Source: http://enronfraud.com/
Timestamp: 2019-04-19 16:58:49+00:00

Document:
United States v. Daniel Bayly et al., No. H-03-CR-363-1 (S.D. Tex). On June 16, 2009, the U.S. Court of Appeals for the Fifth Circuit in United States v. James A. Brown et al. (Daniel Bayly et al.), Nos. 08-20038, 08-20039, 08-20040 (5th Cir.), ruled that double jeopardy or collateral estoppel principles do not prevent a retrial of three former Merrill Lynch executives on charges that they helped defraud Enron Corporation and its shareholders by agreeing to park Nigerian power-generating barges with Merrill Lynch in order to artificially inflate Enron's 1999 earnings. That transaction allowed Enron to enhance fraudulently its year-end 1999 financial position that it presented to the public and to meet its projected year-end numbers. Brown moved for a new trial on his convictions for perjury and obstruction of justice. On August 23, 2010, the District Court denied Brown's motion for a new trial. Brown filed an appeal of that ruling.
United States v. Kevin Howard, No. H-03-CR-093-1 (S.D. Tex.). On June 1, 2009, defendant Kevin Howard entered a guilty plea to one count of falsifying Enron's books and records. Pursuant to the terms of the plea agreement, Howard faces a maximum sentence of up to 12 months of home detention at sentencing. On November 2, 2009, Judge Vanessa D. Gilmore sentenced Howard to one year of probation, of which nine months are home confinement, and ordered him to pay a $25,000 fine.
United States v. Scott Yeager. On June 18, 2009, the Supreme Court, in a 6-3 vote, issued its decision in Yeager, ruling in favor of petitioner F. Scott Yeager, a former Enron executive who had been acquitted of several securities and wire fraud counts by a jury that deadlocked on the remaining counts in the indictment. The Supreme Court held that an apparent inconsistency between a jury's verdict of acquittal on some counts and its failure to reach a verdict on other counts does not affect the preclusive force of the acquittals under the Double Jeopardy Clause. The Supreme Court stated that if the possession of insider information was a critical issue of ultimate fact in all of the charges [against him], a jury that decided that issue in his favor protects him from prosecution for any charges for which that [fact] is an essential element. The Court left open the door, however, for the Fifth Circuit to re-examine its ruling that the jury must have found, when it acquitted Yeager, that Yeager did not possess any material, inside information. On October 19, 2009, on remand from the Supreme Court, the U.S. Court of Appeals for the Fifth Circuit confirmed that the Supreme Court's holding bars retrial of Yeager and ordered the U.S. District Court for the Southern District of Texas to enter judgments of acquittal on all counts against Yeager. The Order of Acquittal was entered on November 2, 2009.
United States v. Joseph Hirko and Rex Shelby, Nos. H-03-CR-093-4, H-03-093-7 (S.D. Tex.). Joseph Hirko has pleaded guilty to Count 4 of the Seventh Superseding Indictment, charging him with wire fraud, in violation of Title 18, United States Code, Section 1343, and was sentenced on September 28, 2009 to 16 months in prison, 2 years of supervised release and ordered to forfeit $7 million (which will be applied to a restitution fund). As part of his plea agreement, Hirko agreed to cooperate fully with the government's ongoing criminal prosecution of individuals at EBS. At sentencing, the remaining charges against Hirko were dismissed. Co-defendant Rex Shelby pled guilty to insider trading on November 22, 2010 and was sentenced to two years probation on February 28, 2011.
United States v. Robert S. Furst, No. H-03-CR-363 (S.D. Tex.). On May 14 ,2010, the Department of Justice entered into 12-month Deferred Prosecution Agreement with Robert Furst. Defendant Furst entered a plea of not guilty to the Third Superseding Indictment. On November 3, 2004, a jury found Defendant Furst guilty of conspiracy to commit wire fraud, falsifying books and records, and aiding and abetting wire fraud. On May 12, 2005, Defendant Furst was sentenced to 37 months in prison. He served approximately nine months of his sentence. On August 1, 2006, the United States Court of Appeals for the Fifth Circuit vacated Defendant Furst's conviction and he was released from the custody of the Bureau of Prisons. As part of the agreement that the court approved, the government agreed that as long as Defendant Furst was in compliance with the agreement's conditions at the end of the 12-month period, including abiding by all laws and that he not serve as a director or officer of a public company, it would dismiss all charges against him in the Third Superseding Indictment.
As a result of the massive fraud at Enron, shareholders lost tens of billions of dollars. Many Enron executives, Enron's accounting firm and certain bank officials were indicted.
Andrew Fastow, Enron's now-imprisoned former finance chief, testified that many of the banks' transactions were contrived, deceptive deals done solely to create the false appearance of profits and cash flow.
Merrill Lynch purchased Nigerian barges from Enron on the last day of 1999 only because Enron secretly promised to buy the barges back within six months, guaranteeing Merrill Lynch a profit of more than 20%. As a result of this fraud, Merrill Lynch ultimately paid $80 million to settle with the SEC.
Barclays entered into several sham transactions with Enron, including creating a special purpose entity called Colonnade, a shell company to hide Enron's debt, named after the street in London where the bank is headquartered.
Credit Suisse First Boston engaged in pre-pay transactions with Enron, including serving as one of the stop-offs for a series of round-trip, risk-free commodities deals in which commodities were never actually transferred or delivered.
After years of preparation and just a few weeks before trial, the Fifth Circuit Court of Appeals vacated the class certification order.
Although the 2-to-1 decision of the Fifth Circuit acknowledged that the banks' conduct was hardly praiseworthy, it ruled that because the banks themselves did not make any false statements about their conduct, they could not be liable to the victims even if they knowingly participated in the scheme to defraud Enron's shareholders.
As the Court's dissenting Judge summarized, the ruling immunizes a broad array of undeniably fraudulent conduct from civil liability . . . effectively giving secondary actors license to scheme with impunity, as long as they keep quiet.

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