SEC says ex-Enron executive to pay $500,000 (1/2 the fine of the former treasurer and no prison!)

The Houston Chronicle ^ | 10/9/2003 | Reuters News Service

[1riot1ranger]

SEC says ex-Enron executive to pay $500,000 Reuters News Service

WASHINGTON -- The Securities and Exchange Commission said today that it charged the former chief accounting officer of Enron North America with securities fraud and he agreed to pay $500,000 in a settlement.

Wesley Colwell, without admitting or denying wrongdoing, agreed to be barred from serving as officer or director of a public company and to pay $200,000 in penalties and $300,000 in disgorgement, the SEC said.

"As part of this settlement, Colwell will continue to cooperate with on-going investigations into Enron Corp. by the Securities and Exchange Commission and the U.S. Department of Justice Enron Task Force," the SEC said.

Enron North America was a unit of Enron, once the seventh-largest U.S. company. Its bankruptcy in late 2001 was the first in a series of corporate scandals that rocked U.S. markets. The company's downfall is still under investigation.

The SEC accused Colwell and others of taking part in "a wide ranging scheme to defraud by manipulating Enron's publicly reported earnings through a variety of devices designed to produce materially false and misleading financial results."

The scheme, it said, included misusing reserve accounts, concealing losses, inflating asset values and improperly accounting for transactions.

For example, the SEC said, in 2000 Colwell and others deferred over $400 million in profits into reserve accounts within Enron North America. Then in early 2001, it said, Colwell and others used the reserve accounts "to mask over $1 billion in losses associated with Enron's retail energy business, Enron Energy Services."

An attorney for Colwell could not immediately be reached.

[1riot1ranger]

This guy seems to have never been on the radar screen with Fastow and friends. Yet he gets a $500K fine and no jail time. Only last month the prosecutors were crowing about the deal that sent Ben Glisan to prison for five years and forfeiture of almost $1 mil.

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[1riot1ranger]

anyone know anything about this guy?

[Ben Chad]

no jail time - wtf?

[VxH]

>>without admitting or denying wrongdoing

LOL, this clown won't even have a criminal record.

And all the Carpetbaggers said Aaaaamen!

[jungleboy]

No jail time means... he's a squealin' like a stuck pig

[1riot1ranger]

don't know. I don't get it because after the others plead guilty (kooper, etc.) their sentencing was deferred. And glisan went straight to jail. I thought that I had been following the enron mess but this is the first I've heard of this guy.

[Liz]

EXCERPT FROM CONGRESSIONAL INVESTIGATION: “In the spring of 2001, Skilling was considering leaving Enron, and he knew that someone would need to be in a position to take over many of his responsibilities,” such as “dealing with analysts. … Skilling wanted to get Fastow involved before he left.”

Skilling’s desire to give Fastow more responsibility at Enron -- not concerns about conflicts of interest -- prompted Fastow to sell his interest in LJM, Skilling told the board lawyers. The memo read, “Skilling asked Fastow whether he was prepared to take on more responsibilities, which would not be possible if Fastow remained involved with LJM. The next day, Fastow said he wanted to remain with Enron and agreed to withdraw from LJM. Skilling knew of no other reason for Fastow’s withdrawal from LJM. He and Fastow did not discuss discomfort with Fastow’s dual roles, and in Skilling’s view that was not a factor in their decision, although the external world was becoming more sensitive to the issue.” (Los Angeles Times, March 19, 2002)

In another interview summary, Wes Colwell a senior Enron accountant, indicated that the Raptor investments in one of the partnerships were Skilling’s idea. Colwell said that in 1999 his boss, Richard Causey, told him, “Jeff Skilling wanted to create a vehicle to hedge Enron holdings in technology stocks.” (Los Angeles Times, March 19, 2002)

-------------------------------------------------------

I would conclude Colwell made a deal with Feds to name names and give up critical info in exchange for a lighter penalty.

We will no doubt find out what he spilled at Fastow's trial. Fastow was the brain trust bedind the thousands of offshore accounting entities that held (and hid) Enron's massive debt off the books.

Ex-CFO Fastow was indicted on 78 counts. His wife (who was once employed at Enron) was also indicted. Seems Fastow let her and other family members profit from Enron deals although they wre not employed at Enron.

That must have made all the low-level Enron employees who got screwed out of jobs and pensions feel mighty good.

[1riot1ranger]

Great info. Thanks. I was sure I had pinged the right person. Ben Glisan's arrangement still confounds me. I can't figure why a young guy with so much at risk would not cooperate and take a five year prison sentence.

[Liz]

Ben Glisan's arrangement still confounds me. I can't figure why a young guy
with so much at risk would not cooperate and take a five year prison sentence.

Bad legal advice.

[1riot1ranger]

I guess it was bad legal advice. Was this latest guy ever indicted or just plead through the SEC? I'm not sure I understand all the nuances.

[Liz]

Aug. 29, 2003

Former Enron treasurer may cut deal
Plea bargain could create a 'bloodbath,' lawyer says
By MARY FLOOD / Copyright 2003 Houston Chronicle

Indicted ex-Enron Treasurer Ben Glisan Jr. is negotiating a plea bargain and cooperation agreement with federal prosecutors.

Glisan, one of the highest ranking Enron officials before he was fired for his involvement in a side-deal, is charged with two dozen counts of money laundering, fraud and conspiracy. His charges are part of a 109-count indictment against Glisan, former Enron Chief Financial Officer Andrew Fastow and former Enron executive Dan Boyle.

"When Glisan flips, this could be a bloodbath," said one lawyer familiar with the Enron investigation. Glisan was installed as Enron treasurer in 2000 and was known as a protege of both Fastow and ex-CEO Jeff Skilling.

Glisan's Washington, D.C.-based attorneys, Henry Schuelke and William Shields, met behind closed doors Tuesday with three Enron Task Force prosecutors and U.S. District Judge Kenneth Hoyt. Such a meeting, especially without counsel for co-defendants, is often a prelude to a cooperation agreement. The judge has made public the broad topics of two other secret conferences in this case, but his public notes on the Glisan meeting did not say why they met.

No matter how far along Glisan and prosecutors are in the negotiations, until the deal is finalized and signed it could always fall through, said sources familiar with the Enron cases. And in some cases a plea arrangement can allow a defendant to back out if, down the line, the judge decides he won't follow the terms the government promised.

Glisan lawyer Schuelke said Tuesday he had no comment about whether Glisan is trying to arrange a deal. Schuelke did not return a phone call Thursday for this story. Prosecutors also would not comment about Glisan's case.

The possibility of a plea bargain involving Glisan, who has pleaded not guilty along with his co-defendants, is one of several recent developments that indicate the Enron criminal investigation is heating up again.

Defense attorneys expect more indictments, perhaps as soon as in September, in an Enron side deal involving a Nigerian barge. Lawyers were scurrying about this week as several possible targets sought to pin down a legal team for fear they might be indicted.

In the barge deal, then-Enron Treasurer Jeff McMahon approached Merrill Lynch about creating an off-balance sheet partnership to operate electricity generators off the Nigerian coast. Enron had a buyer, but to record earnings from the transaction before the end of 1999, the government alleges that Fastow promised Merrill it would not lose money on the transaction and would have its interest bought out within six months.

Merrill did soon sell its investment in the barges to the controversial Enron side partnership LJM2. Both Fastow and Glisan were involved in LJM2. Glisan was Enron treasurer when Merrill sold the barge interest to LJM2. People at both Merrill and Enron could be charged in this transaction.

Although the Fastow-Glisan-Boyle indictment involves the barge deal, the government could choose to file a separate case against new defendants rather than join them to the existing case in Hoyt's court.

Attorneys on the Enron broadband division cases also expect a superseding indictment soon but are still in the dark about whether any more defendants will be added or the case will just be honed. The existing 218-count case alleges several broadband executives lied about the value and capabilities of the broadband Internet business, helping to boost Enron's stock price and then making millions selling their shares.

The Enron grand jury met part of last week on the broadband case. The grand jury had taken about a month break before returning last week.

It is improper for prosecutors to use the grand jury to bolster a case already indicted. But prosecutors could conceivably present new evidence, and the grand jury decide no one should be added to the seven defendants already charged in the broadband case.

There is still no indication that the Enron Task Force is prepared to either accuse or clear former CEO Skilling or ex-Chairman Ken Lay, however.

Glisan, a 37-year-old Clear Lake native, was widely rumored in 2002 to be one of the highest ranking Enron officials cooperating with the government. But he obviously had no promise of immunity because he was indicted in May 2003.

In December 2002, Glisan agreed to pay back the $916,137 he netted after taxes through a $5,800 investment in an Enron-related partnership called Southampton, after Fastow's upscale neighborhood. Glisan stated that he received about $1.04 million from the Southampton deal and paid $412,000 in taxes in April 2001, but that he didn't believe there was anything improper about the transaction at the time.

Glisan was an accountant at Coopers & Lybrand in Dallas and later Arthur Andersen in Houston before joining Enron in 1996. He worked under Fastow before becoming Enron's treasurer in 2000. He held that post until he was fired for taking part in the Southampton partnership.

The indictment against Glisan, Fastow and Boyle alleges they schemed to: manipulate Enron's financial reports so the company would appear more successful than it was, artificially boost the share price, circumvent federal regulations so Enron could obtain undeserved benefits, and enrich themselves at the expense of Enron and its shareholders. Although Glisan and Fastow were charged in several schemes, Boyle was charged only in the Nigerian barge transaction.

[219arh]

This guy did not actually join Enron until 2000. He was under Cliff Baxter in Enron NA for a while. He came in after about 99% of the fraud was done and the SEC and Justice knew all along that he did not even commit any fraud but he was in a high enough up position to be useful in helping them trace through records. I read the complaint against him, it was laughable and goes under the "if the US Attorney wants to indict a ham sandwich...." theory. Glisan and Kopper were directly profiting under Fastow. Colwell did not even get all the options he was promised when he came in. His legal fees alone will probably drive him into or close to bankruptcy though.

[219arh]

The L.A. Times is wrong and right. Colwell did not "officially" join Enron until 2000. It also leads the reader to beleive that Colwell had something to do with setting up Raptor but it was actually set up before then and Causey was just telling Colwell why it was set up. If you read the quote that way, it is quite different. Colwell was cooperating with the Feds from DAY ONE and never thought he would be indicted. He essentially took a wrist slap from the SEC and gave up one of his bonuses.

[1riot1ranger]

Thanks for the info. Next week is shaping up to possibly be an interesting week. Now we have Mrs. Fastow discussing a plea agreement, Ken Lay turning over documents that he had fought to keep, and they have indicted Dan Boyle in two different courts on the same charge. Plus all the guilty pleas that have yet to be sentenced. Glisan may have some company and then again he may turn out to be the biggest patsy in memory.

[Liz]

....Colwell did not "officially" join Enron until 2000. It also leads the reader to beleive that Colwell had something to do with setting up Raptor but it was actually set up before then and Causey was just telling Colwell why it was set up. If you read the quote that way, it is quite different......

Balderdash. If not Raptor, then it was another set up or another fraudulent vehicle. There were thousands of these fraudulent entities parked offshore to hide Enron's debt. There's plenty of blame to go around. All of these thieves have something to hide. Even if his defense is that he was in the wrong place at the wrong time, it is a crime not to report your knowledge that a crime is being committed.

Watta bunch of patsies to have allowed themselves-- through their greed--to fall for the grasping Fastow's criminal schemes. No decent, law-abiding person would have participated in this fraud. They must all pay the price.

[not-an-ostrich]

Immunity given.

[219arh]

Anyone and everyone knew about these entities. They were disclosed in the notes to the financial statements, 10-K's, etc.. Colwell did not set up Raptor, he was in Enron NA and all of that was set up by Global Finance (mostly Fastow, Kopper, Glisan). His contention, largely backed up by the SEC and Justice, is that he was only aware of the SPE (which was not illegal to use but was for the purpose that it was used) after asking Causey about it when he came across notes from his predecessor and Causey gave some explanation of it but he was never involved in the movement of liabilities off the balance sheet.

Maybe the biggest fraud or lack of reporting was done by S&P and Moody's along with all the banks (Merrill, CSFB, FirstUnion, BOA, etc..) that participated in these and knew the structure.

Also, Colwell's boss was David Delainey (Cliff Baxter before that), Delainey just settled also. Delainey was brought to EES to try to clean up the mess made by Lou Pai there. In the end, Colwell was a very insignificant player and Sherron Watkins made millions selling her stock BEFORE she bothered to go to the SEC and Justice with her "findings". Colwell, even though he was much higher up than Watkins, received less than $2MM in total compensation from ENE. The complaint against him, unlike the ones against Kopper, Glisan, Fastow, etc.. was civil and would never have carried jail time, just the "settlements".