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Ex-Enron executive given 2 years probation for insider trading

Ex-Enron executive given 2 years probation for insider trading

Former Enron executive Paula Rieker was sentenced Friday to two years probation instead of the decade she faced in prison, becoming the second official of the failed energy giant in as many weeks to be shown leniency in exchange for cooperation in the case.
Prosecutors asked U.S. District Judge Melinda Harmon to give Rieker, the former corporate secretary and No. 2 executive in the investor relations department, a reduced sentence for insider trading because of her help in the Enron investigation.
"A two year term of probation is appropriate," Harmon said, crediting Rieker for helping prosecutors in their probe and volunteering in her community since her arrest.
A federal judge last week reduced the prison time for former chief financial officer Andrew Fastow from 10 years to six.
Harmon on Thursday granted Fastow a pass to be released from prison during daylight hours through the end of October, but in custody of U.S. Marshals, so he can give a deposition in shareholder litigation.
Rieker, 52, pleaded guilty in May 2004 to insider trading for selling company shares in mid-2001 upon learning that Enron's broadband unit lost millions of dollars more than had been publicly disclosed.
"I am very, very sorry for that wrongdoing," a tearful Rieker told Harmon. "I have done my best to cooperate and support the (Enron) task force in their various cases. I will continue to take responsibility for my actions."
She is among 16 ex-Enron executives who have pleaded guilty in the probe of the company's collapse.
"I think the court did the right thing," Rieker's attorney, Wes Loegering, said after the hearing.
Rieker was also fined $50,000 (euro39,500), which will be paid to victims of Enron's collapse. She has already paid back more than $800,000 (euro632,000) to Enron and the federal government.
Prosecutor Sean Berkowitz complimented Rieker for her help in the government's case.
Prosecutors earlier in the week had asked Harmon to give Rieker a reduced sentence because she provided "powerful and credible testimony" in the trial earlier this year that led to criminal convictions of Enron founder Kenneth Lay and former chief executive Jeffrey Skilling.
"Ms. Rieker has expressed remorse and regret for what she had done," Berkowitz said. "That is in stark contrast to some other individuals."
Skilling and Lay were convicted in May of conspiracy and fraud, proclaiming their innocence to the end. Lay's attorneys are working to erase his convictions since his July 5 death from heart disease. Skilling is to be sentenced Oct. 23.
But Berkowitz also said Rieker had committed a "serious crime" when she participated in insider trading.
"Any time that happens, it damages the market place," he said.
Rieker's friends and family attended the hearing. Her pastor, Doug Groen, spoke on her behalf, telling Harmon that Rieker had performed more than 800 hours of volunteer service at her suburban Houston church and in her community since her arrest.
"I find her to be very compassionate, empathetic and kind," Groen said.
Enron, once America's seventh-largest company, crumbled into bankruptcy proceedings in December 2001 when years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable.
The collapse wiped out thousands of jobs, more than $60 billion (euro47.4 billion) in market value and more than $2 billion (euro1.6 billion) in pension plans.
At the trial of Lay and Skilling, Rieker told jurors that Skilling twice ordered that the company boost its reported earnings-per-share figures to meet or beat Wall Street expectations and support its stock.
She also testified that Lay painted a falsely rosy picture of Enron's financial health as CEO before and after Skilling held that post from February to August 2001.
In 2001, Rieker was the top lieutenant to Mark Koenig, former head of investor relations. She later switched to corporate secretary, maintaining minutes of board meetings and reporting directly to Lay.
Rieker stayed on Enron's payroll several months after the company filed for bankruptcy. She received $130,000 (euro102,650) in bonuses designed to entice needed employees to stay and signed papers that said she had not illegally traded stock.
She kept her job until early May 2002, when her name surfaced as a target in the Justice Department's Enron investigation. She later pleaded guilty to insider trading for illegal stock sales in July 2001.


Updated : 2021-04-22 08:54 GMT+08:00