News

More Charges in Enron Broadband Case

11/19/2003 5:33 AM Eastern

Five new charges of money laundering and insider trading have been added to those already filed against one of seven former executives of Enron Corp.'s defunct broadband unit, AP reported.

The additional charges against former Enron Broadband Services president and chief executive Joseph Hirko were added last week to what is now a 223-count indictment, AP said.

The charges relate to when Hirko was an outside consultant after he left Enron in mid-2000, the Houston Chronicle reported Wednesday.

First, Kevin Howard, the unit's former vice president of finance, and Michael Krautz, former senior director of accounting, pled not guilty in April to 19 counts including securities fraud, wire fraud, conspiracy and making false statements to FBI agents.

The pair was accused of recording $111 million in bogus revenue stemming from a 20-year contract with Blockbuster Inc. to create an online movie-video service. The deal, struck in 2000, was terminated one year later with no real revenue ever recorded.

According to the indictment filing, Howard and Krautz devised a financial scheme that let them recognize future revenue anticipated from the deal.

They then created a joint venture based on that revenue and gained investment commitments from video-on-demand-systems provider nCUBE and Thunderbird, an investment fund controlled by Enron.

Later, the two executives sold the venture to Canadian Imperial Bank of Commerce, according to the indictment.

A superseding indictment unsealed May 1 added Hirko and four other defendants to the case, AP said: Kenneth Rice, Hirko's one-time co-CEO and then successor as head of the broadband unit; former broadband chief operating officer Kevin Hannon; and VPs Scott Yeager and Rex Shelby.

All seven executives have pleaded innocent. Their trial is slated for April 5, although the judge in the case has said that she will consider postponing it, AP added.

Want to read more stories like this?
Get our Free Newsletter Here!