Enron Execs Charged In Connection with Blockbuster Venture12 Mar, 2003 By: Hive News
Two Enron executives closely linked to the energy company's short-lived broadband deal with Blockbuster Video were charged today in connection with the ongoing federal investigation of fraudulent financial reporting.
A federal complaint accuses executives Kevin Howard and Michael Krautz of deliberately violating applicable accounting rules in recording $111 million in earnings from the Blockbuster deal that was intended to get the No. 1 video rentailer into video-on-demand (VOD).
Court papers allege that in an internal scheme called “Braveheart,” Enron recorded $53 million in the fourth quarter of 2000 and another $58 million in the first quarter of 2001 – precisely the time frame in which the deal was unraveling. Enron was supposed to start streaming content to homes in December 2000, but by March 2001 the deal collapsed.“In fact, the Blockbuster contract generated no revenue for EBS,” the Enron unit involved, according to the Justice Department.
Howard and Krautz both still work for Enron, but a corporate spokeswoman would not disclose their current positions.