Conspiracy of Fools (117 page)

35.
Some details of the analysts’ conference from a copy of the packet materials distributed to the analysts, including the document entitled “Enron 2000 Analyst Conference, January 19–20, Houston, Texas.” The dialogue from the meeting, and visual descriptions, come from a transcript of the event and a video taken on Jan. 20, 2000. Also see the press release from Sun Microsystems and Enron on that day entitled “Enron and Sun Microsystems Inc. Team to Accelerate Adoption of Broadband Internet Services.”

36.
Enron’s stock performance from “Thursday’s Most Active Stocks,” Associated Press, Jan. 20, 2000.

37.
The Grayhawk profits from
U.S. v. Skilling et al
.

1.
Once again, for chapter clarity, the presentation of unrelated events has been shifted a little. The last chapter ended shortly after the analyst’s conference of Jan. 20; the Kaminski meeting in fact
took place two days earlier, on Jan. 18. However, this allowed for the full circle of one story—the Sun Microsystems and Project Grayhawk tale—to be told before launching the next story of the spreading recognition of Enron’s risk. Some details of Kaminski’s presentation from the document he prepared that weekend, “Discussion Notes for RAC Research,” Jan. 16, 2000.

2.
Details of the efforts to develop the Raptor program and its ultimate structure from the Wilmer, Cutler notes from interviews with Kevin Jordan on Jan. 11 and 15, 2002; Ryan Siurek on Dec. 11, 2001, and Jan. 31, 2002; and Wes Colwell on Jan. 9, 2002; as well as the original March 28, 2000, memo to file written by Duncan and other members of the Enron engagement team, “Raptor Transaction.” Also see the Powers Report, 97–128; the Feb. 2, 2000, performance review for Glisan written by Kopper; the March 31, 2000, Enron document “Project Raptor; Fairness Analysis”; the April 2000 memo to the files by Siurek and Jordan “Project Raptor”; the Aug. 3, 2000, document “Raptor I Derivative Proposal Sheet”; and the 302 of the FBI’s interview with Debra Cash of Andersen on Feb. 21 and 22, 2002.

3.
Astin’s discomfort with the Raptor payment to LJM2 is confirmed in the Batson Report, vol. 4, app. C, 141–42, and the handwritten Vinson & Elkins notes of the Aug. 23, 2001, interview with Astin during the Watkins investigation. Also see the March 2000 memo from Causey to Mary Perkins, “Project Raptor,” which seeks payment of the forty-one million dollars.

4.
Some details of the efforts to unwind Chewco from the Wilmer, Cutler notes of the Dec. 5, 2001, interview with Brown, as well as the Jan. 21, 2002, interview with McMahon. Also see the undated handwritten notes by Kopper to Fastow, providing his analysis of the value of Chewco.

5.
Some details of Bermingham’s efforts from his e-mail to Darby on Jan. 29, 2000. Also see the affidavit of C. Jeanne Simpson, an FBI special agent, filed on June 27, 2002, in support of the criminal complaint against Mulgrew, Darby, and Bermingham.

6.
Some details of the Andersen meeting from Bass’s Feb. 4, 2000, e-mail to Stewart, and Stewart’s response of the same day.

7.
Some details of the Azurix board meeting from the original minutes. Details of the water2water strategy from Rebecca Smith, “Azurix Is Launching Online Exchange for Buying and Selling Water in West,”
Wall Street Journal
, Feb. 9, 2000, A4; “Azurix Launching Website for Liquid Assets Trading,”
Houston Chronicle
, Feb. 10, 2000, Business, 2; and an Azurix release of Feb. 28, 2000, “Azurix Corp. Expands
Water2Water.com
to Become First Internet-Based Vertical Marketplace in the Water and Wastewater Industry.”

8.
Some details of the audit committee meeting from the official minutes, as well as copies of the presentations prepared for the meeting. The fact that Causey failed to mention certain transactions comes from a reconciliation of the deals that were done versus what he is recorded in the minutes—and in his official presentation—as having said. Also see the Batson Report, vol. 4, 109, and vol. 4, app. D, 110.

9.
A copy of the Bermingham e-mail was obtained by the author.

10.
Details of the Houston meeting from a copy of the bankers’ presentation. Also see the Simpson affidavit of June 27, 2002.

11.
Details of Project California, and the role played by Morgan Stanley, from a Feb. 2000 presentation put together for the effort, “Project California Discussion Materials.”

12.
Some details of the Enron and Blockbuster negotiations from a May 1, 2000, copy of the document “Non-binding Term Sheet.”

13.
Some details of the trip to the Caymans from the Simpson affidavit of June 27, 2002.

14.
Some details of the presentation to Skilling from an undated document by the wholesale division laying out the situation in California. The document is titled “The Supply/Demand Imbalance Has Been Masked by Several Years of Above-Normal Hydro.”

15.
Some details of the efforts to bring Glisan and Mordaunt into what eventually became the Southampton transaction from the Wilmer, Cutler notes of an Oct. 30, 2001, interview with Mordaunt. Also see the March 20, 2000, document “Southampton Place L.P. Amended and Restated Agreement of Limited Partnerhsip,” as well as the cooperation agreement signed by Kopper as part of
U.S. v. Kopper
.

16.
A copy of the MEGS DASH, as signed by McMahon, was obtained by the author. Some details of his response to the signing and his subsequent discussions with Baxter from the notes of his Wilmer, Cutler interview of Jan. 21, 2002.

17.
Details of the concert from Michael D. Clark, “Crosby, Stills, Nash & Young Can Still Rock,”
Houston Chronicle
, March 8, 2000, 1.

18.
Some details of the
Fortune
photo shoot from entries in Skilling’s and Lay’s schedule books. Also see Brian O’Reilly, “The Power Merchants,”
Fortune
, April 17, 2000, 148.

19.
A copy of McMahon’s handwritten notes was obtained by the author.

20.
Timing of the McMahon meeting from the schedules of McMahon and Skilling. Some details of their discussions and thoughts from the McMahon notes, and the testimony of both men before the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations, as well as the notes of McMahon’s Jan. 21, 2002, interview with Wilmer, Cutler.

21.
Some details of Sutton’s involvement in the McMahon complaint from “Affidavit of Joseph W. Sutton,” signed on March 6, 2002. The document appears never to have been formally submitted to any public case file involving the Enron litigation. In his affidavit, Sutton states that he believes his meeting with Skilling occurred on March 20, 2000. However, other information reviewed by the author suggests that this recollection must be inaccurate. Skilling and Sutton do have a scheduled meeting the days preceding that, and on March 18, according to schedules and travel records, Skilling left the country for Brazil and did not return for several days. Other reporting suggests that, indeed, the meeting with Sutton took place the week prior to March 20. McMahon’s recollections of his contacts, as laid out in his Jan. 21, 2002, interview with Wilmer, Cutler, also contradict Sutton’s beliefs on the timing and coincide with the sequence presented in this book.

22.
Some details of the trip to the Caymans from the Simpson affidavit of June 27, 2002.

23.
Some details of Sutton’s involvement from his March 6, 2002, affidavit. Also see the notes of the Jan. 21, 2002, Wilmer, Cutler interview with McMahon.

24.
Some details of the final days before the creation of Southampton from the Simpson affidavit of June 27, 2002. Also see the Wilmer, Cutler notes of the Oct. 30, 2001, interview with Mordaunt; the March 20, 2000, document “Southampton Place L.P. Amended and Restated Agreement of Limited Partnerhsip”; the Kopper cooperation agreement that is part of
U.S. v. Kopper;
and the March 6, 2000, letter from Kopper on behalf of LJM2 to Darby of Greenwich NatWest. Also see the Batson Report, vol. 4, app. C, 121.

25.
Some details of Skilling’s return and discussions with Sutton from the Sutton affidavit, as well as entries in Skilling’s schedule book.

26.
The Polish plant repurchase was first described in the Powers Report, 140.

27.
Some details of McMahon’s trip to Barton Creek, and his return, from entries in his computerized schedule. Other details from his Jan. 21, 2002, interview with Wilmer, Cutler.

28.
Timing of the Whalley meeting from an entry in Skilling’s schedule.

29.
Some details of the meeting between McMahon and Fastow from the notes of McMahon’s Jan. 21, 2002, interview with Wilmer, Cutler.

30.
Timing of the Raptor meeting from Skilling’s schedule book. Some other details from Skilling’s Dec. 4, 2001, testimony before the SEC.

31.
Some details of the Skilling, McMahon, and Whalley meeting from notes of McMahon’s statements in the Wilmer, Cutler interview of Jan. 21, 2002.

32.
McMahon’s change of jobs was announced internally on April 7, 2000, in an e-mail from Fastow.

1.
Certain details, including the minute that the Golden Knights landed and Lay’s outfit and seating, from photographs taken by a number of fans during the opening-night festivities. Additional information from Carlton Thompson, “Phillies Spoil Opener for Astros,”
Houston Chronicle
, April 8, 2000, Sports, 1; and David Barron and Eric Berger, “All Aboard for the New Ballpark,”
Houston Chronicle
, March 30, 2000, A1. Also see the internal Enron document “April 7, 2000: Enron Field Opening Day.”

2.
Some details of Wanda Curry’s experiences from McLean and Elkind,
Smartest Guys in the Room
, 299–301. Other details from audits of EES from the draft document “Enron Energy Services Business
Audit Review” for the years 1998, 1999, and 2000. Also see the Jan. 24, 2000, “tentative and preliminary” memo to the file from the EES accounting department, “EES Contract Accounting”; and the April 20, 2000, document “Enron Energy Services Risk Management: A Presentation to RAC.”

3.
Details of the time and place of the Badr El-Din meeting from entries in Skilling’s schedule book. Some details of Badr El-Din’s background from “Offsets in Defense Trade Fifth Annual Report to Congress,”
DISAMJournal
, Sept. 22, 2001; and M. Satyanarayan, “Ghantoot Wins Opening Tie in Polo,”
Gulf News
, Jan. 13, 2000. Some details of his ties of Enron from “UAE’s Dolphin Project to Maximize Gas Value Chain, Industrial Zone,” Of shore, April 2000, 54; David Barboza, “Enron Sought to Raise Cash Two Years Ago,”
New York Times
, March 9, 2002, C1; and the 1999 presentation “Project Dolphin.”

4.
Some background of Belden and the Portland trading effort from testimony before the Commodity Futures Trading Commission and the Federal Energy Regulatory Commission. These testimonies include those of Richard Sanders on July 9 and 10, 2002; Christian Yoder on June 2, 2002; John Arnold on Aug. 9 and 10, 2002; and an undated transcript of the testimony before the same bodies by Stephen Hall. Also see the Aug. 17, 2000, e-mail from James Steffes of EES to Belden and other members of the trading team, “FERC Investigation in CA—What Should They Be Looking For?” and the documents titled “Daily Position Report” for Jan. 17, 2000, through the end of that year, which lay out the trades of every division within Enron, including the western markets for power trading.

5.
Dialogue on the Forney transactions from a transcript of the recorded April 15 call obtained by the FERC.

6.
Details of the trading strategies from the testimonies before the CFTC and the FERC by Sanders on July 9 and 10, 2002; Yoder on June 2, 2002; and Hall’s undated transcript. Also see a copy of the Dec. 6, 2000, memo from Yoder and Hall to Sanders, “Traders’ Strategies in the California Wholesale Power Markets/ISO Sanctions.”

7.
Details of the wire transfers from the original documents. Also see
U.S. v. Fastow
and the Simpson affidavit of June 27, 2002.

8.
Details of the May 1 finance committee meeting from the original minutes, as well as handwritten notes taken by the corporate treasurer and the presentation prepared by Glisan. Also see the Batson Report, vol. 3, app. C, 25, and the Wilmer, Cutler notes from the Jan. 29, 2002, interview with Norm Blake.

9.
Details of the Southampton wire transfer from the superseding indictment in
U.S. v. Fastow
.

10.
Some details of the May 22, 2000, stage-two emergency from Nancy Rivera Brooks and Zanto Peabody, “Heat Triggers Moderate Power Emergency,”
Los Angeles Times
, May 23, 2000, B2.

11.
A copy of the Quaintance e-mail was obtained by the author. See also the Batson Report, vol. 4, app. B, 64.

12.
Some details of the meeting between the accountants and the SEC from Levitt,
Take on the Street
, 127–28.

13.
Andersen’s work on the Raptors from the original March 28, 2000, memo to file “Raptor Transaction” written by Duncan and other members of the Enron engagement team; also see the Feb. 1, 2000, e-mail from Bass to Stewart and others headed “Enron Transaction,” as well as the response on the same day from Debra Cash and another response, “Clarification: Enron Transaction,” from James F. Green. Fastow’s and Glisan’s efforts to obtain authorization for Raptor II from the minutes of the meeting of the executive committee of the board on June 22, 2000, as well as the presentation from that meeting, “Project Raptor II.” Also see the LJM2 approval sheet of June 26, 2000, for the deal titled “Raptor II”; the July 21, 2000, memo to the files by Duncan and the Enron engagement team, “Raptor II Transaction”; the Powers Report, 97–128; and the Batson Report, vol. 4, app. D, 73, and vol. 2, app. L, annex 5.

14.
Details of Larry Lawyer’s tax fraud relating to RADR from the criminal information that was part of his guilty plea to the charges in
United States of America v. Lawrence W. Lawyer
, filed on Nov. 26, 2002, in Federal District Court in Houston. Other details of the transaction from the deal-approval sheet for “Bulk Fiber Sale,” June 28, 2000, and the same sheet for “Project Backbone,” June 30, 2000. This is the sheet signed by Lay. Mordaunt’s role in EBS from the document “Status Change Form,” Feb. 1, 2000,
and the Wilmer, Cutler notes from her Jan. 12, 2002, interview. Also see the June 2000 presentation by Enron Broadband Services “Project Backbone,” and the “Operation, Maintenance, and Repair Agreement” between EBS and LJM2 (listed on the cover page as “purchaser”), June 28, 2000. Also see the Batson Report, vol. 2, app. L, annex 4, 34–35.