A former employee of ex-Enron Corp. CFO Andrew Fastow testified Tuesday that backdating company documents within some of the company’s special purpose entities (SPEs) was so common it was jokingly called “time travel” in the office. Chris Loehr, one of the few government witnesses not under indictment to testify at the trial of Enron founder Kenneth Lay and ex-CEO Jeffrey Skilling, appeared to bolster Fastow’s claims about financial shenanigans within LJM partnerships, which were used to keep Enron’s poorly performing assets off the balance sheet.

Loehr, who appeared visibly nervous as a witness, was 24 when he began working at Enron in January 1999; he left in August 2001. He now works for Chicago-based Invenergy LLC, a wind-farm energy company. While he was employed at Enron, Loehr testified he acted as an investment analyst on LJM deals. He said he had two offices within the company: one for his Enron-related duties and another to help put together finance deals for LJM.

Under direct questioning by prosecutor John Hueston, Loehr described several transactions over a 14-month period when LJM documents were recreated and backdated so the partnership could avoid paying taxes on assets. Loehr read a section of an e-mail he had written in March 2001, announcing the completion of some documents he and another employee of LJM had backdated. The message read, “Merry Christmas. There are time machine documents…from Chris and Anne.” Loehr told the jury the holiday message was intended as a time travel joke because Christmas had been three months before. In the e-mail, Loehr wrote, “time travel takes its toll.”

Enron accountants, including the defunct accounting firm Arthur Andersen, “kind of covered their eyes” to the unlawful activities, Loehr testified. “They took a see-no-evil, hear-no-evil approach,” he said.

Loehr, who said he spent most of his time working on LJM transactions, confirmed he knew about Fastow’s infamous Global Galactic agreement, which apparently listed secret side deals between Fastow and Skilling. Fastow said last week the deals were approved by Skilling with a verbal “bear hug.” Loehr testified he had never seen a copy of the three-page agreement, but he said he discussed it with Fastow. Loehr said he was aware of only two copies of the list, one held by Fastow, the other by former coworker Michael Kopper.

“He described it to me as a written document,” Loehr said of the agreement.

Fastow attempted to market assets in the LJM-related Raptor SPE to Enron competitors, including El Paso Corp., Loehr testified. The Raptors were partnerships set up to hedge Enron’s money-losing assets. Loehr said he was stunned when Fastow told him he was trying to sell some of the assets to one of the company’s then-top competitors.

”I thought he was crazy,” Loehr testified. “This was Enron’s dirtiest laundry.” He said it didn’t make sense to him to show a competitor how Enron was hiding its under-performing assets. Loehr told Hueston he believed some of the assets were unmarketable, but in any event, the discussions to sell El Paso some of the assets were a “nonstarter.”.

On cross examination, Skilling lawyer Daniel Petrocelli tried to pick away at Loehr’s credibility. Petrocelli noted Loehr said he was paid by Enron, but he worked for “independent” LJM partnerships. The questioning is key because the defense claims LJM’s illegal deals were conducted by Fastow and his subordinates without Lay’s or Skilling’s knowledge. Loehr testified his paychecks were from Enron — not LJM.

Asked by Petrocelli if he believed he was doing illegal work, Loehr replied, “I knew we were doing things that were wrong…I did not consider myself a criminal, though.”

“Were you concerned about getting caught?” Petrocelli asked. “Not particularly. The conduct was fairly open and notorious,” Loehr said.”It was no great secret what we were doing.”

Asked why he left Enron, Loehr told Petrocelli it was to attend business school. He also had another reason, he told the jury. “It seemed to me that Enron was getting more and more desperate,” Loehr testified. “I wasn’t sure that we were going to be able to solve the old problems that kept coming back or the new ones that were going to come up.”

Petrocelli then reviewed Loehr’s exit interview from Enron. In listing the things he had liked about Enron, Loehr gave a “1” — the highest score — for “honesty.” Loehr explained he was referring to Fastow and Kopper.

“I believed Mr. Fastow was honest with me,” Loehr told jurors. Petrocelli, appearing incredulous, asked, “That’s who you gave the highest rating for honesty to? Andy Fastow?”

In the written exit interview, Loehr also said he enjoyed the transactions he worked on at LJM. He told the jury, “What I found interesting…about the deals was that they were innovating and very complex…Over my time at Enron, I realized that was more window dressing than anything else. There were side deals that usurped what was down on the paper.”

In redirect questioning by Hueston, Loehr said he was not surprised when the FBI tracked him down when the investigation of Enron began. Loehr, 31, said the FBI found him in Chicago attending graduate school.

“What was the first thing you said to FBI agents?” Hueston asked. “I remember asking them what took so long for them to find me,” Loehr replied.

The second witness to testify Tuesday was Johnnie Nelson, who began working for an Enron predecessor company in 1985 at a pipeline field station in New Mexico. When Enron collapsed in 2001, he said, “I lost everything.”

Nelson, who provided some of the most colorful testimony so far, said he trusted Lay. When the company was beginning to grow, Nelson said Lay was always true to his word, and he fixed any problems. Nelson said he did not know Lay was selling company stock in late 2001, but he wished he had known. “He’s the flagship of the company,” Nelson said of Lay. “If he’s buying, we’re buying. If he’s selling, we’re selling.”

Nelson said he and other Enron employees believed Lay in October 2001 when Lay said the company would rebound. That month, Enron took a $1.25 billion writedown on its assets, Fastow was fired, and the Securities and Exchange Commission launched an investigation. Videotapes of Enron meetings were available on the Internet to employees, and Enron routinely sent copies to remote locations, including the New Mexico field office. Nelson said he and his coworkers watched the 3Q2001 earnings meeting remotely. “We trusted him,” Nelson said of Lay. He told jurors the webcast videotape was the only source of news about the company he and his coworkers received.

Under cross-examination by Lay lawyer Mac Secrest, Nelson said he didn’t care if Lay was legally required to disclose stock sales or not. Nelson said Enron employees should have been told. Nelson later gave Lay credit for helping Enron’s stock price to rise, but he also held him responsible for its fall. “He violated my trust,” Nelson said. “That’s all I know.”

Asked by Secrest if he thought a chief executive of a company the size of Enron should know everything going on within the company, the plain-spoken witness replied, “We’re not talking about stamps and stationery, these were millions and millions of dollars.”

Later, Secrest told Nelson that Lay had not sold all of his Enron shares in late 2001, noting he had only sold enough to meet margin calls that didn’t have to be disclosed. By holding on to his Enron stock, Secrest said Lay lost millions.

“I’m heartbroken,” Nelson replied sarcastically.

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