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作者：贾明军 何丽莹
Lawyer Jia Mingjun & He Liying
Parties:
The Plaintiff:
The Enron employees who were participants in the Enron Corp. Savings Plan, the Enron Corp. Employee Stock Ownership Plan, the Cash Balance Plan or who received “phantom stock” as compensation.
The defendant:
Jeffrey Skilling
The facts:
Enron employees contributed a portion of their base pay to the Savings Plan and accepted bonuses and compensation in the form of Enron stock. Keeping stock in the hands of company employees helped keep the stock price from a dramatic drop when the company announced bad news. With shares tied up in Savings Plans and the ESOP, where they could not be easily traded, fewer were sold by worried employees. Skilling and other executives sold their shares. As the result, the Savings Plan contained more than $1.3 billion in Enron stock and the ESOP contained $1 billion in Enron stock. In the end, the employees lost a large portion of their retirement accounts and much of their life savings because of the misleading. Now the plaintiffs sue the defendant Jeffrey Skilling as they think he didn’t disclosure the true information about the internal control structure and they think he should take the liability for breach of co-fiduciary and for breach of fiduciary duty.
Issue:
1. Whether the officers of the corporation have to know every details of the corporation?
2. Whether Skilling know the material, adverse, nonpublic information about Enron’s internal control structure?
3. Whether the executives should be punished under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968?
4. Whether Jeffery Skilling should take the responsibility for breaching his fiduciary duty under the Employee Retirement Income Security Program (“ERISA”)?
Holding:
1. My client became the chief executive officer of Enron in February 12, 2001. As a chief executive, he has a lot of things to do everyday. What his major affairs are to manage the corporation in the most important respect. He can’t know everything happening in the inside of the corporation. So maybe there is something wrong happened during the Enron Corp. saving plan, the Enron Corp. ESOP, Enron Corp. cash balance plan, Skilling know nothing about it.
2. Jeffrey Skilling, was the CEO of Enron Corp. only for no more than 6 month. (from Feb.12,2001 to Aug.14,2001) He resigned because of personal reasons. As that is not a long time, he can’t know everything that maybe illegal happened.
3. In the complaint, the plaintiff alleged under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1961-1968, against officers of Enron who conducted and/or participated in the conduct of the affairs of the various RICO enterprises alleged herein, and were active participants in the schemes to defraud and conspiracies. As there is no enough evidence, my client should not take responsibility for it.
4. My client, Jeffrey Skilling didn’t violated ERISA § 502(a)(3), 29 U.S.C. § 1132(a)(3) as follow.
Reasoning:
1. During the period he was the chief executive officer of Enron from Feb.12, 2001 to Aug.14, 2001, he had the chance to access to the material, adverse, nonpublic information about Enron’s internal control structure, as well as the Company’s finances, and had access to internal corporate documents (including the Company’s operating plans, budgets and forecasts, and reports of actual operations compared thereto). He saw these documents, but we all know that Enron’s financial statements from December 31, 1997 to June 30, 2001 were materially false and misleading. Skilling also can’t be blamed for the false financial statements because: A. before he became the CEO of Enron Corporation, he was the COO of it. His major duty was to operate the corporation in the administration. We all know that Mr. Skilling got MBA degree in Harvard business institute. He have been trained the management skillfully. He knows how to operate a corporation well. He can’t know the material that he can’t see during the time he was the COO. B. During the period of my client being the CEO of Enron, he has tried his test to disclosure the most information about the financial affairs. He helped make Enron the nation’s biggest wholesaler of gas and electricity. He took that online, with $27 billion-worth traded in the first quarter. Though Skilling received bonus payments of $10.8 million, it is the bonus for his achievement not as a result of fraud.
2. In the complaint the plaintiffs allege that these defendants committed and/or conspired to commit a “pattern of racketeering activity”, as that term is defined in 18 U.S.C. §1961(1) and (5). Multiple violations of the federal mail and wire fraud statutes, 18 U.S.C. § 1341 (mail fraud) and 18 U.S.C. § 1343(wire fraud); interstate transportation offenses, in violation of 18 U.S.C. § 2314. They further allege that Each and every act of investing or reinvesting Plan assets in Enron stock, whether at the direction of participants induced to invest their salary deductions in company stock or involving the investment of company matching contributions in company stock, constituted an act of embezzlement in violation of 18 U.S.C. § 664. Actually, Skilling didn’t misuse or abuse the property entrusted to him for his own gain and profit or knowingly used the Plans’ assets, placed in his custody for limited use. The $10.8 million he received is only his bonus for his hardworking. Skilling did admit that he sold $66 million in stock, from February 1999 to June 2001. But we have to face this truth that he started 1999 with 262,000 shares and ended the year with 900,000 shares. Why there is only the evidence that he sold the shares? Can the plaintiff give the exact quantity of the shares Mr. Skilling had in August. 14? The price of Enron’s share didn’t drop until October 2001 after Mr. Skilling resigned for his personal reason. As a senior manager, he was ignorant of the rule that prohibits a company from using its own stock to generate a gain or void a loss. He was not an accountant; there is little possibility for him finding out the misleading of the financial statements. Though he got a large profit by buying and selling the shares of Enron Corp. the profit was earned by his own decision. Everyone can transport his stock unrestrainedly. No one can forbid this. Violations of the federal mail and wire fraud statutes, as there is no evidence of mail or wire sent by my client, I don’t think it can be approved by the jury.
3. In the complaint, the plaintiffs also alleged under the Employee Retirement Income Security Program (“ERICA”) that Mr. Skilling was and acted as a fiduciary within the meaning of ERISA § 3(21)(A), 29 U.S.C. § 1002(21)(A) with respect to the Savings Plan and the ESOP. In addition, Mr. Skilling was, and acted as, a co-fiduciary of the others within the meaning of ERISA § 405, 29 U.S.C. § 1005. Actually, Mr. Skilling knew nothing about the financial affairs, therefore he can’t violate the ERISA § 405, 29 U.S.C. § 1105. Further more, we can get the fact that most documents about the ESOP and ERISA have no autograph of Mr. Skilling. Meanwhile, Mr. Skilling didn’t know that Enron stock was not a prudent investment option or he wouldn’t buy so many stocks during the period he worked in Enron Corp.
4. The plaintiffs also said: “Enron executives repeatedly encouraged Enron employees to contribute a portion of their base pay to the Savings Plan and to accept bonuses and/or compensation in the form of Enron stock.” They think by doing so “other Enron executives could pay employees with inflated stock, as opposed to cash, thereby making cash available to pay themselves hundreds of millions of dollars in bonuses and compensation”. I wonder if the employees have no confidences about the Enron stock, how they could transfer their payment into stock. Further more, there is no evidence that my client got a large profit from the Saving Plan. Everybody knows that Enron stock rose during 2000 and 2001. It was not until October 14, 2001 that Enron made its first disclosure that something was awry with its financial reporting. Before this time, no one knows that financial reporting was wrong. Mr. Skilling thought that Enron run smoothly. He encouraged the employees bought the stock on this basis. Mr. Skilling also lost much when the stock fell. He didn’t know the details of the partnerships that concealed hundreds of millions of dollars in debt and overstated the company’s profits by more than $1 billion over several years. In the report of the investigation by the special investigative committee board of directors of Enron Corp. the bankrupt of Enron Fastow should take the direct responsibility. Though there are many problems with Enron, My client, Mr. Skilling shouldn’t be punished as he did nothing wrong in the Enron Corp. Savings Plan, the Enron Corp. Employee Stock Ownership Plan, and The cash Balance Plan.
Back in August, when he resigned his post, "I did not believe the company was in any financial peril,” Mr. Skilling said, “I absolutely, unequivocally thought the company was in good shape.” “The company s financial statements, as far as I knew, accurately reflected Enron s condition”. What Mr. Skilling do was based on the TRUTH he was told. To show the impartial of the federal law, the court should make the judgment that my client is innocent.
Bibliography:
1) Enron 1st Consolidated Amended Complaint in the united states district court for the southern district of Texas Houston division (Apr. 8, 2002)
2) the report of the investigation by the special investigative committee board of directors of Enron Corp. ( Feb.1, 2001)
3) Applicable Law: the Racketeer Influenced and Corrupt Organizations Act; the Employee Retirement Income Security Program: SEC Rules & Regulations.
4) http://www.c-span.org/enron/ http://www.bowne.com/resources/secrules.asp
http://www.enronerisa.com
http://www4.law.cornell.edu/uscode/29/ch18.html
http://news.findlaw.com/wsj/docs/enron/sicreport/index.html |
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