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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.