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Ex-Enron Executive Pleads Guilty in Fraud

August 26, 2004|From Associated Press

Enron Corp.'s former top investor-relations executive pleaded guilty Wednesday to charges that he helped paper over the energy company's shaky financial condition before its collapse.

Mark Koenig, 49, pleaded guilty to aiding and abetting securities fraud, which carries a maximum sentence of 10 years in prison.

In a related civil action brought by the Securities and Exchange Commission, Koenig agreed Wednesday to turn over to the government $1.49 million in forfeited assets and other penalties and to cooperate with government investigators.

As the head of investor relations, Koenig worked with Enron founder Kenneth L. Lay and former Chief Executive Jeffrey K. Skilling, and served as the company's main link to investors and analysts. He oversaw the company's earnings announcements -- exercises that proved fraudulent -- and coordinated conferences with stock analysts.

Federal prosecutors said Koenig participated in and knew about efforts on the part of senior Enron management to fool investors into believing the company was more financially healthy before it collapsed in December 2001.

Lay, Skilling and the company's former chief accounting officer, Richard A. Causey, face similar charges. All three have pleaded not guilty.

Specifically, prosecutors said Koenig knew that Enron masked losses by its retail energy unit by folding it into the division that included the company's trading unit. The government also alleged that Koenig helped mislead analysts about profit in Enron's former Internet unit, Enron Broadband Services, when that unit never earned a dime. Both units fell into bankruptcy along with the parent.

Six former broadband executives are slated for trial in October. The former CEO of the broadband unit, Kenneth Rice, pleaded guilty last month to securities fraud.

In May, Koenig's second-in-command, Paula Rieker, pleaded guilty to insider trading and agreed to cooperate with prosecutors.

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