This Chronicle story reports on today’s plea bargain and settlement involving Paula Rieker, the former Enron managing director of investor relations. Under the deal, Ms. Rieker will turn over to the SEC nearly half a million dollars she made off the sale of stock the summer before Enron filed bankruptcy in early December, 2001, and she will plead guilty to a criminal insider trading charge under a cooperation agreement to testify for the Enron Task Force. Here is an earlier post that anticipated the deal.
Rieker is charged with knowing about significant losses at Enron’s defunct broadband business and selling her Enron stock before the company’s myriad problems were fully revealed to the public. Rieker was the managing director of investor relations for Enron in mid-2001 when the stock sale occurred. Later in 2001, she became the secretary to the board of directors and continued in that position until recently.
Under the SEC settlement, Ms. Rieker agreed never to serve again as an officer or director of a public company and, upon court approval of the settlement, will pay the SEC roughly $500,000, which is her profit from the sale of the stock. As is standard in these deals with the SEC, Mrs. Rieker did not admit or deny the SEC’s charges against her.
In the criminal case, Ms. Rieker has been cooperating with the government and she could be a valuable witness for the government as she prepared earnings releases and internal scripts for conference calls with analysts. The Task Force’s allegations against ex-CEO Jeff Skilling focus largely on alleged misrepresentations made about Enron’s earnings, and it is likely that any prosecution of ex-Enron Chairman Ken Lay would also also focus on such alleged misrepresentations. Lay has not yet been charged with any crime
Over two dozen individuals have been criminally charged in the Enron Task Force’s investigation, but none of those individuals have taken a case to trial. Several have pleaded guilty to various charges and are cooperating with the continuing investigations. Among those cooperating is former Enron Chief Financial Officer Andrew Fastow, whose cooperation facilitated the indictments earlier this year of Mr. Skilling and former Enron chief accountant, Richard Causey.
The first Enron-related criminal trial — the one known as the “Nigerian Barge case” involving several mid-level former Enron executives and former Merrill Lynch executives — is currently scheduled to begin in on June 7 in Houston before U.S. District Judge Ewing Werlein.