Split Verdict in Enron Broadband Retrial

The Associated Press
Thursday, June 1, 2006; 4:16 AM

HOUSTON -- Of two former Enron Corp. broadband executives to be retried on fraud and conspiracy charges in the wake of a hung jury last year, one faces prison and the other is free.

Jurors on Wednesday convicted former broadband unit finance chief Kevin Howard of five counts of fraud, conspiracy and falsifying records while the panel acquitted former in-house accountant Michael Krautz of the same charges after a monthlong trial.

Their case took place next door to the courtroom where six days earlier another Houston-area jury convicted Enron founder Kenneth Lay and former Enron Chief Executive Jeffrey Skilling of fraud, conspiracy and other charges in one of the biggest business scandals in U.S. history.

Both wiped tears from their eyes, one shocked, the other relieved. Howard shook Krautz's hand.

"I feel very sorry for Kevin and his family," Krautz said of Howard, who declined comment. "I do not feel like they got the justice they deserved."

"That said, me and my family are thrilled," he said, choked with emotion.

Lay and Skilling were convicted of conspiring to run a massive fraud through repeated lies to investors and employees about Enron's financial strength. The company careened into bankruptcy proceedings in December 2001.

Howard and Krautz were accused of participating in a small piece of that overall fraud in a scheme to manufacture earnings for Enron's flailing broadband unit in late 2000. Dubbed "Project Braveheart," the deal involved selling an interest in future revenue of a video-on-demand venture that disintegrated a few months later.

Howard, 43, closed his eyes as U.S. District Judge Vanessa Gilmore announced the decision by the panel of eight women and four men. His family members blanched and wept.

Then she got to Krautz, 37, who contained his emotion and then wept with his family as the judge said "not guilty" five times.

Howard faces a maximum of 25 years in prison; five years for each count. Jim Lavine, one of his attorneys, said he would appeal.

"We are surprised. We're disappointed. We don't think the evidence supported a guilty verdict," he said.

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