SEC charges two ex-Enron lawyers with fraud
WASHINGTON (Reuters) - The U.S. Securities and Exchange Commission has charged two former in-house lawyers at Enron Corp. with securities fraud.
Jordan Mintz, former general counsel of Enron's global finance group, and Rex Rogers, former associate general counsel, were charged in connection with a fraudulent scheme to make material misrepresentations or omissions in Enron's public filings, the SEC said on Wednesday.
"Mr. Mintz denies the charges and intends to fight them vigorously in court," his attorney, Chris Mead, said.
An attorney for Rogers said his client was never involved in any wrongdoing. "Mr. Rogers is a person of great integrity and the highest moral character," Edwin Tomko said. "We look forward to vigorously defending these baseless allegations."
Frederic Firestone, an associate director in the SEC's enforcement division, said the case was another example of the pervasiveness of fraud at Enron, which collapsed in 2001, but was also important for showing the SEC will hold all relevant parties accountable.
"The commission will pursue gatekeepers such as these who engage in misconduct," he said.
The case involves Enron's 1999 sale of an interest in a troubled power project in Cuiaba, Brazil to LJM1, a partnership controlled by former Enron Chief Financial Officer Andrew Fastow, the SEC said.
The SEC alleges the transaction was done to take the asset off Enron's balance sheet and to recognize related earnings. It included an oral agreement on the side that LJM1 would not lose money, which was neither in the deal documents nor disclosed to Enron's auditor.
Enron then bought back LJM1's Cuiaba interest in 2001, according to the oral agreement, paying LJM1 a profit even though the investment had decreased in value.
The SEC charges that Mintz knew, or was reckless in not knowing, of the oral agreement and directed the documenting and closing of the buyback.
The investor protection agency also charged Mintz and Rogers with knowingly or recklessly failing to accurately disclose the buyback and related details in Enron's regulatory filings.
The SEC is seeking permanent injunctions, disgorgement and civil monetary penalties from both defendants as well as orders barring them from serving as an officer or director of a public company.
(Additional reporting by John Poirier)