Word: enronizing
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...hard to come up with a scenario for indictment here," says John Coffee, professor of corporate law at Columbia University. "Enough of the facts are already known to know that there is a high prospect of securities-fraud charges against both Enron and some of its officers." He adds that "once you've set up a task force this large, involving attorneys from Washington, New York and probably California, history shows the likelihood is they will find something indictable...
...Enron has already acknowledged that it overstated its income for more than four years. The question is whether this was the result of negligence or an intent to defraud. Securities fraud requires a willful intent to deceive. It doesn't look good, Coffee says, that key Enron executives were selling stock shortly before the company announced a restatement of earnings...
...Arthur Andersen, criminal charges could result if it can be shown that its executives ordered the destruction of documents while being aware of the existence of a subpoena for them. A likely ploy will be for prosecutors to target the auditors, hoping to turn them into witnesses against Enron. Says Coffee: "If the auditors can offer testimony, that would be the most damaging testimony imaginable...
...Enron is in the cross hairs of at least six congressional panels. In the Senate, the Permanent Investigative Subcommittee got a jump on Jan. 11 by subpoenaing documents of 49 Enron executives and, separately, the corporate records of Enron and Arthur Andersen. The subpoenas, covering the period from 1999 through 2001, are aimed at learning "what the officers knew and what they did about it," said a committee official. The first hearing this year is scheduled for Jan. 24, headed by Connecticut Democrat Joe Lieberman. The first appearance of Enron chairman Lay is scheduled for Feb. 4 before the Senate...
...There are now 47 class actions against Enron and its executives and directors, filed either by shareholders or employees and carrying mainly the possible penalty of heavy fines. Most allege that Enron failed to disclose its many risky partnerships, which proved to be a large part of its undoing. Though Enron is bankrupt, Arthur Andersen could be liable as well, and Enron's officers and directors have deep pockets. Plaintiffs are seeking to freeze the proceeds of Enron stock sales by those insiders. "Going after directors personally is rare. But this case calls for the unusual," says Jim Newman, executive...