The Chronicle’s Mary Flood — who has done a fine job as the Chron’s primary reporter on both the Enron-related Nigerian Barge trial and the ongoing Enron Broadband trial — files this report on the final arguments in the latter trial that began on Tuesday morning and will conclude today.
No surprises have occurred so far in the closing arguments. As expected, the prosecution repeatedly pointed to the “elephant in the courtroom” — i.e., the huge amount of money that Defendants Hirko, Shelby and Yeager made on Enron stock sales (between the three, about over $150 million) during the period in which the prosecution contends that they were making false public statements about Enron Broadband’s technological capabilities. Similarly, counsel for Defendants Hirko and Yeager attacked the credibility and motives of key government witness and former Enron Broadband co-CEO Ken Rice, whose testimony was impeached at least to some extent earlier in the trial when he testified falsely that a portion of an Enron Broadband promotion video had been shown to analysts when, in fact, it had not.
An unexpected problem that developed for the prosecution during the trial reared its head again during the first day of closing arguments — that is, the highly different status of Defendants Howard and Krautz from Defendants Hirko, Shelby and Yeager, who made the big money in Enron stock sales. Messrs. Howard and Krautz did not make any huge stock sales and are charged instead with fraud in connection with their involvement in an Enron Broadband structured finance transaction. Nevertheless, the prosecution largely ignored them for large parts of the trial, choosing to focus on the more juicy securities fraud and insider trading charges against Defendants Hirko, Shelby and Yeager. From accounts of Tuesday’s arguments, the same trend continued, which may be an indication that the prosecution does not have much faith in its case against Messrs. Howard and Krautz and is trying to bear down on its case against the three big money defendants. Counsel for Messrs. Howard and Krautz will give their closing arguments this morning.
After an often tortuous three month trial, it’s doubtful that a day and a half of closing arguments will have much of an effect on the jury. In most long trials, my experience is that jurors have made up their minds long before closing arguments and, at this point, are simply interested in getting into deliberations so that they can freely talk about the trial among themselves. After the closing arguments conclude today, U.S. District Judge Vanessa Gilmore will read the charge to the jurors, who will then probably meet briefly and then adjourn for the day. Substantive jury deliberations will likely commence on Thursday morning.
Update: Here is Ms. Flood’s report from the remainder of the closing arguments on Wednesday.
Houston's Clear Thinkers
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Who’s zooming who?
Enron prosecutors tells the jury they saw what the defendants were really doing behind the scenes. Final arguments began Tuesday…
Nice to see that some people see through the government’s tactics and to have somoene expose the misconduct of the prosecutors. The trial may have been “tortuous” for the jurors,lawyers, and judge, but the biggest impact has been on the lives of these innocent men that have been drug into court and prosecuted by an over zealous prosecution team in an effort to”crack down on corporate fraud”. Not only has the trial been “tortuous”,but the 3 years leading up to this have also taken it’s toll on these men and there families.If the government really wanted to make an impact on corporate fraud they would look at some of the accounting rules and stock regulations and actually allow changes there. This ,however, is not going to happen when lobbyist for big business keep lining the pockets of legislators.
The trial may have been a snoozer, but the closing arguments were not – everything but Campbell’s arguments, that is.
From watching the Jury, about three of the fourteen were even looking at Atty. Campbell during his three hour argument, which included such ‘zinger’ lines as: “I’m from Iowa, and I didn’t just fall of the turnip truck, and neither did you,” and “As Jerry Maguire said, ‘Show me the money!'” That’s right, he referenced Jerry Maquire.
Defense attorneys had a better time holding the Jury’s attention: Dave Angeli through power-points and videos, and Tony Canales through colorful analogy and talking directly to the jury. At the end of both attorneys’ arguments the jury was intent and leaning forward. After Mr. Canales’s, half the jurors – and all of the defendants’ families and friends – were in tears. At some point Canales retorted, “Show me the money? How about show me the evidence!” He also showed the indictment to the jury (though the government filed a motion to keep it away from the jury) which, if you read it, is all about the Shelby BOS video, which was never shown. He then said, in reference to the supposedly damning Collins lipstick email, “you can put all the lipstick you want on this indictment, it isn’t going away.” If at this point the jury just wants relief from the drudgery of the trial, they got their wish from the defense.
It’s interesting, however, that you think the prosecution laid off of the Braveheart group, because both Campbell and Stricklin spent over half their time talking about them. This is a stark contrast from the one-tenth of the time spent on them during the actual trial. If Campbell and Stricklin laid off of anyone, it was actually Shelby and Yeager. Yeager was hardly mentioned in Champbell’s argument, and both he and Shelby were mentioned for ninety seconds each during Stricklin’s argument. My impression of the end was that they are cutting their losses and going after Hirko for insider trading (the conspiracy theory has pretty much fallen flat) and after Kraus and Howard.
Though the Braveheart deal is ridiculously confusing, those defendents might be in trouble. It is tough for the government to prove an “oral side deal” because the accountants and experts say it was completely in compliance with accounting rules *and* what the contract said was exactly what happened (there was never a third party buyout, the money was lost, etc.). Yet because it is so confusing, the defense has not been able to explain clearly to the jury exactly what happened. Not even closing arguments brought clear explanation. The Braveheart case might keep the jury out for a while.
Last, (and I’m clearly showing my bias here), I like what I’m hearing about the prosecutors’ tactics. Though I see the need for anti-mafia laws that make prosecuting organized crime easier, I don’t agree those tactics should be used for white-collar crime. Our government has turned into a brute squad. They sent five guys to bang on Beth Steir’s door on Friday night after the Shelby II debacle, and made her cry on the stand. Why? They said she lied to the government by not giving them the correct tapes. In reality, the FBI had the raw footage from her for six months and never watched it. Canales said yesterday, “doesn’t the I in FBI stand for investigation?” The defense got the raw footage from the government – not Beth Steir. Also, The government called Larry Cisqon three times the night before he testified to remind him he was a target. Even worse, the government destroyed the evidence in this case, namely, the software and the servers. They went to the POPs and scrapped the servers and sold them off. Arthur Anderson gets dismantled for destorying backup copies of non-critical documents. The American government destroys evidence and three years of a defendent’s life goes down the drain. This is our America … with liberty and justice for all.
I know I’m running the risk of sounding inflammatory, but this whole case has been an abuse of power. Campbell said that money corrupts. I say power corrupts, and the abolute power of an Enron Task Force backed by millions of tax dollars, Rico, and the Patriot Act, has corrupted them absolutely.