August 25, 2004
Another Enron plea

Anyone keeping count here? I've lost track.

Mark Koenig, the former head of Enron's investor relations section, pleaded guilty this afternoon to a charge of aiding and abetting securities fraud and agreed to cooperate with the government.

U.S. Judge Ewing Werlein asked Koenig if he was "just shaving it" when he misrepresented the financial health of several Enron divisions to investors and analysts.

"I was making an untrue statement of material fact that was misleading investors," said Koenig as he stood before the judge in a dark navy suit, flanked by his two Washington, D.C. lawyers.

Koenig, a 49-year-old Kingwood man who joined Enron in 1985, could be sentenced by Werlein to a maximum of 10 years in prison and a fine of $1 million. The sentencing date is set for February but will likely be postponed since Koenig will likely be a trial witness at least against ex-Chief Executive Officer Jeff Skilling.

Koenig's plea papers noted that he several times heard Skilling misrepresent facts to analysts. He also mentions being prodded to answer questions falsely by Skilling. Skilling and ex-chief accountant Rick Causey are charged together an a wide-ranging indictment that also includes several charges against ex-Chairman Ken Lay. All three of those executives have pleaded not guilty.


Koenig admitted that he was aware that Enron's publicly reported financial results and filings with the SEC did not truthfully present Enron's financial position, results from operations, and cash flow of the company and omitted facts necessary to make the disclosures and statements truthful and not misleading.

He admitted that statements made by him and others relating to the performance of two of Enron's core businesses, Enron Broadband Services and Enron Energy Services were false and misleading.

Because Koenig and his staff drafted earning releases and scripts for conference calls with analysts and he accompanied other executives when talking publicly about the stock, he could be an important witness for prosecutors.

Paula Rieker, who worked under Koenig, has already pleaded guilty to an insider trading charge and is cooperating with the Enron Task Force and is expected to be a witness is several trials.

Koenig was not indicted by the Enron grand jury, but rather prosecutors filed the charge independently. The charge accuses Koenig of involvement in concealing failures at the Enron Energy Services unit through a rigged reorganization. The charge said Koenig knew Skilling misrepresented this in a first quarter 2001 call to analysts.

The charge said Koenig himself misled analysts about the source on the Internet broadband division's earnings in the same phone call.

And the beat goes on.

Posted by Charles Kuffner on August 25, 2004 to Enronarama | TrackBack