Enron's broadband unit focus of trial
HOUSTON -- The next trial to emerge from the Enron scandal involves what became a habit at the company once lauded for innovation: Big talk about a new business that went bust.
Three former executives are charged with making false claims about the capabilities of Enron's broadband network to boost the company's stock so they could get rich by selling inflated shares. Two are accused of faking earnings for the unit to minimize its publicly reported losses. Jury selection begins today.
None of the defendants are marquee names in the Enron Corp. saga, but the outcome could be significant to former Enron CEO Jeffrey Skilling. He faces more than 30 charges in a separate case that alleges he knew the network didn't live up to the hype when he promoted it to Wall Street.
Enron's Internet venture started as a communications unit of a Northwestern utility the company bought in 1997. Two years later several Enron executives touted the unit's broadband network as "intelligent," with capabilities that would slay competitors and bring in billions in revenues. Dazzled analysts spread the word and Enron's stock price shot up.
Enron also struck an exclusive video-on-demand deal with Blockbuster Inc. to stream movies over its broadband network.
Enron Broadband Services, like failed ventures into retail energy and water trading, never made a profit.
The federal government says it was more than tech bubble enthusiasm gone awry. Prosecutors aim to convince jurors that the executives were running a scam to get rich and minimize losses.