Execs defended in Enron broadband case
HOUSTON – Federal prosecutors bought witnesses with immunity and then twisted facts to make their case against five former executives of Enron Corp.’s defunct broadband unit, lawyers for two of the defendants said Wednesday in closing arguments.
“They’re on a hunt; they made up their minds,” said Tony Canales, attorney for Scott Yeager, a former Enron Broadband Services strategist.
Jim Lavine, lawyer for Kevin Howard, said the former Enron Broadband Services finance chief was a person of integrity who “tried to do things the right way.” He said Howard has been victimized by government witnesses who gave conflicting testimony, or in the case of at least one witness, could be deported by failing to cooperate.
Yeager and Howard, along with software engineer Rex Shelby, in-house accountant Michael Krautz and broadband unit CEO Joseph Hirko, are charged with taking part in two alleged schemes to make Enron’s broadband venture appear successful to Wall Street and investors. The unit never made a profit or surpassed testing stages.
Hirko, Yeager and Shelby are accused of conspiring with others to lie about capabilities of Enron’s broadband network and operating software so they could get rich from selling stock inflated by the hype.
Howard and Krautz are accused of manufacturing $111 million in earnings from a failed video-on-demand deal to minimize reported losses.
All five testified during the three-month trial that they didn’t lie. Conviction could get them lengthy prison terms.
The closing arguments have been spread over two days and were expected to wrap up later Wednesday. Then U.S. District Court Judge Vanessa Gilmore was to read more than 60 pages of instructions to jurors before they began deliberating the complex case.
Prosecutors have alleged the highly touted broadband unit was a money loser and barely operational and that executives knew that when it was presented to analysts and investors in 2000.
Hirko, Yeager and Shelby have said early versions of the network and its operating system were working when it was unveiled and that more sophisticated versions were to be rolled out later.
Several government witnesses countered that the network was in disarray and the operating system was a dream. Enron shares jumped to $72 from $54 within two days of the conference.
Canales said that while Yeager was at the conference, he didn’t make a presentation.
“What did he do wrong?” Canales asked, suggesting a complimentary “attaboy award” hug Yeager received from former Enron CEO Jeff Skilling put Yeager in the crosshairs of federal prosecutors.