Former Enron Broadband Services (EBS) executive Kevin Howard was convicted Wednesday on one count of conspiracy, three counts of wire fraud and one count of falsifying books and records for his role in a scheme to mislead investors about the company's finances. Another former EBS executive, Michael Krautz, was acquitted on the same five charges.
Howard was vice president of Finance at EBS from approximately Aug. 1, 1999 to September 2001, while Krautz was senior director of Transactional Accounting at EBS from approximately Aug. 16, 1999 to Oct. 3, 2001. Howard and Krautz were originally tried last year with three other former executives (see NGI, March 17, 2003). However, the jury deadlocked on the charges and a mistrial was declared.
Jurors convicted Howard of fraud for his participation in an EBS project called "Braveheart." Prosecutors alleged that the shell project was used to illegally generate more than $110 million in revenue in late 2000 and early 2001. Braveheart, said prosecutors, sold the expected future profits of a deal EBS had struck with video rental giant Blockbuster Inc. EBS then allegedly used the cash flow from Braveheart to show investors that its business was generating profits. The Blockbuster deal later fell through.
Two of the former EBS executives from the first trial, Joe Hirko and Rex Shelby, will be retried later this year.
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