Former Enron broadband head testifies -- Skilling implicated in scheme to defraud on broadband deals
dfw.com
by KRISTEN HAYS
Associated Press
Mon, Apr. 25, 2005
HOUSTON - The former chief of Enron Corp.'s defunct Internet unit implicated himself, former Enron CEO Jeffrey Skilling and four others in a scheme to lie about capabilities of the company's broadband network to dazzle analysts and pump up stock.
Kenneth Rice, 46, was to resume testifying Monday after giving jurors a glimpse of his role in the alleged scheme late last week.
In a twist to the usual slate of underlings testifying against former superiors, Rice has begun what is expected to be lengthy testimony against a former peer and four subordinates who are on trial on charges including conspiracy and fraud. He has yet to be cross-examined by defense attorneys.
"I lied about the status of the network. I lied about the activity we were experiencing with bandwidth trading," Rice told jurors Friday. When prosecutor Ben Campbell asked who else lied, Rice said Skilling, and broadband defendants Joseph Hirko, Scott Yeager, Rex Shelby and Kevin Howard.
Hirko - who ran the broadband unit with Rice in its early days - and former vice presidents Yeager and Shelby are charged with fraud, conspiracy, insider trading and money laundering for allegedly touting the Enron's broadband network as having capabilities it lacked so they could pocket tens of millions of dollars by selling hype-inflated stock.
Similar charges among those pending against Skilling accuse him of knowingly making similar false claims about the network to analysts in January 2000 and January 2001. Skilling's trial is to begin in January.
Howard and the fifth defendant in the broadband case, Michael Krautz, are accused of faking earnings for the unit in late 2000 and early 2001 to minimize publicly reported losses. The unit never made a profit and went bankrupt along with Enron in late 2001.
The five broadband defendants and Skilling have pleaded innocent.
Rice pleaded guilty last year to securities fraud and is cooperating with prosecutors. As part of his plea deal, he forfeited nearly $14 million in cash and property to the government, including a Ferrari and a Colorado vacation home. |
