Lawyers for former Enron executives Kenneth Lay and Jeffrey Skilling make their closing arguments today. Yesterday, it was the prosecution's turn to sum up their case. The prosecution did not hesitate to reiterate their view of the former Enron managers as criminals attempting to escape responsibility for their actions.(Tuesday, May 16, 2006)

Former Enron CEO Jeffrey Skilling says that he and most of his Enron colleagues are innocent of fraud as he testifies in his own defense in Houston. Skilling will be cross-examined later in the week by prosecutors. Former Enron Chairman Kenneth Lay is expected to testify later in the month.(Monday, April 10, 2006)

Washington Post

Culver woman helps PGE ring in new era KTVZ, OR - 2 ... the opening bell Monday, signaling PGE's return to its status as a publicly traded, Oregon-based utility after years in the dark shadow of Enron;s ownership. ... PGE's emancipation OregonLive.com Enron repays $4.68 billion to creditors Philadelphia Inquirer PGE severs ties to Enron and issues common stock KLTV Forbes - Houston Chronicle - all 77 related

HOUSTON Former Enron Chief Executive Officer Jeffrey Skilling tried to rein in former finance chief Andrew Fastow's use of his off-the-books partnerships to buy company assets, a witness said Tuesday.(Wednesday, April 05, 2006)

HOUSTON (Reuters) - Prosecutors dropped a handful of charges against Ken Lay and Jeffrey Skilling on Tuesday as they rested their case against the former Enron Corp. CEOs accused of covering up the financial ruin at the energy company.

kgw.com (subscription)

Millions of dollars in PGE taxes are still going to Enron Katu.com, OR - Mar 23, 2006 PORTLAND, Ore. - Despite investigations and public criticism, millions of dollars in taxes are still going out of Oregon to the bankrupt Enron Corporation. ... Portland officials urge state look at PGE tax filing OregonLive.com all 4 related

HOUSTON (Reuters) - Former Enron Chief Executive Ken Lay lied to credit agencies to prop up the energy trader's ratings even as its cash dwindled, the company's former treasurer testified on Wednesday.

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2-24-2006: Two prosecution witnesses were on the stand today. Wanda Curry was chief accounting officer of Enron North America for about four months and Wesley Colwell took over.

A story on chron.com describes Wesley Colwell's testimony; earnings were shaped specifically using reserve cash to meet per-share earning targets.  Colwell told the jury that earnings in Q2 of 2000 should have been $278.5 million; the target number was only reached after the shortfall was recovered using money from cash reserves.

"We were engineering (the amount of reserves for Enron North America) from the earnings per share number," Colwell said, referring to the amount he was told Enron wanted to reach.

Wanda Curry held the CAO at Enron for only 4 months when replaced by Colwell.  Curry testified she was informed by Cliff Baxter that she would be replaced by Colwell.  According to Curry, she was fired due to her scrutiny of a year-end 1999 Merrill Lynch deal; she demanded it be restructured to transfer risk.

The Jury had a few moments of education from Enron Task Force Director Sean Berkowitz in what the chron.com calls "Shopping with Sean". Berkowitz uses the analogy of a grocery store and shoe store to help jurors understand the complex business structure at Enron.

More from chron.com today: The trial of Kevin Howard and Michael Krautz, former Enron Broadband Services executives may run concurrently and on the same floor as the Lay/Skilling trial.  News coverage for both will be posted on EnronOffline.com.

More bad news for Ken Lay.  Those who saw the movie "Smartest Guys In The Room" watched the press conference where Lay discusses his personal financial losses due to the Enron scandal.  According to a story on AllHeadlineNews.com, its about to get a lot worse.  According to the article, Ken Lay may be forced to declare bankruptcy.  They quote the NY Times report that Lay's current stated net worth is less than $650,000, down from $400 million before Enron's collapse.

Well, if he is convicted in the current criminal fraud trial and is forced to forfeit his home, maybe he'll get a rent-free room next door to Fastow.  I digress.

14

2-23-2006: The jury is hearing more evidence suggesting Ken Lay really did know what was going on in his company.  A story on LA Times Business Pages reports on more testimony of Paula Rieker, a former Enron Investor Relations executive.  She asserts that Ken Lay lied about Enron's financial health in the weeks prior to the 2001 bankruptcy.

"I had the opportunity to travel with Mr. Lay and hear him give analysts presentations where he described the strong performance" of Enron Energy Services, the company's retail energy division, she told jurors. "I told Mr. Lay a significant amount of the earnings came from the sale of stock and not from core activities."

And further:

"Lay didn't change his message to analysts once he had been told it was misleading, Rieker said."

A Bloomberg.com report goes further into Rieker's testimony.  She told jurors that Lay provided conflicting messages about Enron's cash flow in the last week of October, 2001.  According to Rieker, Lay had a long discussion with Enron's board regarding the looming credit problems, that the capital markets were "closed to Enron."

Rieker testified that the next day, Lay told analysts in a conference call that Enron had no concerns about cash flow; he repeated the line in an all employee meeting later that day.

"Mr. Lay said liquidity was fine," Rieker recalled Lay telling employees. "Then he strengthened his statement and said, 'In fact, liquidity is strong.'"  A day later, at an Oct. 24, 2001, Enron board meeting, Rieker said Lay once again told directors that the company's "liquidity is tight."

Rieker's testimony goes to prove that Lay knew in late October that Enron was in serious financial trouble, while telling employees and the market that everything was fine. Those who attended that employee meeting may recall Lay asserting that not only was liquidity strong, but that Enron had not yet drawn down on cash reserves.

Which brings us to our next story, found on BBC News.  According to this short item, Enron boosted its earnings by dipping into reserve accounts.  EnronOffline.com will talk more about Wesley Comwell's testimony in updates for Trial Day 15 & Day 16.

Also in today's Enron news, the chron.com reports just a few doors down from the Ken and Jeff trial, a Houston judge OK's a $6.6 billion settlement for three more banks to settle civil claims that they helped Enron manipulate earnings.

Canadian Imperial Bank of Commerce, JP Morgan Chase and Citigroup Inc. are the banks named in the case.  This brings the litigation settlement totals to $7.2 Billion against Wall Street firms accused of helping Enron with accounting fraud.

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2-22-2006: Just as with the Fastow trial, Enron trial news is getting thinner and thinner.  Many of the items posted today were actually written 2 or 3 days ago.  But among the old stuff, a few gems stand out.

The Chron.com continues it's coverage of the trial in Houston.  They have two interesting stories today. The first, "Are you on crack?", the jury panel watches the famous all-employee meeting a few days before Andrew Fastow is fired.

In Cross purposes, Houston Chronicle staff discusses witness cross examination.  While we are all waiting for those Perry Mason-style smoking-gun tearful confessions during cross, its not nearly so dramatic in real life. 

The cross of current witness Paula Rieker is a good example. Prosecutor John Hueston whisked her through a myriad of topics on his direct questioning in less than a day. One defense attorney called Hueston's quick coverage of multiple points "drive bys."

"Smartest Guys In The Room" is hitting theaters today in New Zealand. NZ's stuff.co.nz writer Margaret Agnew interviews the directory about the rise and fall of Enron.

A story today in The Times Online (UK) takes an interesting look at the 2003 Extradition Act used this week to force 3 UK businessmen to the US to answer Enron-related questions.

The law was intended to expedite extraditions of suspects in terrorist cases back and forth across the pond.  Barriers made it difficult for intelligence to gather threat information from known terrorists; the law was intended to remove those barriers.

However, the law is being used to round up "white-collar" suspects more often than terrorists.  A quote from the Times:

Of the 43 White House requests to extradite Britons so far, more than half have involved businessmen rather than terrorists. The trend has prompted lawyers and politicians to accuse America of judicial imperialism in its aggressive pursuit of white-collar offenders overseas.

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Reuters.com is running a story about the latest Enron Trial Witness, Paula Rieker. As corporate secretary and an executive for top investor relations, she had inside scoop on the Enron goings-ons and freely shared with the court.

"I recall Mr. Lay saying that liquidity was fine, and then he strengthened his statement to say that liquidity was strong," Rieker said under questioning from prosecutor John Hueston.

But just days before that, Enron finance executives had told Lay and the company's board that the markets were punishing Enron's bonds because of growing pessimism about its finances, and Enron would not be able to raise additional cash to solve its woes.

The washingtonpost.com is running a story today about Houston natives and their role as jurors in the Skilling/Lay trial. The Formation of Enron Jurors' Opinions Is Under Scrutiny not only questions the ability for those in the city to be fair, but also their ability to understand the arguments.

Here are two quotes from the article:

"Juries can understand lies, cheating and stealing," said Ellen S. Podgor, a visiting law professor at Stetson University and co-author of a blog on white-collar cases. "What they can't understand is complex accounting practices. You have to simplify it for the jury."

"It is not about accounting. It is about lies and choices," Assistant U.S. Attorney John C. Hueston told the jurors in opening arguments.

Frankly, it seems they aren't giving the Jurors enough credit.  Then again, neither is the defense.

Almost from the start, they raised questions about whether jurors from Houston, where thousands of workers lost jobs and retirement savings in Enron's collapse, could hear the case with open minds.

We discussed last time about the British bankers who were fighting extradition to the US regarding their roles in Enron-related matters.  The New York Times online published an item indicating that the High Court has ruled against them, and that the three may soon be on their way to Houston.

Click2Houston.com reports on a local theatre company has started work on an Enron-based musical.   Perhaps there will finally be a legitimate use for that song we all passed round in email back in '01. You know the one, was set to the tune of "Do Run Run" called "Enron Ron Ron".

2-22-2006: I hope everyone is enjoying the Enron trial news feeds provided at EnronOffline.  At last count, we have several thousand news items cashed, and more are added every hour.

To improve security on this site, our web host Alentus.com, a Canadian firm I've been using for years for lippeatt.com and BellaireWest.org has moved us to newer hardware.  Well, there's been a couple of glitches.  We are working with Alentus to resolve the problems and will update as needed.

2-20-2006: It was a long weekend for everyone, but there were a few interesting stories posted today.

Reuters posted a story today about the long-running case involving three former NatWest bankers who are still fighting extradition to the United States regarding their role in Enron-related fraud charges.  The item "British judges to rule in Enron extradition case" says the ruling will be handed down Tuesday (2-21).  At odds are treaty issues with the UK regarding extradition treatments.  The case falls under a 2004 law that was designed to speed up transfer of suspected terrorists.

CNNMoney.com posted a story describing possible witness intimidation in the trial.  According to the item, Skilling walked up behind Koenig during a break and called him an "A.H.".  As some readers may remember, this is the same "A-BOMB" that Skilling dropped during an Enron conference call with Wall Street analysts.

Another story posted to our database from The Oregonian describes a $134 million deal that may help Enron retirees and former employees recover savings lost when the company collapsed in 2001. 

And finally, a reader of the Chron.com's blog asks if the public can attend the Trial.  Mary Flood gives a very detailed answer, and is great for anyone wanting to make the trip to downtown Houston.

2-18-2006: A quick weekend note.  First, a thank you goes out to everyone who has sent us email over the past 2 weeks.  It's very interesting to read the various opinions on how the trial is progressing and general feelings about Ken Lay and Jeff Skilling.

There have been some questions about where *I* stand on the trial.  This trial watch web site can seem a bit anti-Enron at times, but I'm truely thankful for the my time there.  Hopefully this trial, and any that come after it will expose those who distroyed Enron.

One reader commented that I must be pretty pro-Enron because of the items available in the EnronOffline Gear Store.  Ok, some of the stuff is a bit toung-in-cheek.  And only wear a "Free Kenny" T-Shirt if you are sure the crowed your run with won't beat you up. :-)

11

This morning I was listening to "Engines of Our Ingenuity" with Dr. John Lienhard.  His visiting speaker today discussed business and ethics.  It seemed fitting to start off today's update with a quote from the audio-article, quoting Saint Augustine:

"Just as art cannot exist without misrepresentation, neither can business exist without fraud."

A quick search on Saint Augustine produced the following quote:

"The businessman who is eager for profit blasphemes at his losses, and he lies and swears falsely over the price of his goods. These, however, are the vices of the businessman himself, not of business in general, which can be conducted without these vices."

And now, today's stories:

Ken Rice goofed in testimony.  While under cross-examination by Skilling defense attorney Mark Holscher, Rice revised some of his testimony on the previous day. This goes to help discredit Rice and plant doubt in Jurors. 9news.com has the interesting play-by-play on the cross.

The Chron.com has a short item about Terry West, a current Enron employee.  It's a quickly, but I found interesting that they posted a link to the CareerServices web site.

This is the web site Enron commissioned directly after bankruptcy to help "displaced" employees connect with hiring firms. CareerServices was the first project I managed after the bankruptcy. I was chosen to manage the CS site because someone at Enron found out I was already developing a career transitions web site for former employees - it was called "EnronOffline.com".  The code for the original EnronOffline construct was integrated into what is now known as Enron's CareerServices.

Yesterday, we listed a news item about Enron's Dabhol power plant in India being restarted in May. This article on indiatimes.com seems to suggest a start date of May 1 is impossible.  The new energy minister, Sushilkumar Shinde is unable to secure a contract for LNG needed to power the plant.

The main premise in a story on Counterpunch.com is to prove that George Bush=Ken Lay.  The writer proclaims Enron wanted to be a world dominator, and Ken Lay is now replaced by George Bush.  To me, it felt like yet another "news item" using Enron as the lead in order to get a readers attention.  Don't you hate people trying to use Enron's woes to get attention for themselves?

Wait ... never mind.

10

We'll start with two brief technical notes.  I'm getting some reports that articles are being posted which, when clicking the link, requires you to "log in" with a username/password.  This is an unfortunate reality in news reporting web sites today.  There's currently no automated method for checking a story to see if it requires a log in before posting.  We'll look for a workaround soon.  Feel free to submit suggestions.

Next item: we are starting to see the same issue as with the last trial: stories show up on the web that are 2 or 3 days old. So they get "posted" today, but its a news item written 3 days ago.  This may be a little confusing, especially on the "stories submitted in the last 24 hours" pages.

And now, today's stories:

A posting on the W. P. Carry site describes a recent speech by Lynn Brewer, the author of Confessions of an Enron Executive: A Whistleblower's Story. Brewer's position at Enron included Risk Management in energy operations and the e-commerce initiatives for Enron's (troubled)water operations and broadband services. Her address to the national Open Compliance and Ethics Group left a few students uneasy in her description of the "average" white-cllar criminals:

Most white-collar criminals are just like you, Brewer told the students: white males, late 20s, early 30s. They are intelligent people, she said -- people who think outside the box. The students squirmed.

Although Brewer's remarks do not constitute "News of the day", it was submitted and archived by EnronOffline.com, and actually turned out to be an interesting read.

A posting on Forbes.com discusses the defense arguments against Ken Rice.  He's described as an out of touch manager of Enron's Broadband Service (EBS).  EBS was one of Enron's largest and most expensive ventures, and if Skilling knew he was "out-of-touch", its unlikely Rice would have kept his job.  One interesting quote from the AP article:

Rice testified that Skilling told him the layoffs were to be characterized as "redeployment" and to mislead the employees into thinking they would be keeping their jobs.

I remember hearing that word often just before bankruptcy -- no one was fooled.  Although it varied within business units, "redeployment" meant you had 30 days to claw your way into a position at another business unit, or find a job somewhere else.  With budgets being cut, business units weren't hiring, so "in redeployment" very often meant "served notice".

BTW, Forbes.com calls their huge advertisement when first viewing their site a "Welcome" screen.  yeah.

moneycontrol.com reports IT'S ALIVE.  Or atleast, it will be around the 15th of May.  The Dabhol power plant, one of the other large financial black-eyes of Enron is now set to restarted mid May to supply India with badly needed electricity. 

9

Our first item today is an post on newsday.com. It features a Bloomberg News item regarding Enron's S.P.E. structure. The 3rd party partnerships, a.k.a. Special Partnership Vehicles were being scrutinized and criticized internally as much as two years before the eventual collapse of Enron.

This goes to backing up the claim I made in my interview on the Weekend America: Enron was in serious financial danger long before my first day on the job in Sept of 2000.  Check out the full article on newsday.com.

One of the odd things about working at Enron was not really knowing how the company made its money.  Months into my Enron experience, I realized that most people in IT, and even many in the business units, weren't really sure where all this "money" came from.

The Oregonian published this item about Utilities and Trade Secrets.  The Enron-owned PGE is now in a battle to keep quiet all the details of how energy trading is done.  The Enron trial may expose embarrassing market manipulation tactics used by traders.

The article is number two on our list for day 9.

Our next article is found on CBS11TV.com.  As we mentioned in the notes for day 8, Ken Rice was next in line for testimony. 

Rice appeared comfortable, though his eyes remained focused on jurors or prosecutor Sean Berkowitz rather than the defendants. Skilling watched him intently, while Lay took notes.

When asked about the SPE partnerships, he replied 'It looked goofy to me'.  You can read the description of Rice's remarks on the CBS11TV.com website.

8

Today's update includes some interesting bits.  Here is what we found interesting in today's news.

An article on msnbc.msn.com probes the "chicken or the egg" debate. 

Lawyers for Ken and Jeff say that the sudden demand for cash collateral from Enron's trading partners precipitated events that had nothing to do with Enron.  The article goes on to discuss theories of the contrary.

"Did a collapse of credit in the energy markets cause the bankruptcy of Enron Corp., or did Enron's looming financial collapse cause the credit crunch in the energy markets?"

In a brief on chron.com, it seems our Judge is getting a bit testy with how slow the trial is progressing.  Today his beef was with lawyers reading an entire Wall Street Journal story into evidence.

A story on CNNMoney.com probes the court room antics of Ken and Jeff's Lawyers.  They are using a tactic of undermining the credibility of witnesses and barraging the jury with corporate conference calls.  The jury must be thrilled.

The Kansas City Star printed this article discussing the conference call with Ken Lay just before Bankruptcy.  In the call, Ken discusses the hundreds of millions in quarterly losses, and the "surprise" 1.2 billion writedown in shareholder equity.  This article is a great refresher on the events just prior to the implosion.

The next witness in the case will be Ken Rice.  Ken Rice and Jeff were best buds according to this article posted on chron.com.

Those following Enron closely will recognize Steven Cooper's name.  He was the apparent Messiah CEO of Enron immediately after Bankruptcy.  Cooper was hired by Enron's board of directors to try and re-organize the company and close the doors gracefully as apposed to the Chapter 7 liquidation that was favored by many.  Cooper's team battled many fronts while the Zolfo-Cooper organization worked at Enron, including his new gig at Krispy Kreme.  Man, that guy can multi-task.  Cooper has now pulled out of Enron, and only a handful of Z-C people are still there.  The Seattle Times did a story on Cooper and his new role at Krispy Kreme.  Like Enron, Krispy Kreme will never be the same.  Will that be better, or worse?  Check the writeup in The Seattle Times for details.

2-11-2006: The interview I did just aired NPR stations' Weekend America show.  Having been in radio, I know its impossible to use all interview material in the actual segment; some things just get cut. 

One of the things that hit the editing room floor was my comments about the group of fine people I left behind, the litigation application and documentation group.

Enron hired only the "Best and Brightest"; I always questioned that because, well, they gave me a job.  But the individuals who helped build the litigation and document support systems were some of the brightest and most dedicated individuals I have ever met. 

When many people would have taken the first job that came along, we worked long hours, logged in at home, and came in on weekends -- for a job we knew would eventually end.  We had faithful and strong management that supported us and communicated exactly what was riding on our performance

Enron would have paid $100's of millions in outsourcing fees to organize the terabytes of electronic documents into manageable evidence.  By providing excellent service and support, Enron's EDMS and App Development not only saved the company Millions, but we helped bring to justice those responsible for what happened at Enron.

Had Enron decided to outsource and eliminate our team, it's very likely that costs would have lead to Chapter 7 - liquidation and the loss of the last few remaining jobs.

Even though it is impossible to "save" Enron from its absolute demise, I had the pleasure of working on the teams that helped provided key evidence and save hundreds of jobs over the past 4 years.  Frankly, they get no credit.

7

2-10-2006: Looks like Lay took on more duties after Skilling resigned. At least, thats what one could gather from the dozens of news items being submitted by that title. Tonight we are going to implement some rules into EnronOffline to prevent the same storis from get covered over and over.

6

2-9-2006: Today I had a very interesting conversation with Bill Radke of Weekend America and American Public Media. I was originally approached about a year ago to read an essay I wrote about Enron and Unemployment. My duties at Enron conflicted and I wasn't able to commit to the interview.

But today I spent a good hour and a half in chat with Bill discussing what it was like working at Enron in those first few months after Bankruptcy, and what it was like to leave Enron.

Bits of our conversation and a reading of my essay will air this weekend. I will post a link if the audio is included on their website.

And now, 5 stories from Day 6:

2-8-2006: Issues with the DNS entry for this URL have been resolved and the database is complete. So we are up and ready to go!