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Rather than go to trial for the third time, Kevin Howard agreed to a deal that required no prison time. He pleaded guilty to one count of falsifying books and records. Howard stood in court Monday with a group of family and friends in the audience, including his former codefendant Michael Krautz, who wrote a glowing letter to the court about Howard.
U.S. District Judge Vanessa Gilmore sentenced Howard to also pay a $25,000 fine and said for the first nine months of his probation he can only go to work, church, medical appointments and educational classes. Gilmore said that while Howard's actions did not cause the ultimate downfall of Enron, which collapsed in 2001, and while he got no personal benefit from his action, he still must be held accountable.
"You will be restricted. It's jail, but jail at home," she said. She said he can't coach sports or go to dinners or parties or shows and if he violates the order he will go to prison.
Howard was tried twice. The first in 2005 ended with a few acquittals for other defendants and jurors hung the case against Howard. The second trial in 2006 ended with convictions that U.S. District Judge Vanessa Gilmore later tossed out.
"In the wake of the collapse of Enron the task force went out and charged a bunch of people. It the public's eye it's easy to lump them all together and think of them the same say," said Barry Pollack, Howard's attorney. "But the reality is more nuanced than that and Kevin Howard was very different."
Prosecutor Jonathan Lopez declined comment as did Howard himself.
Howard was accused in a 2000 deal to sell future revenues from a video-on-demand business that later failed. Howard assured an investor that its money wouldn't be at risk because Enron would find a third party to buy it out. But Howard learned from outside auditors that Enron couldn't properly post earnings from the deal unless the investor's money was truly at risk, and his plea stemmed from his failure to pass that along to the investor.
The investor, a small technology company, lost its money when Enron went bankrupt in December 2001.
Gilmore threw out Howard's retrial convictions after a 5th U.S. Circuit Court of Appeals panel wiped out most convictions in the Enron Nigerian barge case. Prosecutors in both cases alleged that the defendants robbed Enron of their "honest services" by helping falsify company books. The appellate court found the theory didn't apply because the defendants didn't steal, take a bribe or rob Enron. That same issue is now part of the U.S. Supreme Court appeal of former Enron CEO Jeffrey Skilling.
Seven people were charged with crimes relating to falsely inflating the performance and value of the unit.
Co-CEO Ken Rice and Chief Operating Officer Kevin Hannon pleaded guilty. Then Howard, Krautz, Joe Hirko Scott Yeager and Rex Shelby were tried in 2005. A jury acquitted them on some counts but was deadlocked on most charges.
In a second trial of just Howard and Krautz, a jury acquitted Krautz but convicted Howard, a conviction to later be tossed out by the judge. Yeager fought his case all the way to the U.S. Supreme Court and won and has been acquitted. Shelby's fate is still in limbo.
This year ex-Enron Broadband CEO Joe Hirko also pleaded guilty and was sentenced to 16 months in prison for his role in hyping the performance of the collapsed company's business unit through false news releases.
mary.flood@chron.com
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