The prosecution took longer than they thought they would to put on their case, a development which almost led to a juror revolt and which did lead to the defense making the slightly bizarre offer to help pay their salaries, a suggestion the judge nixed. Today, after five long weeks of often dull testimony, including recent allegations of just a joke video skits, purchase backdating, verbal pacts, and suspicious trading activity, the prosecution has finally rested its case.
The prosecution rested today in the Enron Internet division criminal trial and the five men accused of putting a profitable face on the company’s failing business will begin presenting their witnesses next week, with some or all of the defendants likely to testify.
The Enron Task Force prosecutors will argue they have proved that three of the men lied to analysts and investors about the technological capabilities of Enron Broadband Services and then sold their own stock, pocketing millions of dollars on insider information.
Prosecutor Cliff Stricklin questioned a finance specialist who the government paid more than $500,000 to trace the stock sale proceeds and show they were moved to different accounts, to prove up money laundering charges against former EBS co-CEO Joe Hirko and high-level technology execs Rex Shelby and Scott Yeager.
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Defense lawyers are expected to argue that Yeager, Hirko and Shelby didn’t lie about technology, but were projecting a plan for the future. They will also say the trades were not based on insider information but made because stock options would expire, the price was up and the men wanted to diversify.
The other two men on trial, midlevel finance and accounting workers Kevin Howard and Michael Krautz, are accused of arranging a fake sale of Enron’s future profits off a video-on-demand deal. Prosecutors charge they faked the accounting so it looked like income to Enron rather than the loan the government says it really was.
Their defense is likely to be that there was that the deal was above board, the purchaser nCube was really at risk and really lost money in the deal.
They’re adjourned for the holiday weekend, then the defense will start calling its witnesses. The story suggests the trial may last another four weeks, though Tom thinks it may wrap up more quickly than that. I have a feeling this phase is where the action will be. No reason, just a feeling. Stay tuned.