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“Not guilty” — two words rarely heard in a Houston courtroom at the end of an Enron-related trial. In fact, when a jury pronounced Michael Krautz, an accountant in Enron’s failed broadband division, not guilty last month, it was only the second time a jury had acquitted an ex-Enron employee. Before the verdict came down, Krautz’s attorney, Barry Pollack, a partner at the D.C. office of Kelley Drye Collier Shannon, worried that the jury could have been swept up by the euphoria surrounding the convictions of Kenneth Lay and Jeffrey Skilling, Enron’s former chairman and chief financial officer, just six days earlier. “We were worried about the spillover effect,” says Pollack, explaining that the Lay and Skilling trial took place in the courtroom next door. On their third day of deliberations, the Krautz jurors walked past the Lay and Skilling jurors holding a press conference on the courthouse steps and hundreds of Houston residents lining the streets cheering the verdicts. On May 31, Krautz was acquitted of charges of fraud, conspiracy, and falsifying records, while his co-defendant, Kevin Howard, the former chief financial officer of Enron’s broadband division, was convicted of the same charges. Both men were first tried last year with three other executives from the broadband unit, but that trial ended in a hung jury. The government accused Howard and Krautz of conspiring to manufacture earnings for their division’s 2000 results by selling a right to future revenues of a video-on-demand business the company had started to a consortium of banks for an immediate payment. The government claimed they lied to the company’s auditors and others in order to convince them that the transaction fit within accounting rules that would allow Enron to book the earnings from the deal for the year 2000. Pollack says the jury pool had strong preconceived notions about anyone affiliated with the company. But the government’s evidence was so weak, Pollack says, that they couldn’t convict Krautz even in that environment.
Alexia Garamfalvi can be contacted at [email protected].

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