Tuesday, June 28, 2005
The Enron Broadband Services prosecution of five former executives at the unit grinds into its third month, with three former high-ranking officers taking the witness stand to dispute the government's claim that they misled analysts and investors about the unit's technology and engaged in accounting fraud. Former executives Scott Yeager, a senior vice president for business development, and Rex Shelby, senior vice president of engineering and operations, have already testified, and former co-CEO Joe Hirko is on the witness stand. The other two defendants, Kevin Howard and Michael Krautz, who ranked more as mid-level officers on the finance side of the Broadband Services unit, appear to be left behind in the trial. A Houston Chronicle article on June 11 (here) notes that most of the testimony focuses on the statements and conduct of Hirko, Yeager, and Shelby, and that the judge sometimes does not even ask the other two defendants' attorneys whether they want to ask questions because there has been no mention of either. Moreover, unlike the other three defendants, Howard and Krautz are not charged with securities fraud related to sales of Enron stock, so there may be an even greater distance between them and the three more prominent defendants, who must defend sales of Enron shares that provided them with millions of dollars in profits before the company collapsed.
While the high-level executives have all taken the stand, I would not be surprised if Howard and Krautz do not testify to avoid bringing attention to themselves, relying instead on a "Hey, we're the little guys" defense, which is accentuated by their being almost ignored each day at trial, sitting at the back table in the defense area. An "Out of sight, out of mind" approach is not a bad strategy in a multi-defendant case that rises and falls on intent and whether statements were misleading. If the two mid-level executives don't testify, then the case may be able to go to the jury in fairly short order. The Houston Chronicle has excellent coverage of the trial in a number of stories available here, along with Tom Kirkendall's Houston's Clear Thinkers blog (which also includes a valuable update on the struggling Astros, who proved last year that the first half of the season does not determine the second half). (ph)