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Last Updated:  Thursday, 13 March, 2003, 06:29 GMT
Enron hit by fresh charges
Enron head office
So far, 160 people have been charged over Enron's collapse
Two Enron executives have been charged with fraud over a defunct and largely fictitious internet movie venture.

Federal prosecutors charged Kevin Howard and Michael Krautz - both with Enron Broadband Services - with securities fraud, wire fraud, conspiracy and making false statements to FBI agents.

In a related filing, stock market regulator the Securities and Exchange Commission (SEC) charged the pair with violating a number of federal securities laws, including falsifying Enron records and quarterly reports.

The alleged frauds were to support a transaction that the SEC characterised as "a sham from its inception".

Separately, the Commodity Futures Trading Commission (CFTC) charged Enron with manipulating natural gas and agricultural commodity prices.

Virtual video

The charges relate to an attempt by Enron - in partnership with video rental chain Blockbuster - to set up an online video-on-demand service using broadband technology.

Like many other Enron ventures, this turned out to be largely fictitious.

According to court documents, although Enron claimed $111m (69m) in profits from the venture in 2000 and 2001, no revenue was in fact generated.

According to the charges, Enron secretly promised profits from the deal to outside investors.

These promises were hidden from shareholders and auditors, and the venture eventually evaporated in March 2001 when Blockbuster pulled out.

Dodgy futures

The new charges coincided with long-expected action from the CFTC, which regulates trading in the commodity markets that Enron long dominated.

According to the CFTC complaint, Enron's online subsidiary was used as "an illegal futures exchange", and was the basis of several attempts to manipulate the natural gas market.

The firm also attempted to structure a timber deal that amounted to an illegal agricultural futures contract, the CFTC alleged.

The charges are the latest in a tidal wave of litigation to hit the once-mighty firm since it admitted falsifying accounts in November 2001.

So far, the US Justice Department has filed charges against 160 people, notably the company's former chief financial officer, Andrew Fastow, who faces 78 separate indictments.

Enron filed for bankruptcy in December 2001, but still aims to emerge as a smaller but viable company at some point.


SEE ALSO:
Enron's trail of deception
13 Feb 03 |  Business
US bank settles Enron claims case
02 Jan 03 |  Business
US energy firm files fraud suit
26 Sep 02 |  Business
Merrill rejects claims over Enron
30 Jul 02 |  Business


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