Ex-Enron Exec Convicted In Retrial

Former Enron broadband unit finance chief Kevin Howard returns to the courthouse after lunch Tuesday, May 23, 2006 in Houston. Howard and in-house accountant Michael Krautz are awaiting a jury's verdict on whether they conspired to break accounting rules so the energy giant could book bogus earnings. (AP Photo/Pat Sullivan)
AP Photo
Jurors on Wednesday convicted one of the former executives from Enron Corp.'s defunct broadband unit to be retried after his original case ended in a hung jury last year.

Former broadband unit finance chief Kevin Howard was convicted of five counts of fraud, conspiracy and falsifying records while former in-house accountant Michael Krautz was acquitted of the same charges after a monthlong trial.

The verdict came six days after another jury convicted Enron founder Kenneth Lay and former Enron Chief Executive Jeffrey Skilling of fraud, conspiracy and other charges in one of the biggest business scandals in U.S. history.

Lay and Skilling were convicted of conspiring to run a massive fraud through repeated lies to investors and employees about Enron's financial strength. The company careened into bankruptcy proceedings in December 2001.

Howard and Krautz were the first of five broadband executives to be retried in separate cases after the original trial of the entire group ended in a hung jury last year. Although Enron was primarily an energy trader, the broadband unit was created to sell movies over the Internet in a diversification move.

The government contended that Howard and Krautz conspired to manufacture earnings for the failing broadband unit in late 2000 by selling an interest in future revenue of a video-on-demand venture that disintegrated a few months later.

The two men each testified, as they did in their first trial, that the deal was legitimate. The investors were not bought out and lost their money along with other creditors when Enron collapsed in late 2001.

The first broadband trial began in April 2005 and focused mostly on three other executives accused of overhyping capabilities of Enron's broadband network and operating software. After that case ended with a hung jury, the five defendants were split into three separate cases and re-indicted on fewer counts.

Howard and Krautz were charged with one count each of conspiracy, another of falsifying records and three counts of wire fraud.

Howard faces a maximum of 25 years in prison; five years for each count.

Unlike most of their former Enron colleagues, Howard and Krautz remained on the energy company's payroll after it crashed. They were fired in March 2003, the day their indictment became public.

Of the other three defendants, two are slated to be retried in September and the second trial of the third is postponed indefinitely pending an appeal to drop the case.

Jurors in the original trial gave up efforts to reach verdicts on all counts after four days of deliberations. The panel acquitted the technology defendants on a handful of charges, but were hung on the rest. Jurors were hung on all 15 counts of fraud and conspiracy that were pending against Howard and Krautz.

Of the other three defendants, former vice president Scott Yeager's May 30 retrial on charges of insider trading and money laundering has been postponed indefinitely pending an appeal. Joseph Hirko, former broadband unit CEO, and Rex Shelby, former senior vice president, face retrial Sept. 5 for conspiracy, fraud and insider trading.

Jurors in the trial of Howard and Krautz deliberated a few hours longer than the Lay-Skilling jury, which took 33 hours over six days to reach its verdict.

Lay and Skilling are to be sentenced Sept. 11.