Rex Shelby, a former Enron Broadband Services executive, pleaded guilty to one count of insider trading. According to Shelby’s lawyer, Ed Tomko, “[t]his ends Enron, because Rex was the very last Enron defendant standing from prosecutions that resulted from the company’s bankruptcy.”
Bloomberg reports that prosecutors agreed to drop the remaining conspiracy, securities fraud and other insider trading charges against Shelby in exchange for his plea. Shelby may serve up to six months in a halfway house, plus six months’ house arrest. He also agreed to forfeit about $2.5 million.
In 2003, Shelby and six other ex-Enron Broadband executives were charged with misleading investors about Enron Broadband’s prospects. Bloomberg reports that prosecutors alleged that while the defendants told analysts and investors that the division might be worth as much as $40 billion, in fact it was struggling and never made money.
However, although two of the indicted pleaded guilty before trial, none of the remaining five were convicted at the subsequent trial. Faced with the prospect of retrials, Bloomberg reports that
•Shelby pleaded guilty to one count yesterday.
•Former CEO Joseph Hirko pleaded guilty to a reduced charge in late 2008
•Strategy chief F. Scott Yeager won a ruling from the U.S. Supreme Court that he could not be retried because of his partial acquittal at the first trial.
•Senior accountant Michael Krautz was retried and acquitted in 2006.
•Finance chief Kevin Howard was retried in 2006 and convicted, but his conviction was later overturned. Howard ultimately pleaded guilty to reduced charges in June 2009 to avoid a third trial.
(Source: Compliance Week)
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