Kenneth Rice, 45, who formerly was co-CEO of Enron Corp.’s broadband division, pleaded guilty on Friday to one count of securities fraud. He agreed to pay a $13.7 million fine, and now faces up to 10 years in prison. Sentencing is set for Jan. 31, 2005.
Rice had pleaded innocent when he was indicted last May for fraud, money laundering, insider trading and conspiracy in a 218-count superseding indictment against former Enron CFO Andrew Fastow (see Daily GPI, May 2, 2003). Rice and other former Enron Broadband Services (EBS) executives were accused in the indictment of selling large amounts of Enron stock when they knew the division was failing, and in turn, reaped about $186 million in profits. The government is seeking forfeiture of more than $100 million of the profits.
Rice left Enron several months before the company declared bankruptcy, selling about 1.2 million shares of stock for more than $76 million. He had been CEO of Enron’s trading unit, then called Enron Capital and Trade, from June 1996 to June 1999. He then was promoted to lead EBS. Rice was the co-chief executive of EBS from July 1999 until July 2001, just five months before Enron filed for bankruptcy.
At a hearing in a Houston courtroom on Friday, Rice said he misrepresented the development state of EBS’s software, and he said he knowingly made false statements about it. Rice will be cooperating with the Enron Task Force on pending cases, according to investigators.
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