Enron, Jeff Skilling, USA discussed on MSNBC Rachel Maddow (audio)

Automatic TRANSCRIPT

He's he's passed away. Yeah explain who he was and who Jeff Skilling is and what their roles were an Enron. They were at different points in time respectively the CEO's does of Enron which at the time it filed for bankruptcy was the seventh largest company in the US by terms of revenues very large company. What did they do. That's a great question and that was a big part of contention in our prosecution. The way that Jeff Skilling describe the company he said it was a logistics company they were sort of an intermediary for essentially in the gas and power business but they also had some sidelined businesses they got into broad-band they got into retail energy provision of services to businesses that failed really spectacularly and actually formed the basis have a significant part of our indictment against the to CEO's but in truth and I think what we proved at trial what really Enron did is it was a a gas power energy trader and the reason why Jeff Skilling in particular we alleged improved wanted wanted to create this other narrative of it. Being a logistics company or inner mediator was that traders just a pure trading in company because it's quite risky the stock price tends to be volatile volatile and trade at what they call a much lower multiple all much lower price to earnings multiple because it reflects the risk involved at some days. They're up some days. They're down is volatility and what the market weekly then was looking looking forward sort of steady growth and so what Skilling's kind of plan in particular was okay. I'm going to construct this narrative that this company is. It's actually growing year-over-year at sort of a steady fifteen percent. It's a stable company. Earnings are smooth every quarter and in order for them to achieve narrative win. The reality of the company was it was a speculative trading house was they had to sort of concoct all of these accounting honing manipulative activities to create a picture of the company that was very different than the reality that was false that was false the broad and that's the fraud that's a crime under the securities laws and so that's the the case that we tried and that's the case that we proved a remember a book by two wonderful reporters called the smartest guys is in the room about the Enron scandal and even as a federal prosecutor and even as someone who had handled white collar cases. I was struck by the complexity complexity of the fraud in some ways. It's incredibly simple. It was designed to conceal what they really were from the trading public and from the markets on the other hand and some of the transactions were very complex. How you'll learn that stuff. It was really hard and we could not have done it without cooperators than I imagined with some very very good agents some very good agents we had primarily the FBI meals such a different time because today regardless of how big the white collar cases I I. I don't know you could get the resources that we were able to get but we had. I believe you know roughly around forty agents most of whom were. CPA's we had some really fantastic agents is working on that case. It was a full-time noticed. Actions is all any of US did slept it. We breathed it. It was an all consuming experience. It's that we needed people on the inside to really explain to us where in a very complex transaction the problem was and without those guides we had a really cooperative the cooperators who we were able to persuade that they had their own you know exposure which they of course they did and to plead guilty and to work with us in explaining the case and one of the cooperators. I worked with really closely. He was the former treasurer of the company. He had been very involved in designing some of these complex structures who was the treasurer his name was. Ben glisten. There was a particular transaction that they referred to at Enron as raptor the raptor one two three and four and it was unbelievably complex transaction he Bangladesh and did something that is very unusual. In these types of cases he basically pled to a five five-year conspiracy offense with no cooperation deal. He just said I'm just GONNA plead and I'm going to do my time. Why would you do that because he we made an assessment that his kids were at age. They were reasonably young that he could be of more value to them if he got this over with earlier her and was there for them and accessible in fighting for years inviting it for years. We weren't entirely satisfied that he was mentally in a place where he would be ineffective cooperator for us and one of the things that's really challenging about white. Collar cases is that people go through lots of different stages of denial and rationalization. I've seen it happen with a number of individuals where it's hard to accept that you know you committed fraud and that's not how it felt to them necessarily when they were going to work every day lots of times. I saw people would rationalize each small all decision as being what they needed to do at the time until you're too far down the road and you look back at all these small decisions and they constitute a very big fraud. That's exactly exactly right and it's hard to come to grips with that. You really have to sort of lay yourself bear. You have to just come to terms with all of it to be very effective witness the government you have to just be willing to just tell it exactly how it is in terms of your own culpability as well and so that's a process usually for most people has been gleason the treasurer of Enron ultimately able to do that. He was you know we spent a Lotta time I think reflecting when after he was sentenced I would go to the prison to meet with him so that he could explain to me. How this rafter transaction worked. You know sit down with them. We we'd have absorb secret place because obviously you know he didn't. We didn't want the other inmates to know that he was meeting with the government so it's all done in a very clandestine way and we worked the bureau of prisons to do that and I'd sit down with him. He was at a federal facility. The first place he was in Bastrop Texas then he moved to Beaumont he would explain explain it to me and I would say okay drive back to Houston is about two and a half hours. I'd say I got it and then I wake up the next day and I'd say it's is gone so it really took a process of just staying added. It was like learning a different language. I remember cases where I would do the same thing I I would hear it. I understood the words and then I realized I couldn't explain it to anyone else and that I didn't actually understand that would have to just do it again right. That's right and it's the you know what what's difficult for. People to understand is because you're talking to a jury of course says no background on this whatsoever. There's no way that they could possibly Sibley understand the complexity but if you as the prosecutor don't understand the complexity you're never going to be able to explain it in a way that they can understand stand it. You're going to be killed by the other side if you don't really understand the complexity so one thing I've always said about juries is that they may not necessarily understand exactly all of the nuance in the complexity but they know who's getting the better of the other Hey it's Chris Hayes from MSNBC every day. I come to the office and we make a television show and every day I think to myself itself. They're so much more. I want to talk about and so this is our podcast. It's called. Why is this happening and the whole idea behind it is to get to the root of the things that we see Lee out every day. They're driven by big ideas each week. I sit down with a person uniquely suited to explain why this is happening new episodes of why is this happening every every Tuesday. Listen for free wherever you get your podcasts did Ken Lay and Jeff Skilling trial they did. They did a new report of that trial. Trial was with whom with Sean Berkowitz. Who's my partner now? Leith unlock and Sean was in a USA in the northern district of Illinois. That's right. He worked with PAT FITZGERALD WHO. I know you've how does a guest on who great prosecutor and a guy named John Huston was the prosecutor in the Central District of California and we sort of you know wacked up the case as you do. John gave the opening statement I gave the closing argument and Sean gave the rebuttal and that was about a four month trial very intense since you know there were three completely packed courtrooms with journalists so there is the main courtroom and then to overflow rooms where you probably ably don't remember this Kathy but I was detailed to Houston for about a year and actually sat and watched you. Try that case well. I knew you were there. Because of course you are incredibly helpful to US and getting US some office face and things like that which we were grateful for the Houston. US Attorney's office which temporarily ran in who was recused from all of the Enron cases and so that's why people like you and John and Sean Matt were brought in from other parts of the country to handle that matter that's right there was a story in the Houston Chronicle that referred to us as the Evian drinking carpet baggers or something you know which a we all thought was not very nice. Were you drinking a Vietnam of course not carpetbaggers. Yes we were. We were Houston's one of those places. That's pretty parochial like a lot of districts around the country and but the judges were very fair to us and it was uh really hard. Fi ks it was one of those once in a lifetime cases you know it was difficult to explain and we were under enormous pressure in. I think back now I turned thirty five during the trial and so I was the youngest member of the team and I remember coming back to Doj after we got the guilty verdicts in that case and there was a it's very senior prosecutor in the asset forfeiture money laundering section and she said to me. I just have one question for you. How did you not just stay in in the fetal position every day it. was you know it was such she was. It was a very genuine questions. She's just like how did you cope with. That kind of pressure and the answer is is just that you just do because you have to. When you step into the well of the Corden the world's watching and you just have to hope that you know the case better than anybody and trust your gut we started this conversation talking about a USA toiling in a Superior Court in the district of Columbia in anonymity where nobody knows and nobody cares and we are now.

Coming up next