Ex-Enron Executive Jeffrey Adam Shankman Indicted by a Federal Grand Jury Alleging Bankruptcy Charges and Concealment of Assets

October 1, 2013

The Federal Bureau of Investigation on September 30, 2013 released the following:

“HOUSTON— A federal grand jury has returned a 24-count indictment against Jeffrey Adam Shankman with bankruptcy fraud and concealment of assets, announced United States Attorney Kenneth Magidson.

The indictment was returned today. Shankman is expected to turn himself in to federal authorities and make an initial appearance before a U.S. magistrate judge in the near future.

According to the indictment, Shankman engaged in a scheme to conceal assets to defraud creditors and the trustee who was appointed to collect and dispose of all Shankman’s assets in his bankruptcy estate.

A debtor is required to complete several documents to carry out the bankruptcy process, which consist of a petition which contains summary information about the debtor’s financial condition, various bankruptcy schedules, and a statement of financial affairs. That statement contains, among other things, detailed information about the debtor’s assets, liabilities, recent payments to creditors, past and current income, and anticipated future income. The documents are required to be signed and certified under penalty of perjury that the information contained in them is true and correct. A debtor is required to disclose all creditors to the bankruptcy court so that the court can provide notice to the creditors of the filing of the bankruptcy petition. One purpose of this requirement is to allow the creditors the opportunity to participate in the bankruptcy proceeding and protect their interests.

Shankman, 46, filed for Chapter 7 bankruptcy in October 2008. The indictment alleges he concealed, transferred, and sold various pieces of fine art, decorative art, and jewelry and other assets without the knowledge, consent, and approval of the trustee or the bankruptcy court. The approximate value of the assets was $952,125, according to allegations.

Shankman was head of the Global Markets Division of Enron in 2001 before its collapse and served on the Art Committee of Enron.

In order for the bankruptcy system to work for all parties, it is imperative for the debtor to be truthful and forthright in all aspects of the bankruptcy process. The bankruptcy system is based on an honor system; the debtor agrees to provide all the necessary information requested by the trustee and to assist the trustee in collecting all assets of debtors and comply with the court’s orders to obtain the relief desired under the chapter the case was filed.

If convicted, he faces up to five years in federal prison and a possible $250,000 fine of on each count.

The case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Quincy L. Ollison.

An indictment is a formal accusation of criminal conduct, not evidence. A defendant is presumed innocent unless convicted through due process of law.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


“Enron’s Jeff Skilling Could Get Early Release From Prison”

April 4, 2013

CNBC on April 4, 2013 released the following:

“By: Scott Cohn
CNBC Senior Correspondent

Former Enron CEO Jeffrey Skilling, who is serving a 24-year prison term for his role in the energy giant’s epic collapse, could get out of prison early under an agreement being discussed by his attorneys and the Justice Department, CNBC has learned.

Skilling, who was convicted in 2006 of conspiracy, fraud and insider trading, has served just over six years. It is not clear how much his sentence would be shortened under the deal.

A federal appeals panel ruled in 2009 that the original sentence imposed by U.S. District Judge Sim Lake was too harsh, but a re-sentencing for the 59-year-old Skilling has repeatedly been delayed, first as the appeals process played out, and then as the negotiations for a deal progressed.

Those talks had been a closely guarded secret, but Thursday the Justice Department quietly issued a notice to victims required under federal law:

“The Department of Justice is considering entering into a sentencing agreement with the defendant in this matter,” the notice reads. “Such a sentencing agreement could restrict the parties and the Court from recommending, arguing for, or imposing certain sentences or conditions of confinement. It could also restrict the parties from challenging certain issues on appeal, including the sentence ultimately imposed by the Court at a future sentencing hearing.”

(Read More: Flush With Crime: Study Shows Prison a Career Booster)

A Justice Department spokesman declined to comment. Skilling’s longtime defense attorney, Daniel Petrocelli, could not immediately be reached for comment.

Lake, who imposed the original sentence, would have the final say in the sentence. The posting of the notice, however, suggests the parties have some indication he will go along. Lake held a private conference call with attorneys for both sides last month.

For Skilling, who has consistently maintained his innocence, an agreement would end a long ordeal, although his conviction on 19 criminal counts would likely stand. The government, meanwhile, would avoid a potentially messy court battle over alleged misconduct by the Justice Department’s elite Enron Task Force appointed in the wake of the company’s sudden failure in 2001.

Skilling’s attorneys had planned to move for a new trial based on that alleged misconduct. Under a sentencing agreement, that motion would likely be dropped.

Skilling, who developed Enron’s business model as an “asset-light” energy trading company, rose to CEO in early 2001, only to resign six months later. Soon after that, Enron began its sudden plunge into what was at the time the largest bankruptcy in U.S. history.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Appeal

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Supreme Court rejects appeal in Enron-related case

April 23, 2012

The Associated Press on April 23, 2012 released the following:

“WASHINGTON (AP) — The Supreme Court has turned away an appeal from a former Merrill Lynch executive who was convicted on perjury and obstruction charges that stemmed from a bogus 1999 deal involving Enron.

The justices did not comment Monday in leaving in place a federal appeals court ruling that upheld the conviction of James A. Brown. He argued that federal prosecutors improperly withheld favorable evidence in his case.

The charges centered on Enron Corp.’s sham 1999 sale to Merrill Lynch of three power barges moored off the Nigerian coast. Brown was a managing director at Merrill Lynch and head of its strategic asset and lease finance group at the time.

The case is Brown v. U.S., 11-783.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Federal Indictment

Federal Crimes – Appeal

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Enron’s Skilling Rejected by Top U.S. Court on Conviction

April 16, 2012

Bloomberg on April 16, 2012 released the following:

“By Greg Stohr

The U.S. Supreme Court left intact Jeffrey Skilling’s conviction for leading the Enron Corp. accounting fraud, refusing to grant a second hearing to the imprisoned former chief executive officer.

Today’s rebuff leaves Skilling with nothing to show for his victory at the Supreme Court in 2010, when the justices said prosecutors used an improper legal theory to convict him. A federal appeals court then reaffirmed his 19-count conviction, saying the verdict would have been the same regardless.

Skilling is serving a 24-year sentence in a federal prison in Colorado after he and former Enron Chairman Kenneth Lay were found guilty of deceiving investors about the company’s true financial condition. Lay died in 2006.

The accounting fraud caused Enron, once the world’s largest energy trading company, to file for bankruptcy in 2001, wiping out more than 5,000 jobs and $60 billion in shareholder value.

The 2010 Supreme Court ruling said Skilling couldn’t be convicted under a federal statute outlawing fraudulent schemes to withhold “honest services.” The high court said that law could be used only in cases involving bribery or kickbacks, which weren’t at issue in the Enron case.

The honest-services law had come into play on Skilling’s conviction on one charge of conspiracy. The jury didn’t spell out whether he had conspired to commit honest-services fraud or to commit securities fraud.

In its ruling last year, the New Orleans-based appeals court said there was “overwhelming evidence that Skilling conspired to commit securities fraud.”

Skilling’s sentence might be adjusted because the appeals court concluded in an earlier opinion that the trial judge overseeing the case erred on one issue.

The case is Skilling v. United States, 11-674.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Enron case was much bigger than FBI agent first thought

November 28, 2011
Enron - Houston FBI Investigation

The Houston Chronicle on November 27, 2011 released the following:

“By TOM FOWLER, HOUSTON CHRONICLE

When Mike Anderson launched the FBI’s investigation of Enron’s collapse in early December 2001, he thought assigning a couple of agents to the case would be a good start.

“I knew it was going to be a big case,” said Anderson, assistant special agent in charge of the white-collar crime group in Houston. “But I think I was a little naïve about how big.”

Within a few weeks, the investigation had exploded into a national task force with dozens of agents, prosecutors and other specialists working on it from coast to coast.

“It was the biggest FBI investigation at the time and remains one of the most complex in the history of the bureau,” Anderson said.

The investigation started off looking at three areas: the LJM partnerships that Enron Chief Financial Officer Andrew Fastow created to help Enron move assets off the balance sheet; the way the energy trading business’s reserves were used to cover losses in other units; and possible insider trading.

‘No smoking gun’

Over time, new areas of interest popped up as investigators dug deeper and more witnesses came forward to talk, Anderson said. But it was never simple.

“There was no smoking gun in this case,” Anderson said. “It was more subtle. They didn’t get in a room and say, ‘You do this, you do that, and this is how we’ll cook the books.’ ”

There were many twists and turns in the investigation, but Anderson remembers particularly potent testimony came from Ben Glisan – the former treasurer who pleaded guilty to a single charge and later testified in the trial of top executives Ken Lay and Jeff Skilling – and David Delainey, the former Enron Energy Services executive.

Anderson boils down the problems at Enron to four issues: overly aggressive accounting that reported financial results Enron had not achieved; a corporate culture that gave too much leeway to youth over experience; leadership failures; and a flawed business model that believed Enron could enter any market it wanted to and become the dominant player.

The company’s accounting techniques generally weren’t illegal, Anderson said, but they were aggressive.

“When you use the techniques to report results you really didn’t achieve, that’s when it becomes fraud,” Anderson said. “When the financial statements so grossly diverge from the true economic condition of the company, that’s fraud.”

In time, criminal intent

Most of the people who worked at Enron were hardworking people who were doing the right thing, Anderson said.

“Of the people that were convicted, I think none of them went to work thinking they were going to commit fraud. But did they eventually have criminal intent? Yes.”

The FBI continues to make corporate crime a priority, Anderson said. The fiscal year that ended in September saw the most indictments and convictions in the history of the bureau’s corporate fraud section.

“I’m hopeful that we demonstrated to Wall Street and business executives that we will hold people accountable for their actions,” Anderson said.”

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.