At least five former Enron Broadband employees were named in a sealed indictment filed in federal court Tuesday, sources told the Houston Chronicle. Reporters were barred from the grand jury investigation, but sources indicated that charges would be made in connection with statements made at an analyst meeting in 2000 that may include insider trading, stock fraud and money laundering.

Former Enron executives had touted the emerging broadband business in several analyst meetings in 2000 and early 2001. During a conference call to discuss earnings in January 2000, former Chairman Ken Lay spoke of the company’s “early success of our new broadband services business,” which later in the year recorded a $20 million loss (see Daily GPI, Jan. 19, 2000). One year later during another analyst conference call, former CEO Jeffrey Skilling boasted that Enron’s broadband services would swamp the competition (see Daily GPI, Jan. 26, 2001).

Enron Task Force prosecutors John Kroger and Ben Campbell cannot comment on the grand jury investigation, which has been brought before U.S. Magistrate Marcia Crone. However, according to the Chronicle, “the meeting at the heart of the government’s broadband investigation took place Jan. 20, 2000, at the Four Seasons Hotel in downtown Houston. The company outlined bold plans to build a fiber-optic network to trade Internet bandwidth capacity and transmit movies, games and other applications that involve massive amounts of data.”

Speakers at the meeting included Skilling, former broadband CEOs Joe Hirko and Ken Rice, as well as engineering, sales and marketing employees. Although speakers indicated that the broadband division would not be profitable for several quarters, some speakers, including Skilling, claimed the new business would add about $40 to Enron’s share price. Following the meeting, Enron’s share price climbed 25%.

In March, two former Enron Broadband executives, Kevin Howard and Michael Krautz, were indicted. Their indictments, said the Chronicle, mention the January 2000 meeting specifically, and that “many of the representations made about Enron’s network and software at the Jan. 20, 2000, analyst conference were false.” Howard and Krautz have both pleaded not guilty.

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