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Notice:

Under Department of Justice guidelines and regulations, members of the Newby shareholders' class-action lawsuit are to be notified of Enron-related court proceedings, including the following events that have or will occur in the near future:

For Class Members
Newsroom

Enron in the News
  • Judge Ends Enron Suit Filed by Shareholders, 12/02/09
  • UC Begins Distributing Enron Settlement to Victimized Investors, 12/18/08
  • Billions to be Shared by Enron Shareholders, 09/09/08
  • Enron Payout Plan Approved, 09/09/08
more...
Press Releases
  • UC Begins Distributing Enron Settlement to Victimized Investors, 12/18/08
  • UC Reaches $11.5 Million Settlement with Goldman Sachs in Enron Securities Lawsuit, 02/05/08
  • Enron Victims Comment on Stoneridge, 10/09/07
  • Frank and Conyers File Amicus Brief in Stoneridge Case, 07/30/07
more...
Multimedia
  • Stoneridge and Enron - An Interview with Patrick Coughlin from Bloomberg TV, 10/08/07
  • Investors vs. Wall Street, 10/08/07
  • Enron Victims Seek SEC Support, 08/09/07
  • Sue the Banks, 06/22/07
  • CNBC, Keeping America Great, 06/12/07


 
United States v. Daniel Bayly et al., No. H-03-CR-363-1 (S.D. Tex). On June 16, 2009, the U.S. Court of Appeals for the Fifth Circuit in United States v. James A. Brown et al. (Daniel Bayly et al.), Nos. 08-20038, 08-20039, 08-20040 (5th Cir.), ruled that double jeopardy or collateral estoppel principles do not prevent a retrial of three former Merrill Lynch executives on charges that they helped defraud Enron Corporation and its shareholders by agreeing to “park” Nigerian power-generating barges with Merrill Lynch in order to artificially inflate Enron’s 1999 earnings. That transaction allowed Enron to enhance fraudulently its year-end 1999 financial position that it presented to the public and to meet its projected year-end numbers. Pretrial motions in Bayly are to be filed by November 16, 2009, responses by December 14, 2009, and replies by December 21, 2009. A pretrial conference has been scheduled in the case for January 8, 2010 at 11:10 a.m. before the Honorable Judge Ewing Werlein Jr. in Courtroom 11D, United States Courthouse, 515 Rusk Avenue, Houston, Texas. Jury selection and trial is set for February 8, 2010; however, on October 27, 2009, the Government filed an unopposed motion to continue the trial date and other deadlines, requesting a May 10, 2010 trial date.

United States v. Kevin Howard, No. H-03-CR-093-1 (S.D. Tex.). On June 1, 2009, defendant Kevin Howard entered a guilty plea to one count of falsifying Enron’s books and records. Pursuant to the terms of the plea agreement, Howard faces a maximum sentence of up to 12 months of home detention at sentencing. On November 2, 2009, Judge Vanessa D. Gilmore sentenced Howard to one year of probation, of which nine months are home confinement, and ordered him to pay a $25,000 fine.

United States v. Scott Yeager. On June 18, 2009, the Supreme Court, in a 6-3 vote, issued its decision in Yeager, ruling in favor of petitioner F. Scott Yeager, a former Enron executive who had been acquitted of several securities and wire fraud counts by a jury that deadlocked on the remaining counts in the indictment. The Supreme Court held that an apparent inconsistency between a jury’s verdict of acquittal on some counts and its failure to reach a verdict on other counts does not affect the preclusive force of the acquittals under the Double Jeopardy Clause. The Supreme Court stated that “if the possession of insider information was a critical issue of ultimate fact in all of the charges [against him], a jury that decided that issue in his favor protects him from prosecution for any charges for which that [fact] is an essential element.” The Court left open the door, however, for the Fifth Circuit to re-examine its ruling that the jury must have found, when it acquitted Yeager, that Yeager did not possess any material, inside information. On October 19, 2009, on remand from the Supreme Court, the U.S. Court of Appeals for the Fifth Circuit confirmed that the Supreme Court’s holding bars retrial of Yeager and ordered the U.S. District Court for the Southern District of Texas to enter judgments of acquittal on all counts against Yeager. The Order of Acquittal was entered on November 2, 2009.

United States v. Joseph Hirko and Rex Shelby, Nos. H-03-CR-093-4, H-03-093-7 (S.D. Tex.). Joseph Hirko has pleaded guilty to Count 4 of the Seventh Superseding Indictment, charging him with wire fraud, in violation of Title 18, United States Code, Section 1343, and was sentenced on September 28, 2009 to 16 months in prison, 2 years of supervised release and ordered to forfeit $7 million in (which will be applied to a restitution fund). As part of his plea agreement, Hirko agreed to cooperate fully with the government’s ongoing criminal prosecution of individuals at EBS. At sentencing, the remaining charges against Hirko were dismissed. Co-defendant Rex Shelby is awaiting trial on charges of conspiracy to commit wire and securities fraud, securities fraud, and insider trading. A pre-trial conference has been set in Shelby’s case for November 16, 2009 at 9:30 a.m. before Judge Vanessa D. Gilmore in Courtroom 9A, United States Courthouse, 515 Rusk Avenue, Houston, Texas.

Updated information on these events and other future court proceedings in Enron-related cases is available on the Criminal Division's Victim Witness webpage at:
http://www.usdoj.gov/criminal/vns/index.html.

  Background on the Enron Victims' Lawsuit to Recover Damages from Wall Street Banks that Orchestrated the Enron Fraud

Background of the Banks’ Role in the Enron Debacle

  • As a result of the massive fraud at Enron, shareholders lost tens of billions of dollars. Many Enron executives, Enron’s accounting firm and certain bank officials were indicted.

  • Andrew Fastow, Enron’s now-imprisoned former finance chief, testified that many of the banks’ transactions were contrived, deceptive deals done solely to create the false appearance of profits and cash flow.

  • Internal Enron documents and testimony of bank employees detailed how the banks engineered sham transactions to keep billions of dollars of debt off Enron’s balance sheet and create the illusion of increasing earnings and operating cash flow. For example:

    • Merrill Lynch purchased Nigerian barges from Enron on the last day of 1999 only because Enron secretly promised to buy the barges back within six months, guaranteeing Merrill Lynch a profit of more than 20%. As a result of this fraud, Merrill Lynch ultimately paid $80 million to settle with the SEC.

    • Barclays entered into several sham transactions with Enron, including creating a “special purpose entity” called Colonnade, a shell company to hide Enron’s debt, named after the street in London where the bank is headquartered.

    • Credit Suisse First Boston engaged in “pre-pay” transactions with Enron, including serving as one of the stop-offs for a series of round-trip, risk-free commodities deals in which commodities were never actually transferred or delivered.


The Fifth Circuit’s Decision

  • After years of preparation and just a few weeks before trial, the Fifth Circuit Court of Appeals vacated the class certification order.

  • Although the 2-to-1 decision of the Fifth Circuit acknowledged that the banks’ conduct was “hardly praiseworthy,” it ruled that because the banks themselves did not make any false “statements” about their conduct, they could not be liable to the victims even if they knowingly participated in the scheme to defraud Enron’s shareholders.

  • As the Court's dissenting Judge summarized, the ruling “immunizes a broad array of undeniably fraudulent conduct from civil liability . . . effectively giving secondary actors license to scheme with impunity, as long as they keep quiet.”

  • In an extraordinary admission, the Court's two-member majority acknowledged that their ruling runs afoul of “justice and fair play” (“We recognize, however, that our ruling . . . may not coincide, particularly in the minds of aggrieved former Enron shareholders who have lost billions of dollars in a fraud they allege was aided and abetted by the defendants at bar, with notions of justice and fair play.”)

For more background on the Enron lawsuit: www.universityofcalifornia.edu/news/enron

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