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Rack up another Enron plea

The count is now 14.

Former Enron Broadband Services executive Kevin Hannon pleaded guilty today to conspiracy to commit securities and wire fraud, becoming the 14th former executive to strike a plea bargain with prosecutors.

Originally indicted on charges of conspiracy, money laundering and insider trading, the former chief operating officer of Enron’s Internet business avoided an Oct. 4 trial by entering the plea this afternoon before Judge Vanessa Gilmore. He faces a maximum of five years in prison and a $250,000 penalty, but he remains free on a $1 million bond, and his sentencing will come later.

As part of the plea bargain with prosecutors, Hannon agreed to forfeit $2.2 million in assets, pay a $1 million civil penalty to the Securities and Exchange Commison, and drop a claim for $8 million in back pay from Enron.

His plea could further complicate the standing of the five remaining defendants in the broadband case. In July, former EBS Chief Executive Officer Ken Rice pleaded guilty to making misleading statements during a Jan. 20, 2000, meeting with analysts where he and others at the company touted the capabilities of Enron’s broadband network.

The remaining defendants are Joe Hirko, EBS’ former chief executive officer; F. Scott Yeager, former senior vice president of business development; Rex Shelby, former senior vice president of engineering and operations; Kevin Howard, former vice president of finance; and Michael Krautz, former senior accounting director.

The five still headed to trial are scheduled for a hearing before Judge Gilmore on Wednesday. They are expected to discuss motions to move the trial out of Houston and to argue that the government allowed key evidence to be destroyed when Enron auctioned off much of the computer hardware and software that was part of the broadband business.

The prosecutors are certainly earning their money.

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One Comment

  1. Former EBS Employee says:

    Of that list of pending defendants, AFAIK Shelby is innocent. His tech company merged with mine, and was promptly bought by EBS. Shelby is a small-time operator who hit a gold mine and then stopped having much day-to-day say in how things worked. He was out of his depth at EBS–nothing wrong with that, but it throws doubt on him being one of the defendants.

    (Chuck, you’ll know who is posting this, but I prefer to stay anonymous.)