David Delainey, the former CEO of Enron North America and Enron Energy Services, Thursday agreed to enter a guilty plea in connection with criminal charges brought by the U.S. Department of Justice. Delainey, who also agreed to cooperate with the continuing investigation, also settled Security and Exchange Commission (SEC) allegations without admitting or denying any wrongdoing in manipulating his former company’s earnings statements.

Under the guilty plea, Delainey agreed to forfeit nearly $4.26 million from money he made at Enron. According to the SEC, Delainey agreed to pay a fine of $3.74 million. He also will be barred from serving as an officer of a public company, the SEC said.

According to the civil charges, Delainey engaged in a “wide-ranging scheme to manipulate Enron’s publicly reported earnings through a variety of devices designed to produce materially false and misleading financial results. The SEC also alleges that Delainey engaged in insider trading while at Enron, and “sold large amounts of Enron stock at inflated prices and reaped millions of dollars in profits.”

Specifically, said the SEC, Delainey either took part in or knew about the manipulation of reserve accounts, concealment of uncollectable receivables, fraudulent asset valuations and other manipulative accounting devices. The SEC alleges that beginning in the first quarter of 2000 and continuing through 2001, Enron North America improperly reserved hundreds of millions of dollars of earnings to conceal volatility in its energy-trading profits and to use large amounts of those reserves to cover up other business unit losses.

“Enron and [Enron North America] senior commercial and accounting managers concealed the existence of these bad debts,” the SEC said. In another instance, the SEC alleges that in late 1999, Enron entered into energy trade agreements with Merrill Lynch & Co. to sell and then repurchase energy generated from certain power plants, which allowed Enron to meet its year-end earnings targets.

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