Conspiracy of Fools (118 page)

15.
Details of the efforts to sell off the Nigerian barges from the Batson Report, vol. 2, app. L, annex 4, 36–37; the Wilmer, Cutler notes from the Jan. 29, 2002, interview with Quaintance and from the Jan. 11, 2002, interview with Kevin Jordan. Also see the June 13, 2000, e-mail from Kira Toone of Merrill Lynch to Alan Hoffman of Whitman Breed Abbott & Morgan; and the Merrill Lynch “Credit Flash Report” for the week ending Dec. 23, 1999. Dialogue from Kopper’s testimony in
U.S. v. Bayly et. al.;
additional details of the buyback proposal from Glisan’s testimony in the same case.

16.
Details of the Cochise transaction from the Batson Report, vol. 3, app. G, 51–52.

17.
The excessive number of faxes arriving at Buy’s home in New Hampshire was described by Kaminski in his interview with Wilmer, Cutler on Dec. 19, 2001.

18.
Details of the stage-two alert from “Heat, Humidity in Southern California Force Regulators to Declare Emergency,” Associated Press, June 26, 2000.

19.
Some details of Skilling’s African trip from entries in his schedule book and travel records.

20.
Details of Fastow’s declared distribution from “LJM Cayman L.P. Analysis of Accounts,” Nov. 16, 2000; a July 14, 2000, wire-transfer request from LJM Cayman to LJM2 Capital Management. Also see the Batson Report, vol. 4, app. F, 60. Background on the Fastow Family Foundation from the certificate of incorporation filed for the group on March 14, 2000, with the office of the secretary of state for Delaware.

21.
Details of the timing of Lay’s meeting from his schedule book and his personal itinerary, headed “New York/London/Nice, July 18–23, 2000, KLL Itinerary.” Also see the Aug. 16, 2000, document “Blockbuster Transaction Summary.”

22.
Details of the effort to bump up Enron’s earnings to thirty-four cents from the superseding indictment in
U.S. v. Skilling et al
. Also see the Enron release from July 24, 2000, “Enron Reports Second Quarter Earnings of $0.34 per Diluted Share.”

23.
The dialogue in the second-quarter conference call from an official transcript, July 24, 2000.

24.
Details of the summer problems in California from Betsy Streisand, “Power to the People,”
U.S. News & World
Report, Aug. 21, 2000, 50; David Lazarus, “PUC Calls for Probe of Deregulation,”
San Francisco Chronicle
, Aug. 2, 2000, A1; Lazarus, “Davis Acts to Bridge Energy Gap,”
San Francisco Chronicle
, Aug. 3, 2000; and Sweeney,
California Electricity Crisis
, 128–44.

25.
Some details of Lay’s movements during the Republican National Convention from a copy of his itinerary for that week, headed “Republican National Convention, August 1–4, 2000, Philadelphia, Pennsylvania, Itinerary for KLL and LPL.” Background on the convention and the Regents from Mike Allen, “For ‘Regents,’ a Special Class of Party Favors,”
Washington Post
, Aug. 3, 2000, A15; and Jim Drinkard, “Party Never Forgets Royal Treatment for Big Donors,”
USA Today
, Aug. 4, 2000, 5A.

26.
The words of Bush’s acceptance speech from a transcript of the speech. Also see Frank Bruni, “Bush, Accepting G.O.P. Nomination, Pledges to ‘Use These Good Times for Great Goals,’ ”
New York Times
, Aug. 4, 2000, p A1.

27.
Details of the Project Summer transaction from the confidential Aug. 1, 2000, presentation to the Enron board titled “Project Summer”; the minutes from that special meeting; the document “Project Summer” presented to the full board on Aug. 8, 2000; and the draft document from Aug. 9, 2000, “Project Summer Q&A.” Also see the July 25, 2000, document “Project Summer Update” and the Aug. 3, 2000, memo to the file by Rodney Faldyn, “Project Summer Dabhol Total Return Swap.”

28.
The events in this meeting were recounted by multiple attendees. However, while I believe I have copies of all Enron board and committee minutes back to 1985, no one could precisely place when these events occurred, although all agreed they took place sometime in Aug. 2000. Minutes in several meetings, which are written in a very diplomatic style, have different events that could be these discussions. Also, many of the presentations were faxed to board members before or after the actual meeting, so it is difficult to ascertain which precise meeting these events occurred in. The
possibilities are the finance committee meeting of Aug. 7, the full board meeting of Aug. 7–8, or the full board meeting of Aug. 1. Rather than guess, I have relied on the reconstruction provided by participants, coupled with the reports that were faxed to the directors around that time. Those include Skilling’s “return analysis” for the international division from 1994 to 2000.

29.
The signing of the Project Summer agreement from the term contract, Aug. 11, 2000.

30.
Some details about the collapse of Mark’s career from Rebecca Smith and Aaron Lucchetti, “Water Venture Sinks an Enron Career,”
Asian Wall Street Journal
, Aug. 29, 2000. Timing of the meeting from entries in the schedules of Skilling and Lay. Also see the Azurix press release of Aug. 25, 2000, “Rebecca P. Mark Resigns Azurix Chairman and CEO Post.”

31.
The timing of Skilling’s meeting with the international group from an entry in his schedule.

1.
Some details of Sheikh Zayed’s surgery from “UAE President Undergoes Successful Kidney Transplant,” Xinhua General News Service, Aug. 28, 2000; Olivera Perkins, “Sheik Undergoes Kidney Transplant,”
Plain Dealer
, Aug. 29, 2000, A1; Sarah Crump, “Blossom Bonanza with Sheik in Town,”
Plain Dealer
, Sept. 1, 2000, B7; Regina McEnery, “Sheik’s Age Makes Transplant at Clinic Unusual,”
Plain Dealer
, Sept. 18, 2000, E1; Bob Dyer, “A Big Wallet Can Bring Big Adventures,”
Beacon Magazine
, Oct. 22, 2000, 4; and “Sheik Touched by Get-Well Letters Donates $30,000 to School,” Associated Press, Nov. 22, 2000.

2.
Copies of the Zisman memo, one dated Aug. 31, 2000, and another dated Sept. 1, 2000, were obtained by the author. Also see the internal Enron memo by Mike Galvan, “Troubled Assets—Raptor,” Sept. 6, 2000; notes of the Wilmer, Cutler interview with Zisman on Dec. 12, 2001; and the Batson Report, vol. 4, app. C, 143–44.

3.
Details of Raptor III from the Sept. 2000 memo to the file of Kevin Jordan, Clint Walden, and Alan Quaintance, “Project Raptor 3”; and the Sept. 20, 2000, memo from the same executives, “Project Raptor.” Also see the Powers Report, 114–18, and the Batson Report, vol. 4, app. C, 135–44; Wilmer, Cutler notes from the Jan. 11 and 15, 2002, interviews with Jordan, and the Dec. 11, 2001, and Jan. 31, 2002, Siurek interviews; the LJM approval sheet for Raptor IV, Sept. 11, 2000; the Oct. 20, 2000, memo from Enron Corp. to Talon I LLC, “Equity Swap Transaction”; the Nov. 9, 2000, memo to the file by Duncan and other members of the Enron engagement team, “Raptor 3 Transaction”; and the Dec. 27, 2000, memo to the files by the engagement team, “Raptor IV Transaction.” Additional information from the FBI 302 of Deb Cash from her Feb. 21, 2002, interview.

4.
Details of Lay’s situation from downloaded data in a financial navigator program, showing all of the family’s transactions from 1998 through 2001, as well as personal balance sheets for 1999, 2000, and 2001. Details of the individual drawdown on the credit lines from individual drawdown requests submitted on Lay’s behalf.

5.
Timing of the meeting, and some details of the discussion, from entries in Mintz’s personal schedule. Also see the Wilmer, Cutler notes from the Oct. 20, 2001, interview with Mintz, and his May 16, 2003, deposition taken as part of the Batson investigation.

6.
Timing of the meeting from entries in the executives’ schedules. A copy of the purported “Global Galactic Agreement” was obtained by the author. The agreement, along with the fact that it had been written down, was also described in
U.S. v. Skilling
. Fastow has represented to the government that this agreement was approved by both him and Causey. While Causey’s initials are also present on this document, Causey had pleaded not guilty in this case, and I cannot state with absolute certainty that he himself is the person who placed his initials on the document.

7.
Some details of these discussions from Sanders’s July 9, 2002, testimony before the CFTC and the FERC, 33–36.

8.
Some details of the conversations between Haedicke and Yoder from Yoder’s deposition before the CFTC and the FERC on June 7, 2002, 35–40.

9.
Details of Zisman’s conversations with Haedicke from notes of his Dec. 12, 2001, interview with Wilmer, Cutler. Also see Zisman’s sworn statement of April 21, 2003, to lawyers with Alston & Bird;
the Batson Report, vol. 4, app. C, 143–44; and notes of Haedicke’s Jan. 21, 2002, interview with Wilmer, Cutler.

10.
Timing of Baxter’s visit from an entry in Skilling’s appointment book.

11.
Some details of the SEC’s struggles with Capitol Hill over the accounting proposal from Levitt,
Take on the Street
, 132–34.

12.
The collapse of Project Summer is reflected in the flurry of activity involving the board of directors. On Sept. 15, Rebecca Carter, the corporate secretary, sent out notification by fax to the directors calling for a special board meeting on Sunday, Sept. 17, according to the original documents. Included in that invitation was an updated packet of material on the economics of Project Summer. However, with the deal still struggling, the meeting was postponed on that Sunday, followed by the collapse of Project Summer the next morning.

13.
Some details of Weil’s reporting effort from Scott Sherman, “Enron: Uncovering the Uncovered Story,”
Columbia Journalism Review
, May/June 2003. Also see Jonathan Weil, “Energy Traders Cite Gains, but Some Math Is Missing,”
Wall Street Journal (Texas Journal
), Sept. 20, 2000.

14.
A copy of the Duncan letter written for Lay was obtained by the author. Some details of the letter from Duncan’s testimony of May 15, 2002, in
United States of America v. Arthur Andersen
LLP, criminal action no. H-02-121 in Federal District Court in Houston. Also see Duncan’s Sept. 11, 2000, e-mail to Jeffrey Peck of Andersen, headed “Enron SEC Letter.”

15.
Some details of Chanos’s efforts from his testimony of Feb. 6, 2002, before the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations. Also see Jonathan R. Laing, “The Bear That Roared,”
Barron’s
, Jan. 28, 2002, and McLean and Elkind,
Smartest Guys in the Room
, 319–21.

16.
Levitt described his efforts to reach out to Berardino in
Take on the Street
, 134–36.

17.
Timing and some details of the Davis and Skilling call from handwritten notes taken during the conversation and from an entry in Skilling’s schedule.

18.
Some details of the Portland meeting from the FERC and CFTC testimony of Sanders on July 9 and 10, 2002; Yoder on June 7, 2002; and an undated transcript of the Hall testimony. Also see unsigned, handwritten notes of the meetings of Oct. 3 and 4, 2000, and the billing records of Stoel Rives for Oct. 1–31, 2000, as reflected in the invoice issued by the firm to Enron North America, Nov. 27, 2000.

19.
Yoder described his encounter with Forney in his June 7, 2002, testimony before the FERC and the CFTC.

20.
Some details of the accident in Palm Beach from “Palm Beach,”
Palm Beach Post
, Oct. 7, 2000, 2B.

21.
Details of the Oct. 7 meeting of the Compensation and Management Development Committee from the official agenda and minutes, as well as handwritten notes taken by the corporate secretary.

22.
Some details of the Oct. meeting of the finance committee from the official agenda and minutes, as well as handwritten notes taken by the corporate secretary. Also see the presentations at that meeting titled “Chief Financial Officer Report” and “LJM3.” Also see the Wilmer, Cutler notes from the Nov. 30, 2001, interview with Causey; the Jan. 29, 2002, interview with Blake; and the Nov. 27, 2001, interview with Skilling; as well as the Batson Report, vol. 4, app. D, 145.

23.
Some details of the Oct. 7 board meeting from the official agenda and minutes, as well as handwritten notes taken by the corporate secretary.

24.
Some details of the meeting with Fastow from entries in Mintz’s personal schedule book, which he used to take notes. Copies of the LJM approval sheets were obtained by the author. Some details of Mintz’s early days in global finance from the Wilmer, Cutler notes from the Oct. 20 and Nov. 21, 2001, interview with Mintz; his May 16, 2003, deposition taken as part of the Batson investigation; and his Feb. 7, 2002, testimony before the House Energy and Commerce Committee’s Subcommittee on Oversight and Investigations.

25.
Details of the Raptor problems and the use of the costless collars from the Powers Report, 110–11, and the Batson Report, vol. 4, app. C, 135–44; Wilmer, Cutler notes from the Jan. 11 and 15, 2002, interviews with Jordan, and the Dec. 11, 2001, and Jan. 31, 2002, Siurek interviews; a Nov. 14, 2000, memo to the files by Ron Baker of Enron, “Raptor Vehicle Issues”; and the documents headed
“Daily Position Report and Summary” for each Raptor vehicle in the months of Oct. and Nov. Also see the Wilmer, Cutler notes of the Dec. 20, 2001, interview with Rakesh Bharati.

26.
The timing of the Oct. 23 meeting from the two men’s calendars. Some details of the discussion from contemporaneous notes taken by Mintz during the meeting. Also see the Wilmer, Cutler notes from the Oct. 20 and Nov. 21, 2001, interview with Mintz, and his May 16, 2003, Batson deposition

27.
Mintz’s discussion with Buy from the Wilmer, Cutler notes from the Nov. 21, 2001, interview with Mintz, and his May 16, 2003, deposition taken as part of the Batson investigation. Also see the notes from Buy’s Jan. 17, 2002, interview with Congressional staffers.