As expected, the Fifth Circuit denied the government’s appeal yesterday of U.S. District Judge Vanessa Gilmore’s decision to vacate the final count of the government’s odious five count conviction against former Enron Broadband CFO Kevin Howard. The Fifth Circuit’s decision affirmed Judge Gilmore’s decision to vacate the only remaining count of Howard’s conviction on which the prosecution had not already tossed in the towel. Ellen Podgor provides her usual excellent analysis of the decision.
With the Fifth Circuit’s decision, the stage is now set for the Department of Justice’s decision as to whether to try Howard for the third time on the same charges. One would hope that prosecutors would leave well enough alone, but don’t count on it. This is an Enron-related prosecution, after all.
Meanwhile, far from Houston in Hartford, the DOJ continues to assert essentially the same case against three former General Reinsurance executives and an AIG executive that has been thrown out against Howard and also the four former Merrill Lynch executives in the equally reprehensible Nigerian Barge case (see also here and here). The defendants represented their company in the negotiation of a legitimate business transaction that was evidenced by a written agreement that provides that all agreements or representations between the parties that are not contained in the written agreement are void and unenforceable. But that’s not what really happened, says the prosecution. The defendants entered into “secret side deals” that changed the risk allocation of the written agreement and eviscerated the company’s accounting treatment of the transaction. Pay a couple of witnesses to testify against the defendants by cutting favorable plea deals with them and “presto” — we’ve got a criminal case against some wealthy executives. Shattered lives, families and careers be damned.
This process is not one that a truly civil society would embrace.