Enron Corp.'s former investor relations chief pleaded guilty yesterday to one count of aiding and abetting securities fraud and agreed to help prosecutors with their ongoing probe of the energy company's leaders.
Mark E. Koenig, 49, regularly briefed Wall Street analysts on Enron's financial prospects and took part in meetings and conference calls with the company's highest-ranking officials, including former top executives Jeffrey K. Skilling and Kenneth L. Lay.
In a plea agreement, Koenig said he misled investors about a move used to shift hundreds of millions of dollars to cover losses at the company's important energy services unit in early 2001. Prosecutors said he also failed to correct top executives' inaccurate statements to analysts about the success of the company's energy services and Internet broadband businesses that same year. Enron collapsed into bankruptcy in December 2001, leading to billions in investor losses and thousands of job cuts at the Houston firm.
Koenig faces up to 10 years in prison, although he will likely receive credit for the help he gives federal prosecutors and securities regulators.
Separately, Koenig yesterday paid $1.49 million to settle Securities and Exchange Commission charges. The SEC alleges that Koenig made "false and misleading statements" to analysts and investors about Enron's troubled Internet broadband and energy services units during the first three quarters of 2001. Koenig agreed, as part of the SEC deal, to never again serve as an officer or director of a public company.
Koenig, who worked at Enron from 1985 to May 2002, earned $746,736 from stock sales and a bonus "during my participation in the scheme," he said in court papers. Koenig said that by early 2001, he knew that executives' public statements about the company "intentionally concealed the true state of Enron."
Philip T. Inglima, Koenig's defense lawyer, did not return calls.
The Koenig plea builds upon earlier deals that company insiders have struck with the Justice Department's Enron Task Force. In May, Koenig subordinate Paula H. Rieker pleaded guilty to an insider trading charge. Prosecutors also have secured guilty pleas from David W. Delainey, former head of the energy services unit, and Kenneth D. Rice, former chief of the broadband division.
Each of those former executives could serve as important witnesses in the upcoming trial of Skilling and Lay. Both men have pleaded not guilty to fraud and other charges stemming from Enron's collapse. They are awaiting a judge's decision about whether they will be tried together.
Skilling, a former consultant, led Enron from February until mid-August 2001, a period covered by part of Koenig's guilty plea. Skilling took part in March and July 2001 analyst conference calls referenced in yesterday's court papers.
Lay took over day-to-day control of the company after Skilling abruptly departed. In that capacity, Lay, along with Koenig and others, repeatedly met with analysts and employees to reassure them about Enron's prospects and the health of its operations. Representatives for Lay declined to comment on the Koenig plea.
Daniel M. Petrocelli, lead trial counsel for Skilling, said, "One can only imagine the pressure put on these people to plead and cooperate. We'll just have to wait and see what they really have to say when they are alone on the witness stand."