General Michael Flynn, former National Security Advisor to President Donald Trump, has every reason to be sweating bullets at present. After pleading guilty to lying to the FBI about Russian contacts, General Flynn is at the mercy of Special Counsel Robert Mueller and his team of investigators. In addition to Flynn, three other henchmen of President Trump’s are in hot water relating to the investigation over Russian interference in the 2016 Presidential Election:
Paul Manafort, Campaign Chairman
Ricky Gates, General Flynn’s assistant
George Papadopoulos, Campaign Foreign Policy Advisor
Andrew Fastow, the former CFO of Enron shown in this month’s movie, might strongly empathize with these men for he was once in their same distressing situation.
At the time of Enron’s catastrophic bankruptcy, Robert Mueller was Director of the FBI and led the investigation of all things unscrupulous about Enron. Mueller hired a top prosecutor named Andrew Weissmann, whose hardball tactics had earned him the moniker of “pit bull” (Guttman, 2017).
By indicting Andrew Fastow’s wife, Lea, Weissmann got Enron’s CFO to talk. According to Harvard professor and renowned lawyer, Alan Dershowitz (Roberts, 2004),
Andrew Fastow is being taught not only to sing but also to compose. To keep his wife out of prison, Fastow will now give the prosecutors whatever testimony they want against his bosses.
Robert Mueller took the leash off this “pitbull” and Weissman went wild with his Enron Task Force. Over 30 Enron employees were under a multifaceted investigation that included other organizations that had done business with Enron. The accounting firm Arthur Andersen & Co, Enron’s auditors, underwent an astounding collapse as approximately 90,000 employees, 99% of them innocent, were practically abandoned (“Reversed and remanded”, 2005).¹ The Enron Task Force also went after Merrill Lynch and CIBC for their transactions with Enron. Weissman encouraged the strategy of throwing multiple charges at the Enron defendants in hopes that a few would stick (Flegenheimer, 2017).
‘It’s pretty clear that Weissmann created a culture in which they presumed that the people they were investigating were guilty,’ said Tom Kirkendall, a Houston defense lawyer who represented clients on Enron-related cases.
Every Enron employee, who had, or was thought to have insight about the company’s dealings, secured a lawyer for protection from the frenzied witch hunt that descended upon Houston. These people witnessed abuse and intimidation that left them more than disenchanted with America’s Justice Department. Now that the statute of limitations has past, and the Enron Task Force is disbanded, these former employees of Enron are presenting their side of the story on a website. I found this information to be valid, startling, and deeply disturbing.
One Enron Executive Testifies for Another
Mike S. McConnell, formerly Enron’s Head of Global Marketing, shares his upfront experience with the aggressiveness of Enron’s prosecutors and the Justice Department in a book entitled, Just Because You Can Doesn’t Mean You Should (2007). While McConnell escaped the grasp of the Enron Task Force, his friend Kevin Howard, former CFO of Enron’s Broadband Service, unfortunately did not—despite doing nothing wrong. Below is an excerpt of McConnell’s book (pp 88-90), which includes Mike Krautz, another former executive at Enron’s Broadband unit. [Referring to the first trial for Kevin Howard and Mike Krautz]
Although they [Justice Department] had not been able to get a single guilty verdict in the first trial, they were off trying again. The prosecution changed its strategy and made the case more about character and the so-called ‘bad’ people of Enron rather an illegal transaction. I testified in the trial. I felt compelled to do so. It was a very scary thing to do. I had spent five years off the radar screen of the entire process, but I was going to intentionally walk back in and put some focus on me. I lost a lot of sleep over this decision, but I knew I was doing the right thing…. After several days of being on call to testify, the day finally arrived to go down and do it….
Jeffrey Skilling, former Enron CEO
The case was still moving very slowly, and we had to wait for several hours in a small conference room before finally going in at 4 p.m. Just before we entered the little waiting room for the court, Ken Lay and Jeff Skilling walked by as they returned from lunch to their trial, which was right next door! . . . After a quick conversation with all in their family, they both thanked me for testifying for Kevin because they were angry that he had been dragged into this mess. . . . I wasn’t on the stand very long and was able to make the points I really wanted to make. It certainly wasn’t easy to do, though. The prosecutor interrupted me at every question, literally. He was extremely arrogant, and the judge actually overruled him every time. I learned just how ugly the process actually is. It’s not about justice at all but about winning at any cost. In fact, as I was waiting my turn on the witness stand, two FBI agents approached me and acted as if we were old friends. They actually offered me advice. I saw this for what it was – an attempt to get inside my head and make me believe they were watching me.
I was in Austin on May 30 when Kevin Howard’s verdict came in and he was convicted on all five counts. Earlier in the year he got a hung jury and thus was ‘not guilty’ on 20 counts. Mike Krautz, the accountant with him, was acquitted; thank God for that. I didn’t know him very well, but everyone liked him and believed he was a tragic victim of the witch hunt. Kevin is a wonderful man and faced going to jail for most of the rest of his life. This was a travesty, a total travesty. This shouldn’t happen in America. Juries should not be able to make such a big mistake. They shouldn’t put someone in jail because he made some money and used to work at Enron. Chris [McConnell’s wife] then reminded me that juries are just people and that 60 million people watch American Idol. There are more votes cast for a reality show contestant than for President of the United States. My reaction was that it’s difficult to be proud to be an American under these circumstances. It just isn’t right.
The emails had begun. Terry, Kevin’s assistant and my old assistant Cathy were crying while typing what they were feeling and thinking. I sent Kevin an email, telling him how sorry I was and, incredibly, I got an e-mail back from him. He consoled me and told me to hang in there and to keep the faith in God…. Again, Kevin emphasized to keep faith in God and this was part of his plan; we just didn’t understand his long-term plan. How could he feel that way? The decision devastated me, but the person who was going to jail was at peace with it, at least for the moment.
Kevin told me he planned to file an appeal, but there was a major problem: he had no money and was deep in debt. The trial had wiped him out and he was on the verge of being unable to pay his bills or even keep his family in their house – never mind paying another appellate lawyer. As Kevin dealt with these realities, the first of two miracles happened. Jeff McMahon [former Enron CFO who had replaced Andrew Fastow as the company was going downhill]…started a fund for people to contribute money to help Kevin and his family. The fund was set up to allow $10,000. per individual contribution. The donations came pouring in. Each time I received an update from Jeff, I would actually giggle aloud, so many people were stepping up. Chris and I contributed as well after some serious discussions about how much we could give. It was the biggest single donation we had ever made, outside of church. It meant we would not take a vacation this year, among other cutbacks, but it was the right thing to do. The kids understood as best they could, but I know it was difficult for them. And, we soon found out we were not the only ones to stretch our limits: the fund ultimately surpassed $240,000. Think about that. People contributed $240,000. to help a man who had been convicted of a felony. What an inspirational life lesson and testament to the character of Kevin. Thank God for Jeff and his commitment and for everyone else who stepped up to help. Kevin was able to hire the right appellate lawyer, who actually cut his fee in half because he believed the conviction as a travesty of justice…
On the legal front, good news was developing. Kevin’s appeal had gained momentum and the prosecution supported a sentencing delay. This was a positive sign about the outcome of his appeal, and it would get even better. The judge vacated all of the five convictions. Dropped convictions! That simply does not happen. All that we had said and believed about the guilty verdicts having been a travesty was bearing out. All our prayers for real justice were paying off….
(Note: Jeff McMahon was not charged with any crimes, yet paid $300,000. to settle civil allegations, and to put the Enron matter behind him once and for all.)
Mueller and Weismann United in the same Goal
Robert Mueller (REUTERS/Joshua Roberts)
Now, this Mueller-Weissman duo is back together. Instead of a corporation and its executives, their target is one single man: President Donald Trump. Their investigation is whether he and his campaign colluded with Russia in the 2016 presidential election. It got ugly with a FBI pre-dawn raid on Paul Manafort’s house in July 2017. Alan Dershowitz chimed in once more,
Manafort now is the first domino, and what Mueller wants to do is see him as the first domino, the second domino, the third domino, ultimately trying to get to the big domino, which is President Trump . . . If Manafort has nothing to offer to assist Mueller’s larger investigation, then he’s going to twist in the wind.
President Trump is fighting back via Twitter highlighting anti-Trump bias in the midst of Mueller’s investigations. This is not unfounded as an FBI agent was recently suspended from Mueller’s team over anti-Trump texts. From a recent CNBC article (Novak, 2017),
In fact, a total of six of the 15 lawyers on Mueller’s staff have been connected to either the Clinton campaign or actions that can be viewed as overtly partisan.
Trump, though surrounded by a team of lawyers, is not afraid to take the fight to Mueller and Weissmann in the bull ring. The only thing a bully understands is another bully. From Flegenheimer (2017),
‘I’m no fan of Donald Trump,’ said Dan Cogdell, a Houston defense lawyer who tangled with Mr. Weissmann when Mr. Weissmann helped lead the federal task force investigating Enron in the early 2000s. ‘Frankly, I can’t think of two people who deserve each other more than Andrew Weissmann and Donald Trump.’
Enron Catered to Both Political Parties
A great number of Americans hate President Trump with an unprecedented vengeance. The source of this nationwide loathing has to go beyond Trump’s sordid reputation as a misogynist, and his notoriety for being arrogant, egotistical, and ignorant. Truth be told, Donald Trump is not unlike past Presidents in these undesirable qualities. What appears to elevate Trump above the others in America’s contempt is that he is an outsider. While this is precisely the reason roughly half of America, by Electoral College, voted him into the Oval Office, it appears to make the other half feel most uncomfortable in a world that has been dominated by the Establishment.
Both Republicans and Democrats make up the Establishment, and they strive to appear to represent all of America when in reality they are in it to enrich themselves and to keep their political parties in power. Our current documentary, Enron: Smartest Guys in the Room, portrays President George W. Bush as being in cahoots with Enron’s CEO Kenneth Lay. The Bush administration could have conveniently turned the other head to Enron’s vices. However, I do wish the documentary makers had also included the Clinton Administration’s significant associations with Enron. In an article titled, “Enron Movie Misses Hillary’s Role in the Scandal,” American author Jack Cashill details the Clinton Administration’s active support of Enron’s reckless investments overseas, all in the name of making money (2005).
When it comes to enabling Enron, it appears that neither the Clinton nor the Bush Administration can take the moral high ground. Lochhead reported in 2002,
Enron Corp.’s campaign contributions to President Bush are well chronicled, but the real rarity in Washington is the politician who did not get the energy giant’s largesse.
Enron’s tentacles ran so deep into Washington’s political establishment that 71 sitting senators and nearly half of the current House of Representatives received Enron money during the last decade, including some who are now investigating the company’s bankruptcy.
To cover their bases, Kenneth Lay and Enron contributed to both parties, and all levels of government. An article in the Hartford Courant states (“Enron’s Pervasive Influence”, 2002),
The company also was generous with state and local candidates from both major political parties. Its tentacles were wrapped around high-profile figures in several administrations.
Half of America was fed up with the swamp of political elites, their diffusion of responsibility, and their growing distance, hence the upsurgence of Donald Trump. The political Establishment, knocked off its pedestal, is doing everything it can to regain power. Robert Mueller, a Republican, and Andrew Weissmann, a donor to President Obama’s campaigns, are united to take down President Donald Trump. Andrew Weissmann is no doubt strategizing on how to use the pawn that General Michael Flynn represents to declare “checkmate.” Andrew Fastow, now out of jail and voluntarily researching legal documents and giving talks on corporate fraud, is likely empathizing from a helpless position.
Footnote
¹ Quotes below from an article published in The Economist regarding the role of Arthur Andersen & Co. in the Enron case (“Reversed and remanded”, 2005),
The 89-year-old firm was convicted in June 2002 by a Houston jury of obstructing justice by shredding tons of documents and destroying e-mails related to its client, Enron, just before the energy-trading giant abruptly went bankrupt the previous autumn when questions were raised about its financial statements. . . .
On May 31, 2005, the US Supreme Court, in a unanimous decision overturned the firm’s conviction. . . .
Nevertheless, there are two important lessons to be drawn from Andersen’s legal travails. First, prosecutors in the case overreached in persuading the judge to dilute the jury instructions. The Supreme Court rightly wants all convictions to meet the same standard: defendants should be found guilty only if the jury believes that they knew they were committing a crime. In white-collar cases, this can be difficult to prove, but not impossible. Prosecutors must aim to meet this standard in the upcoming trials of Enron executives and others. Second, prosecutors should reserve the criminal prosecution of service firms such as accountants, banks and insurance firms, which depend on government licenses to stay in business, to only the most egregious cases. After all, the SEC and other agencies already have a powerful sanction in civil lawsuits. Even in Andersen’s case, it would have been better to confine any criminal charges to individuals, rather than to destroy the livelihood of thousands of innocent employees.
REFERENCES
Cashill, J. (2005, May 20). Enron movie misses Hillary’s role in scandal. World Net Daily. Retrieved from https://www.wnd.com/2005/05/30397/
Reversed and remanded: The Supreme Court’s quashing of the accounting firm’s conviction sends an important signal. (2005, Jun 2). The Economist. Retrieved from https://www.economist.com/node/4033351
It was fatalistic! An excellent description of a company hell bound for destruction.