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The trial of five former executives from Enron Corp.’s failed broadband venture is about “lying for profit,” a federal prosecutor told jurors Tuesday. “The evidence will show that these men knew what we all learned later on — that Enron was a fraud,” Assistant U.S. Attorney Lisa Monaco said. Testimony is to begin today. Per Ramfjord, who represents Joseph Hirko, the former CEO of the broadband unit and the most senior executive of the defendants, countered that Hirko believed his statements about the broadband network’s so-called revolutionary capabilities were true. “No one committed any crimes while Mr. Hirko was in charge,” he said. Hirko and two other defendants are accused of making false claims about Enron’s broadband network’s capabilities to boost the company’s share price. He and former vice presidents F. Scott Yeager and Rex Shelby are charged with conspiracy, fraud, insider trading and money laundering. Defense lawyers said their clients sold stock to diversify their holdings, and some were holding thousands of shares that became worthless when Enron cratered in December 2001. “If you’re going to convict the three guys because they made money — because that’s what the government wants you to do — then we may as well stop right now,” said Ed Tomko, Shelby’s attorney, noting the stock sales were not crimes. Monaco said the broadband unit “was Enron’s answer to the Internet fever of the 1990s.” The defendants and others, including former Enron CEO Jeffrey Skilling, touted it “as being something it wasn’t — namely, a success,” she said. Monaco said the defendants stated that Enron’s broadband network was running with capabilities competitors couldn’t match, even though it never moved beyond the testing stage. Analysts dazzled by broadband presentations in 2000 and 2001 spread the word, and Enron’s stock rose. “What they had was a beginning, an idea, a concept — but that’s not what they said,” Monaco told jurors. Monaco said that Bill Collins, a broadband employee, sent an e-mail to Yeager in 1999 making that point. “I don’t care what lipstick and rouge you paint that (expletive) up with, she’s still just dead meat on a sofa threatening to steal the show,” the e-mail said. Tony Canales, one of Yeager’s attorneys, called Collins “the most unbelievable person you’re going to meet” who was angry that Hirko had blocked a deal he tried to make with Microsoft. Ramfjord blamed Kenneth Rice, who ran the unit with Hirko and then helped engineer Hirko’s ouster in mid-2000 so he could run it himself, and Kevin Hannon, the unit’s former chief operating officer. Rice pleaded guilty last year to securities fraud, and Hannon pleaded guilty to conspiracy. Both are expected to testify for the prosecution. Hirko wanted to build the business slowly, while Rice and Hannon pushed for the “Enronization” of the unit, or the appearance of instant success. Rice, a former top trader, also pushed to create a market for trading bandwidth in the unit — a venture that never got off the ground. Ramfjord also said Rice urged Skilling in an e-mail to oust Hirko, saying he “does not get the Enron way” and “I like my chances of getting rich faster if I’m the one running the business.” Kevin Howard and Michael Krautz, finance and accounting executives with the unit, are charged with conspiracy and fraud for allegedly faking earnings in late 2000 and early 2001 from a failed video-on-demand deal with Blockbuster. Barry Pollack, Krautz’s lawyer, told jurors his client was a low-level employee who spotted accounting problems. He said Krautz stood up to Enron finance chief Andrew Fastow in 2000 when he found a problem with an unrelated deal Fastow wanted done. Krautz held his ground when Fastow dressed him down with some “choice words,” the attorney said. Fastow, who is not expected to testify in the broadband case, pleaded guilty last year to conspiracy for orchestrating myriad deals that fueled Enron’s bankruptcy in 2001 while pocketing millions for himself. Pollack said Krautz was as conscientious with the Blockbuster deal, which he deemed legitimate after consulting outside lawyers and accountants. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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