All it takes is a little patience. F. Scott Yeager, a former Enron executive, got some good news from the 5th Circuit Court of Appeals in New Orleans, which ruled that it wouldn't revisit his case. So, he no longer has criminal charges related to financial fraud hanging over him. Yeager has been acquitted on all counts. This follows a June ruling by the Supreme Court, which tossed a previous 5th Circuit Court ruling that could have resulted in a new trial.

The ruling said, "Today, ... it is clear under our initial ... analysis the jury made a finding in acquitting Yeager that precludes prosecution on insider trading and money laundering." Samuel Buffone, who was one of Yeager's attorneys, stated that his client shouldn't have been indicted to begin with and didn't do anything wrong. It has taken them seven years to get to this point.

Yeager landed in hot water because he sold stock in Enron for more than $54 million before it began the plunge that would ultimately end with its bankruptcy in 2001. He faced 125 counts, was acquitted of five (four for wire fraud and one for conspiracy to commit wire and securities fraud) and wound up with a hung jury for the remaining 120, which included insider trading and money laundering. He was later indicted again on 13 counts of insider trading and money laundering.

Continue reading Former Enron exec set free

Former Enron exec set free originally appeared on BloggingStocks on Wed, 21 Oct 2009 16:40:00 EST. Please see our terms for use of feeds.

This post is part of a feature in which he wonder whatever happened to some notorious financial felons. See all 17.

Jeffrey Skilling was the Enron CEO who tried to pin the blame for its 2001 bankruptcy on anyone but himself. He was not able to convince a jury, however. When Fortune raised questions about Enron in 2001, Skilling dismissed those "who want to throw rocks at us." And in a conference call with a hedge fund manager, Highfields Capital analyst Richard Grubman, who had shorted Enron stock, Skilling called Grubman an expletive beginning with the letter A.

Now, Skilling -- whose sentence was double that of other Enron convicts -- was serving a 24-year sentence in Waseca Federal Correctional Institution in Minnesota. Last month, Skilling was moved to a low-security prison in Littleton, Colo. The poor fellow will be about 74 years old when he is released in February 2028 -- that is, unless he gets pardoned by the current president, he wins an appeal, or he gets out early on parole.

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College. His eighth book, You Can't Order Change: Lessons from Jim McNerney's Turnaround at Boeing, will be published by Portfolio on December 26, 2008.

Financial Felons: Jeffrey Skilling originally appeared on BloggingStocks on Mon, 24 Nov 2008 06:30:00 EST. Please see our terms for use of feeds.

This post is part of a feature in which he wonder whatever happened to some notorious financial felons. See all 17.

There was one company that I believed in during my journalism career. It was a scrappy underdog challenging the establishment and made scads of money. Back in the day, it was sure easy to root for Enron, and Andrew Fastow was one of the reasons why.

Fastow was not suave like his boss Jeffrey Skilling -- whom I met several times -- and lacked the people skills of President Bush's pal Chief Executive Ken "Kenny boy" Lay. No, Fastow was a humorless number cruncher. His importance to Enron can not be overemphasized. As Time magazine notes, "Fastow had a skill Skilling needed; he did asset 'securitization,' a means for banks to sell off risk in the form of securities backed by mortgages or other obligations."

Wow, the roots of today's financial difficulties can be traced back to Enron!

There is nothing evil. about special-purpose entities. At first, Enron's initial investors did well because the deals were straightforward. CalPERS, put $250 million into an spe called jedi i, which invested in natural gas projects. Four years late, the California State Pension Plan CalPERS got back $433 million, a 73% return over four years.

Continue reading Financial Felons: Andrew and Lea Fastow

Financial Felons: Andrew and Lea Fastow originally appeared on BloggingStocks on Sun, 23 Nov 2008 18:10:00 EST. Please see our terms for use of feeds.

This post is part of a feature in which we wonder whatever happened to some notorious financial figures. See the other 17.

As Wall Street implodes around us, the word "hubris" is getting tossed around quite a bit. Hubris -- also known as excessive, overweening pride -- has become the catchall explanation for most of the market's ills. Our financial system has gone up in flames, we're told, simply because so many CEOs and regulators thought they were too smart to fail, no matter how highly leveraged their subprime mortgage portfolios may have been.

Assuming this is true, let's call Joseph Nacchio a trendsetter. As the chief executive of Qwest Communications International (NYSE: Q), Nacchio was determined to construct the world's biggest, best, and most totally awesome fiber-optic network. (Mind you, this was back in the late '90s, when the telecom bubble was just a glimmer in the market's eye.) However, the plucky CEO was driven not by a personal commitment to excellence, but rather by spite.

Nacchio left his old job at AT&T (NYSE: T) because he wasn't granted a plum promotion to president, which he felt he so richly deserved. What better way to show up his former employer than to build a superior network and steal away market share?

Unfortunately, Nacchio's impure motivations were not the best recipe for success. To give you some idea as to how his plans for world telecom domination played out, check out this blog entry I wrote about Qwest and Joseph Nacchio as part of our series on the worst S&P 500 stocks of the past 25 years.

Continue reading Financial Felon? Joseph Nacchio

Financial Felon? Joseph Nacchio originally appeared on BloggingStocks on Sun, 23 Nov 2008 14:40:00 EST. Please see our terms for use of feeds.

This post is part of a series on some of the most memorable companies that have disappeared.

Whenever I hear a company chief executive talk about "creative destruction" or "breaking the rules" or some other business buzzwords, a chill runs down my spine. You see, I have heard this sort of talk many times before -- from a company in Houston called Enron.

I was one of the many journalists who drank the Enron Kool-Aid. It was easy to understand why. Enron was the underdog, doing battle against the stuffy electric power industry to free up markets for competition, which in turn would save consumers tons of money. Everybody would win -- at least in theory -- and Enron would make tons of money in the process. The narrative the company spun was compelling, and I bought it hook, line, and sinker.

I dutifully scribbled down electricity and natural gas prices from Enron traders when I covered energy markets. Enron traders were always a chatty bunch. Enron's trading floor seemed to beehive of activity when I visited it during tours escorted by the company's public relations staff. It sure looked high-tech and had almost as many Bloomberg terminals as there were in the Bloomberg offices where I worked as a reporter.

Only years later did I realize that the whole thing was a sham.

Continue reading Companies that vanished: My memories of Enron

Companies that vanished: My memories of Enron originally appeared on BloggingStocks on Wed, 11 Jun 2008 15:09:00 EST. Please see our terms for use of feeds.

Enron's Jeff Skilling wants his conviction reversed originally appeared on BloggingStocks on Mon, 31 Mar 2008 13:01:00 EST. Please see our terms for use of feeds.

Ex-CEO Skilling of Enron gets prison delay originally appeared on BloggingStocks on Tue, 12 Dec 2006 09:02:00 EST. Please see our terms for use of feeds.

'Enron: The Musical' opens today in Houston originally appeared on BloggingStocks on Fri, 01 Dec 2006 09:10:00 EST. Please see our terms for use of feeds.

Since becoming a part of the bloggingstocks team I have observed that two things have gotten readers' passions in an uproar more than anything else based on clicks and comments. One is the Ken Lay / Enron saga and the other is Ebay (NASDAQ:EBAY) and their variable strategies for dealing equitably with vendors. Jim Cramer posts also get a lot of attention from our readers...go figure?

Ken Lay, the deceased CEO of Enron, escaped punishment for his conviction on numerous charges related to Enron's demise, not the least of which was selling his soul. In my book, he deceived the public, he deceived investors, he deceived his employees, he deceived his business associates, and he deceived himself. His family cremated the body so not much is left. While he will not be spending any time behind bars the pressure of the prosecution, the trial and verdict no doubt caused him to pay a high price. He lost his reputation, he lost his privilege and he lost his life. What else is there? His soul?

In reading some of the negative comments about Ebay from my many posts it is clear that there is a segment of the Internet population that feels Ebay sold its soul to the devil. That got me thinking about what a soul is worth. And from there, could you auction one off on Ebay? People sell the naming of stars in the universe. People sell rights to other imaginary things in the solar system. They legitimize this with various certificates and nonsense... and they make some money. How much is a soul worth? In Ken Lay's case it may have been worth billions of dollars at one time; he must have had "key man insurance". When he sold his soul a lot of Enron value evaporated. Now that he is gone his soul is worth nothing -- or is it? If someone posted it for sale on Ebay would there be any bids? Would Ebay accept such a thing? If there were bids what would the high bidder receive?

Yes I know this is all very silly and I reserve the right to be silly at times, if it stretches one's mind and causes people to think about how their actions affect others and how value is created and destroyed. At the same time there have been some strange things for sale on Ebay. Does Ebay strictly prohibit the sale of souls? If so, than how could they have sold theirs? Is this another conflict of interest?

In the mean time Ebay has issued a very positive quarterly earnings report to the chagrin of it's detractors; Cramer's ratings are through the roof (even if he has lost some integrity in the process); and Jeffrey Skilling, the ex-Enron president, was sentenced to 24 years and 4 months behind bars, thus assuring that we have not heard the end of this saga. So that must be what the judge and jury thought his soul was worth. It will be a course in most business schools for sure. Oh yes... and I have my worthless Enron stock certificate framed and hung on the wall in my office as a reminder that I make mistakes too and should try very hard not to repeat them.

Disclosure: I sold my last shares of Ebay January 2006. My Enron certificate does have some minimal value as a collectors item.

Other must reads:

Time Warner Cable no longer stuck in the muddle

Energy: Going forward while looking back

All Cramer needs now is a PIE in the FACE
DOW 14,000 here we come!

Sheldon Liber is the CEO of a small private investment company and the vice president for Design and Research of an Architecture & Planning firm.

Imagine Ken Lay's soul for sale on eBay - OH MY! originally appeared on BloggingStocks on Wed, 25 Oct 2006 19:35:00 EST. Please see our terms for use of feeds.