
Wells Fargo Bank
Comdata
Newbridge Networks
AT&T
United Airlines
IBM

Substantial clients, wouldn’t you say? And so how on earth was Modulus ever able to snag these customers without Bill Collins stupid plan? I guess they were just sort of pretending to be successful when they were Modulus and then when Enron bought them, the Modulus gang suddenly had to appropriate the business plan of a journalism major who has no MBA, no master’s degree, no PhD, no technical degree of any description, and no technical experience at all.

But to address Collins’ larger point, he felt that Rex Shelby and David Berberian were responsible for taking over his plan and thus, depriving him (once again) of the credit he so richly deserved.

Eighteen months after he left the company, he sent Scott Yeager a letter. The letter apologized for being a giant pain in the ass. He also added that Scott had made it possible for him to be financially secure for the first time in his life – he bought a home and a vacation home, he had given money to all his brothers and sisters, and he finally felt he could relax. He also thanked Scott for giving him the business opportunities that he had.

After all the crap Bill Collins had put him through, Scott wisely did not reply. But as always with Collins, his good feelings about Scott Yeager began to evaporate (again… you know how marriages can be) and when the FBI contacted him about their investigation into EBS, Collins volunteered to give as much information as he could about the people who worked there. He sent emails from his personal computer to an FBI agent and John Kroger, who was eyeballing Scott Yeager, Rex Shelby, Joe Hirko, and Ken Rice for an indictment.

Bill Collins has genuine mental/emotional problems, as he admitted on the stand. That does not give him a pass to make up fantasies on the stand and portray them as truth. It is even more egregious for the United States Government to take advantage of someone in such a compromised position.