A pair of former Enron Broadband Services executives pleaded not guilty to
charges that they cooked the books for a failed Internet video-on-demand venture
with Blockbuster Inc.
Kevin Howard, the unit's former vice president of finance, and Michael
Krautz, former senior director of accounting, face 19 counts including
securities fraud, wire fraud, conspiracy and making false statements to FBI
The pair is accused of recording $111 million in bogus revenue stemming from
a 20-year contract with Blockbuster to create an online movie-video service. The
deal, struck in 2000, was terminated one year later with no real revenue ever
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 VOD-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.
Howard and Krautz will next appear in a pretrial hearing May 27, with the
trial set to begin June 2.