Enron witness: 'This is BS'
Ken Rice, former CEO of Enron's broadband unit, defends his cooperation with prosecutors in hope of securing a lighter prison sentence.
Note - This article contains strong language. HOUSTON (CNNMoney.com) -- The defense lawyer for Enron ex-CEO Jeff Skilling sought to undermine a key witness who's cooperating with the prosecution in return for a possibly more lenient sentence.
Defense attorney Mark Holscher aimed to discredit Kenneth Rice, the former CEO of Enron's broadband unit, for his earlier testimony that he -- with the knowledge of Skilling -- misled analysts about the capabilities and future potential of Enron's broadband unit. Holscher tried to convince the jury that Rice had been, in fact, bullish on the future of the broadband unit. Holscher brought up the potential acquisition targets Rice had pursued during that time, which included Global Crossing and Sprint. Holscher also referenced steps Rice took to bring in more qualified executives and to aggressively pursue Hollywood studios for premium content for the video-on-demand business. "You were still dreaming big in early 2001, weren't you?" he asked. "Yes," Rice replied. Holscher tried to get Rice to say that he had been, in fact, "optimistic" about all aspects of Enron Broadband and did not conspire with Skilling to mislead analysts. He then played for jurors a lengthy videotape in which Rice touted the success of Enron Broadband Services (EBS) to his employees. Judge Sim Lake said he was skeptical of the relevance of the tape. The judge warned Holscher to keep his cross-examination focused on Rice's testimony from the day before. "If you are going to cross-examine him on Shakespeare, you don't have to start with the invention of the alphabet," the judge said. Speed racer?
Holscher tried to get Rice to admit that he had already "checked out" of Enron in early 2001 and chose to race cars instead. "I did not 'check out' of Enron," Rice said, "I raced cars on the weekend." Holscher then reviewed the charges that had been filed against Rice, including alleged conspiracy, securities and wire fraud, money laundering and insider trading. As to his state of mind at the time he was indicted, Rice admitted that he was angry and told another former Enron broadband executive that this was "bullshit." "I was angry about what was happening to me," Rice said. Rice acknowledged that he had believed that he faced, potentially, life in prison. "You knew the only way you could avoid a potential life sentence was to cooperate, right?" Holscher asked. Rice did not answer. Rice has agreed to cooperate with prosecutors in hope of securing a lighter prison sentence. He pleaded guilty in 2004 to a single count of securities fraud, agreeing to pay nearly $15 million in fines, and now faces a sentence of up to 10 years in prison. Skilling and former Enron Chairman Kenneth Lay face more than three dozen fraud and conspiracy charges. They are accused of lying to investors about the company's financial state while they enriched themselves by selling millions in stock. Enron's 2001 bankruptcy was the largest in history at the time and was the first of a wave of business scandals that shook corporate America and led to the passage of tough new disclosure laws. Enron was once the nation's seventh-largest company. On Tuesday, Enron Task Force Director Sean Berkowitz questioned Rice on how he misled investors about Enron Broadband Services (EBS), which was a key part of Enron's growth story before the company collapsed in 2001. ____________ Enron's defense could be brilliant ... or crazy. Click here for more.
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