Former Enron Broadband CFO pleads guilty to falsifying books, records

By Angela McDaniels

Tacoma, Wash., June 1 - Enron Broadband Services' former chief financial officer and vice president of finance, Kevin Howard, pleaded guilty to one count of falsifying books and records, assistant attorney general Lanny A. Breuer of the Department of Justice's criminal division and assistant director Kenneth W. Kaiser of the FBI's criminal investigative division said in a Justice Department news release.

Enron Broadband was Enron Corp.'s failed telecommunications business.

According to the news release, Howard admitted that he and others at Enron Broadband and Enron knew that without a large revenue-generating transaction, Enron Broadband would miss its earnings target for 2000 by a wide margin.

The Justice Department said Howard admitted that, in an attempt to generate earnings to meet the earnings target, he and others structured a transaction known as "Project Braveheart" designed to monetize or book a portion of the anticipated earnings from the company's agreement to provide video-on-demand services to Blockbuster Inc.

Enron Broadband approached a small video-on-demand technology company in November 2000 about becoming a joint venture partner, the news release said, and told the technology company it would be bought out of the joint venture by a third party the next quarter.

The Justice Department said Howard admitted that prior to the close of Project Braveheart, he learned that Enron's auditors, Arthur Andersen, would probably not have agreed with Enron Broadband's recognition of earnings from Project Braveheart if it had known that the technology company planned to exit the joint venture in the first quarter of 2001.

Enron Broadband subsequently sold a portion of its interest in the joint venture and booked $53 million in earnings from this transaction in the fourth quarter of 2000. The Justice Department said that Project Braveheart enabled Enron Broadband to falsely record these earnings as revenue in order to meet the $60 million loss goal for 2000 and this false loss amount was reported in Enron's 10-K for the year 2000.

Enron is a Houston-based energy company that emerged from bankruptcy on Nov. 18, 2004.

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