Check out the Chronicle’s nifty rendering of the new basketball configuration that will be used this weekend at Houston’s Reliant Stadium for the NCAA Basketball Tournament South Regional. The Reliant Park ticket seating chart for the basketball configuration is here.
This particular configuration provides about 40,000 seats for the South Regional. A different configuration that will seat 72,000 will be used when Reliant Stadium hosts the NCAA Final Four in 2011.
In this previous post on former Enron CEO Jeff Skilling’s Supplemental Brief regarding prosecutorial misconduct in connection with covering up exculpatory evidence contained former Enron CFO Andrew Fastow’s interview notes, I noted that the Skilling brief would likely have a ripple effect on the re-trial of three former Merrill Lynch executives in connection with the Enron-related criminal case known as the Nigerian Barge case.
Well, based on an extraordinary motion filed on behalf of former Merrill executive James Brown, that ripple effect has turned into a tsunami of evidence that includes, but is not limited to, the Fastow interview notes.
As with the Lay-Skilling case, the Nigerian Barge case has long represented much of what is wrong with the Department of Justice’s regulation of business-through-criminalization approach in the post-Enron era.
After prosecuting Arthur Andersen out of business in the intensely anti-business, post-Enron climate, the Enron Task Force threatened to do the same to Merrill Lynch unless the firm served up some sacrificial lambs, which it did with Mr. Brown, Daniel Bayly, Robert Furst and William Fuhs.
Through a deferred prosecution agreement with Merrill, the Task Force then proceeded to hamstring the defendants’ defense by limiting access to other Merrill Lynch executives involved in the barge transaction. Moreover, the Task Force intimidated other potentially exculpatory witnesses by threatening to indict them if they cooperated with the defense.
After bludgeoning a couple of plea deals from former key witnesses Ben Glisan and Michael Kopper, the Task Force proceeded to put on a paper-thin case against the defendants, which was good enough to obtain convictions in the hyper-anti-Enron climate of Houston in 2004.
Of course, most of the convictions were vacated on appeal (and in Fuhs’ case, reversed and rendered), but not before each of the former Merrill defendants and their families had incurred the incalculable human cost of these misguided prosecutions.
Now, Brown’s motion provides a specific and detailed case that the Enron Task Force engaged in not only a wide-ranging cover-up of evidence that was exculpatory to the Merrill defendants, but also offered testimony at trial that the Task Force lawyers knew was contradicted by evidence and testimony that they had in their possession.
The lives and careers that have been damaged in the Nigerian Barge case are the inevitable carnage that results from giving incentivized prosecutors the overwhelming power of government to paint transactions as frauds and manipulate ignorance about them as a means to regulate merely questionable business transactions. A truly civil society would find a better way.
Update: As usual, Ellen Podgor asks the key question — why are the Fastow notes so late in coming?
Update 2: The Chronicle’s Kristen Hays has an article on the Brown motion here.
The Shell Houston Open has been a frequent topic on this blog, particularly the tournament’s troubled recent history (see here, here and here). This year’s tournament is coming up during the week of March 31-April 6 and, for the first time in years, the SHO’s projected field contains several top 10 players in the World Golf Rankings. In fact, the SHO’s field looks as if it will be about as good as any of the PGA Tour’s tournaments that currently exist in the Tiger Chasm:
Steve Stricker, No. 4 in the world golf rankings, is the latest PGA TOUR player among the Top 10 to commit to tee it up in the Shell Houston Open the week of March 31-April 6 at Redstone Golf Club – Tournament Course.
Stricker joins No. 2 Phil Mickelson, No. 3 Ernie Els, No. 5 Adam Scott (defending champion) and No. 6 K.J. Choi in the field. No. 11-ranked Padraig Harrington of Ireland, the current British Open champion, and No. 16-ranked Angel Cabrera of Argentina, the current U.S. Open champion, are also in the fold.
Of the above-described players, only Scott has been a regular participant in the SHO. Thus, this is a key year for the tournament. If the top players give the Tournament Course at Redstone (see also here) good reviews, then that will bode well for the SHO going forward, particularly if the tournament can maintain its warm-up date the week immediately before The Masters. On the other hand, if the key players pan the new course, then the SHO will probably fall further into the Tiger Chasm and have a very difficult time climbing out.
I don’t particularly like the distraction of talking on a cell phone while driving, so I avoid it as much as possible. It’s also not enjoyable avoiding other drivers who are not paying full attention while chatting on the cell phone.
However, I also recognize that cell phone usage while driving has facilitated beneficial communication exponentially. Thus, whenever I see creeping paternalism such as this, it gets my attention:
West U. eyes ban on calls while driving
Cell phones in school zone lead to ‘near misses’Houston-area officials are watching West University Place as elected officials there consider banning cell phones in the school zone near the community’s lone elementary campus.
The move would put the affluent suburb on the map as the first Houston-area municipality to take a stand against drivers talking on their phones as children travel to and from school. The community is following in the footsteps of Dallas and several North Texas suburbs that have recently approved bans. [. . .]
West University proposed the ban earlier this month after conducting a study to determine how often drivers were spotted chatting on their cell phones in active school zones. Over three weeks in February, police counted 297 drivers on their phones.
Six of the drivers violated traffic laws by creeping into intersections while children and crossing guards were present, West University police Lt. Thad Olive said.
Although neither Olive nor HISD police officials could recount an incident when a child was seriously injured in a school zone because of a driver on a cell phone, they said this type of ordinance could prevent tragedy.
"There’s been a lot of near misses," Olive said. "It definitely has distracting effects. If I can take one element of risk away from the children in that school zone, then it’s a good thing." [. . .]
Kenneth Jones, who oversees HISD’s crossing guard department, said he’d love to see the ban enacted citywide.
"If you’ve got that phone in your hand, I don’t think you have your mind 100 percent on driving," he said.
Kelli Durham, an assistant superintendent in the Cypress-Fairbanks school district, was one of several educators to suggest widening the ban to include all drivers, regardless of whether they’re in school zones.
"If cell phones shouldn’t be used for safety reasons in school zones, should they be used anytime on our streets and highways?" Durham asked. . . .
So, if "one element of risk" can be taken away from children in a school zone, then that’s sufficient justification for regulation of a hugely beneficial communication device? Does this mean that the next initiative will be to ban conversation between a driver of a car and a passenger while in a school zone? That’s also distracting, perhaps even more distracting than talking on a cell phone. Should we also ban distracting billboards, signs, automobiles and lights while we’re at it?
What is most disturbing about all this is the utter ignorance of the bureaucrats proposing these regulations of the cost of the regulation relative to the benefit. Wouldn’t it be prudent at least to perform a meaningful cost-benefit analysis of the probable impact of outlawing a valuable improvement in communications before foisting yet another regulation on the public?
The incongruity of Chronicle sportswriter Richard Justice writing about sports has been a frequent topic on this blog, so I don’t much bother anymore keeping up with his often baseless observations about the local sporting scene. However, on the heels of the Houston Rockets’ recent 22-game winning streak, I did a double-take when Justice jumped on the bandwagon and started promoting the Rockets’ Tracy McGrady for the NBA’s Most Valuable Player Award this season.
As noted in this earlier post, as of December 30, McGrady was barely better than a league-average NBA player. There were dozens of players in the Western Conference alone who were having demonstrably better seasons than McGrady. So, at least as of that date, there was simply no objective basis for McGrady being considered the MVP of the NBA this season.
But perhaps McGrady elevated his performance tremendously during the Rockets’ subsequent 22-game winning streak? Maybe that improved performance justifies Justice’s advocacy of an MVP award for McGrady?
Sorry. As this Dave Berri post points out, McGrady’s production in the second half of the season is essentially the same as it was in the first half. Thus, McGrady is not the reason the Rockets went on their 22-game winning streak. Rather, the primary reason for the Rockets’ transformation was the improved play of Carl Landry, Rafer Alston, Shane Battier, Luther Head, Luis Scola and Dikembe Mutumbo, not McGrady.
Berri backs up his position with objective statistical analysis. Justice backs his up with subjective blather. Is that what the Chronicle prefers?
The Economist produces the best mainstream media article that I’ve seen to date placing the prosecutorial misconduct of the Enron Task Force toward former Enron executives Jeff Skilling and Ken Lay in the context of the most recent demise of a trust-based business, Bear Stearns:
For many people, the mere fact of Enron’s collapse is evidence that Mr Skilling and his old mentor and boss, Ken Lay, who died between his conviction and sentencing, presided over a fraudulent house of cards.
Yet Mr Skilling has always argued that Enron’s collapse largely resulted from a loss of trust in the firm by its financial-market counterparties, who engaged in the equivalent of a bank run.
Certainly, the amounts of money involved in the specific frauds identified at Enron were small compared to the amount of shareholder value that was ultimately destroyed when it plunged into bankruptcy.
Yet recent events in the financial markets add some weight to Mr Skilling’s story—though nobody is (yet) alleging the sort of fraudulent behaviour on Wall Street that apparently took place at Enron.
The hastily arranged purchase of Bear Stearns by JP Morgan Chase is the result of exactly such a bank run on the bank, as Bear’s counterparties lost faith in it.
This has seen the destruction of most of its roughly $20-billion market capitalisation since January 2007. By comparison, $65 billion was wiped out at Enron, and $190 billion at Citigroup since May 2007, as the credit crunch turned into a crisis in capitalism.
The article goes on to compare the similarity of certain of Ken Lay’s public comments regarding Enron’s liquidity in the turbulent post 9/11 markets (for which he was eventually prosecuted) with those of Bear Stearns and Lehman Brothers executives during the current turmoil in the financial markets.
The source of the information upon which Lay based his positive statements is the same fellow (former Enron CFO Andrew Fastow) whose exculpatory statements regarding Skilling and Lay the Enron Task Force improperly withheld in connection with their criminal trial. And the revelations of this latest round of prosecutorial misconduct with regard to Fastow comes on top of the Task Force’s blatant misrepresentation (see also here) of Fastow’s plea deal to the Lay-Skilling jury during the trial.
As usual, Larry Ribstein places all of this in context:
I’m constructing a “narrative” for the prosecutorial misconduct case: Prosecutors desperate for a conviction, their careers turning on the outcome, have a key witness, Andy Fastow. The problem is, the guy has, in [Enron Task Force prosecutor John] Hueston’s words, a “heartstopping history of self-dealing.”
Obviously the government couldn’t afford any additional shadow on Fastow’s credibility. Yet in the government interviews it seems his story got more negative on the defendants over time.
Could be a big problem for Fastow on the witness stand, as the defense sought on cross to show he was changing his story to suit his jailers. Could the prosecutors afford to give these notes to the defense? Why not just turn over a summary?
By the time the truth came out (if it ever did) they could do a dance about how the differences were inconsequential.The government is saying the differences are inconsequential. So why, then, didn’t they produce the notes as repeatedly requested, rather than summarizing them? I think those prosecutors have some explaining to do.
Update: Warren Meyer also notes the similarities between Bear Stearns’ demise and that of Enron.
I’m shocked, absolutely shocked, that a former Enron Task Force member would have ever been involved in improperly suppressing exculpatory testimony at trial that would ultimately lead to the Tenth Circuit’s reversal of the conviction of former Qwest CEO, Joseph Nacchio.
Larry Ribstein and Ellen Podgor break down and comment on the Tenth Circuit decision. As an aside, the expert witness who was improperly excluded in the Nacchio trial — Daniel Fischel — was the author of the book that exposed the true nature of, and motive behind, Rudolph Giuliani’s prosecution of Michael Milken.
Each time local politicians in Houston engage in bad policy initiatives such as the ones noted here, my wish is that they would be required to read this fine Joel Kotkin/The American op-ed entitled Lone Star Rising — How a combination of ambition, entrepreneurship, trade, and tolerance made Houston America’s booming opportunity city. Kotkin has been studying Houston over the past several years and he provides a perceptive outsider’s view on why Houston grew into such a vibrant place:
First appearances—then and even now—often didn’t help. Early visitors were struck by the settlement’s largely shack-like housing. And in those days, long before air conditioning, there was the Houston weather, which often combined scalding temperatures with soupy humidity. . . . Yet the Allen brothers had not really chosen so badly. Houston possessed powerful assets. It sat on an enormous fresh-water aquifer, which today guarantees a water supply in a way that other growing cities, such as Phoenix and Las Vegas, can only dream about. The area also abounded in natural resources such as timber and rich soil that was ideal for growing cotton. And when oil drillers hit a gusher in Spindletop, about 90 miles from Houston in East Texas, in 1901, Houston suddenly found itself positioned as the nearest city to some of North America’s richest oil and gas reserves.
None of this, however, adequately explains Houston’s ascendancy. Other cities enjoy better locations for shipping, richer agricultural resources, or similar proximity to oil fields. The answer, I have come to understand as I have worked in Houston as a reporter and consultant, echoes something that the late Soichiro Honda once told me: “More important than gold and diamonds are people.” This critical resource, more than anything, accounts for Houston’s headlong drive toward becoming not only the leading city of Texas and the South, but also a player on the global scene: it is emerging as one of the world’s great cities.
Read the entire op-ed and learn a lot about what makes Houston such a special place to live.
Over the weekend, we learned that the Fed had bailed out New York-based investment bank Bear Stearns during this unsettled time in the financial markets.
Almost seven years ago, a much larger company that shared many characteristics with Bear Stearns — Houston-based Enron — did not even generate serious consideration for a Fed bailout before it went under in the turbulent post-9/11 financial markets.
In between those two events, one of the world’s wealthiest insurers and another company that is similar in many respects to Bear Stearns and Enron — American Insurance Group — barely escaped a similar fate by cutting a deal with the now-disgraced former Governor and Attorney General of New York to cut loose the executive primarily responsible for creating AIG’s vast wealth.
The fact of the matter is that Enron was — and Bear Stearns and AIG are — trust-based businesses that fundamentally depend on the trust of the markets to sustain their value.
Once that trust is lost, such companies lose value quickly and dramatically, a case in point being that JP Morgan Chase’s proposed $236 million purchase price for Bear Stearns comes just hours after Bear’s market cap was $3.5 billion this past Friday and $20 billion as of January, 2007.
Although unfortunate for the owners of such companies, such a dramatic loss of wealth does not necessarily mean that any criminal conduct caused or was even involved in the loss. Rather, such loss is simply one of the risks of investing in a company based on a trust-based business model.
The sooner we all recognize and understand this risk — and avoid the mainstream media’s promotion of myths about them — the quicker we can put a stop to injustices such as this while advancing the discussion of how best to hedge the risk of such potential losses.
The stench of prosecutorial abuse has long hung over the Enron-related criminal cases.
But the extent of that abuse became crystal clear this afternoon when the Fifth Circuit Court of Appeals granted former Enron CEO Jeff Skilling’s motion to unseal his supplemental brief relating to the government’s interview notes of former Enron CFO and chief Skilling accuser, Andrew Fastow.
The brief reveals suppression of exculpatory evidence by the Enron Task Force on a massive scale. The entire brief is devastating to the Task Force’s prosecution of Skilling and the late Enron chairman, Ken Lay. The excellent 11-page introduction of the brief includes the following passage:
The raw notes are shocking. The 420 pages of contemporaneous notes, which we have spent the last many weeks comparing to the thousands of pages of trial record and the Task Force’s pretrial disclosures, confirm our worst fears. On the most crucial issues in Skilling’s case—especially where it was only Fastow’s word against Skilling’s—the Task Force suppressed vital exculpatory evidence from its “composite” FBI Form 302s for Fastow and all other disclosures given to Skilling. The Task Force then proceeded to present critical testimony and argument at trial it knew was contradicted by the evidence withheld from Skilling.
Much of the suppressed evidence directly relates to—and refutes—the Task Force’s pivotal contention that Skilling orally agreed to “secret side deals” to manipulate Enron’s financial statements. This “side deal” theory underlies every count of conviction against Skilling.
By depriving Skilling of key exculpatory evidence that Fastow conveyed in his interviews, the Task Force was able to skew the proof and convince the jury to accept Fastow’s word over Skilling’s. As the Task Force later told Fastow’s sentencing judge and recounted in a law review article, Fastow’s testimony and credibility were the cornerstones to convicting Skilling. . . . Enron Task Force Prosecutor John C. Hueston, Behind the Scenes of the Enron Trial: Creating the Decisive Moments (“Hueston”), 44 AM. CRIM. L. REV. 197, 197-99 (2007). The substantial evidence the Task Force kept from Skilling all shares one chatacteristic—it was harmful to the Task Force’s case against Skilling. . . .
The implications of this brief reach far beyond the Skilling appeal. For example, the already-reeling re-prosecution of the three former Merrill Lynch bankers in the Enron-related Nigerian Barge case would appear to be over. The Enron Task Force in the first trial of that case not only withheld exculpatory evidence, but put on incriminating testimony from former Enron treasurer and Fastow confidant Ben Glisan that directly contradicted the exculpatory evidence that Fastow provided to Task Force prosecutors during his interviews. Other Enron-related criminal cases — as well as plea bargains — could well be affected.
I’ve often noted on this blog that fair-minded people can disagree over whether the government’s prosecutorial power is an appropriate tool to regulate business. However, my fervent hope is that even those who favor using the state’s awesome power to criminalize merely questionable business transactions will be appalled by what the prosecution did in the criminal case against Skilling and Lay, as well as the other Enron-related criminal cases.
In truth, none of us would be able to survive, as Thomas More reminds us, “in the winds that blow” from the unjust exercise of the government’s overwhelming prosecutorial power. I continue to hope that Jeff Skilling’s unjust conviction and sentence are reversed on appeal, not only for his and his family’s benefit, but also for ours.
Update: The Chronicle’s Kristen Hays, who is the only mainstream media reporter who I know of following this story, has an article on the Skilling brief here (the Chronicle story links to the copy of the Skilling supplemental brief).
Probably in response to an off-the-record response from the DOJ, Hays writes that the Skilling supplemental brief contends that “some of [Fastow’s] initial statements to authorities were not as damning as those in his testimony.” That’s a stark understatement of what the Skilling supplemental brief describes.
The initial Fastow statements set out in the Skillling brief may not have been as damning as Fastow’s trial testimony, but they were irreconcilable with that trial testimony and described completely legal activity, even by Fastow. Consequently, had the Enron Task Force not been able to pry Fastow off his original story, the core of the Task Force’s case against Skilling and Lay would not have been contradicted by Fastow, who was Skilling’s main accuser at trial.
And the fact that the DOJ did not disclose to the Skilling defense team how Fastow’s incriminating testimony evolved over time from his exculpatory initial statements while Fastow and the Task Force were negotiating a dubious plea deal is beyond reprehensible. What is the DOJ going to say now, that they didn’t disclose the exculpatory earlier statements to Skilling’s defense team because Fastow was protecting Skilling in these initial meetings? Yeah, right.
Update 2: The blogosphere is picking up the story quickly, as Larry Ribstein, Ellen Podgor (see also here) and Warren Meyer have already commented.
Curious, isn’t it, that the mainstream media is lagging well behind. Could it be that the story simply does not comport with the media’s pre-conceived notions of the Enron saga?
Update 3: The WSJ’s John Emshwiller, who covered the Lay-Skilling trial for the WSJ despite legitimate questions about his objectivity, reports on the latest developments here.
Update 4: John Hueston, the former Enron Task Force prosecutor who is quite proud of his work in nailing Skilling and Lay on an admittedly weak case, is mentioned often in the Skilling supplemental brief because of the law review article he authored that is cited in the passage above. Hueston’s law firm bio used to link to a copy of the article, but the firm took the link down some time ago. However, Cara Ellison, who has followed the Enron-related criminal cases closely, provides this handy link to Hueston’s article.
Update 5: The DOJ has replied to the Skilling Supplemental Brief. The DOJ argues essentially that, put in what the DOJ considers to be the proper context, each portion of the Fastow interview notes on which Skilling relies to establish Brady violations contains information that Skilling already had prior to trial or is evidence that would have had “minimal” value in impeaching Fastow.
Frankly, the DOJ’s analysis stands Brady on its head. The essence of Brady is that the prosecution does not retain the power to make such determinations regarding exculpatory evidence unilaterally — that information is a part of the mix that the jury and the Court sort out in determining facts and in applying the law. If what the Enron Task Force withheld here is truly harmless error, then the DOJ’s need of 70+ pages to explain why that is the case belies that contention. Ellen Podgor passes along similar thoughts regarding the DOJ’s brief here.