TOP STORIES -- Feb. 15-20

Enron Ex-CEO Skilling Charged With Fraud

Former Enron Corp. Chief Executive Jeffrey K. Skilling was charged with 35 counts of fraud, insider trading and conspiracy in connection with one of the biggest corporate scandals in recent American history.

U.S. Magistrate Frances H. Stacy told Skilling, who presided over Enron’s ascent from a small pipeline firm into the No. 7 company on the Fortune 500 and then quit just before it imploded, that he could face fines of as much as $80 million and a prison sentence of 325 years.

“I plead not guilty to all counts,” Skilling said.

The indictment alleges that between 1999 and 2001, Skilling and other executives “engaged in a wide-ranging scheme to deceive the investing public,” credit rating firms and regulators by manipulating Enron’s finances to keep the stock price up.

Also unsealed was a five-count civil suit from the Securities and Exchange Commission.

Skilling posted his $5-million bond with a cashier’s check, surrendered his passport, agreed to maintain continuous contact with his pretrial officer and confirmed that his firearms already had been confiscated.

Skilling’s lawyer, Daniel Petrocelli, told reporters that the former CEO was a victim of an overzealous Justice Department task force that had to find a scapegoat for Enron’s collapse.

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Disney’s Board Rejects $50-Billion Comcast Bid

Walt Disney Co. directors unanimously rejected the unsolicited $50-billion takeover bid from cable giant Comcast Corp. and gave a vote of confidence to Chairman and Chief Executive Michael Eisner, setting the stage for what could be a long siege for the entertainment company.

Disney’s board said the bid was inadequate “from the very first day.” The board said it would consider “any legitimate proposal” to buy the company and the “appropriate premium.”

Eisner has been at the center of a storm of criticism over his management. But the board said it had “confidence in the business, financial and creative direction” of Disney under Eisner and his management team.

“We maintain the belief that our merger proposal represents a sound and compelling proposition for both sets of shareholders,” Comcast said, without disclosing its next move.

Separately, Disney said it was buying the Muppets, including Kermit the Frog and Miss Piggy, from Jim Henson Co. in a $90-million deal.

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Lawsuit Alleges Fraud at Pimco Bond Unit

Authorities accused Pimco’s Newport Beach-based bond operation of letting a wealthy client rapidly trade its signature bond funds to the harm of regular investors.

New Jersey Atty. Gen. Peter C. Harvey sued Pimco’s parent, Allianz Dresdner Asset Management, and three affiliated firms, claiming they defrauded shareholders by allowing the hedge fund Canary Capital Partners to “market-time” stock and bond mutual funds.

Market timing, or rapid in-and-out trades, allowed Canary to net profit of more than $4 million from two bond funds alone, Pimco High Yield and Pimco Real Return, the complaint alleges. Harvey said New Jersey would seek fines and restitution.

Pimco called its arrangement with Canary “an isolated incident” and said it would repay $1.6 million to the stock funds harmed by the short-term trading from October 2001 to May 2003. As for the bond funds, a Pimco spokesman said that shareholders were not harmed by the trading from January to September last year and that it “occurred within the parameters of the funds’ prospectuses.”

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Actors Union Extends Contract With Studios

Hollywood’s two actors unions agreed to extend their contract with producers by one year, staving off the threat of a crippling strike or production slowdown.

The deal continues the actors’ current three-year television and film pact, which had been set to expire June 30. It will give the major studios a chance to focus on potentially difficult talks with Hollywood writers, whose contract expires in May.

The one-year contract extension, which covers the Screen Actors Guild and the American Federation of Television and Radio Artists, provides a 2.5% increase for actors’ minimum salary rates and a 0.5% increase in producers’ contributions to the unions’ health plans.

Another provision of the deal will allow the unions to negotiate jointly on the terms for actors in prime-time TV dramatic programming on any outlet.

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Cingular Wins Battle for AT&T; Wireless

After a four-week courtship, AT&T; Wireless Services Inc. agreed to join Cingular Wireless in a $41-billion cash deal that would create the country’s largest mobile phone company.

Cingular’s acquisition of AT&T; Wireless would reduce to five the number of major players in the industry, a consolidation analysts said could lead to more stable profits, possibly at the expense of customers.

The two regional Bell companies that own Cingular -- SBC Communications Inc. and BellSouth Corp. -- would have nearly 30% of the country’s cellphone customers, overtaking longtime market leader Verizon Wireless.

Under terms of the deal, Cingular would pay $15 a share. In addition, Cingular would assume $4.3 billion of AT&T; Wireless debt. The deal, which must be approved by shareholders and regulators, is expected to close in the fourth quarter.

The company would be called Cingular and its headquarters would remain in Atlanta.

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IBM Loses Ruling on Cash-Balance Plan

In a decision that could cost IBM Corp. billions of dollars, a federal judge ruled that the company must make retroactive payments to employees and retirees who were hurt when it abandoned its pension plan.

The case, filed in 1999, claimed that IBM discriminated against older, long-serving employees when it replaced its pension program with a cash-balance plan. Cash-balance accounts are similar to 401(k) plans. Employers contribute money into employee accounts that can be tapped at retirement; traditional pensions guarantee a set monthly payment.

U.S. District Judge G. Patrick Murphy ruled last summer that IBM’s cash-balance plan was inherently discriminatory against older workers under pension law. In his follow-up ruling, Murphy said 140,000 current and former IBM employees were entitled to retroactive payments for retirement benefits lost when the company converted to the new plan in 1999.

IBM has appealed Murphy’s ruling that its retirement plan is discriminatory, and plans to fight this ruling as well.

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Prosecutors Rest Case; Stewart Defense to Begin

Federal prosecutors wrapped up their case against Martha Stewart after one of their star witnesses expressed confusion about her earlier crucial testimony about an alleged insider tip that led Stewart to sell her shares in ImClone Systems Inc.

Mariana Pasternak had said that Stewart told her she had learned that ImClone founder Samuel D. Waksal had sold all his shares in the company. The witness also recounted a conversation in which Stewart said, “Isn’t it nice to have brokers who tell you those things?”

On cross-examination, Pasternak acknowledged that she was unsure Stewart made the second comment, though she later testified that it was her “best belief” that her friend had made the comment.

Meanwhile, Stewart’s lawyers pressed the judge to dismiss the criminal charges, including lying to cover up the suspicious stock trade, but they will have to wait until this week for a ruling.

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Appeals Court Backs ‘Do-Not-Call’ Registry

A federal appeals court endorsed the government’s “do-not-call” list, rejecting telemarketers’ claims that the popular program violates their free-speech rights.

“We hold that the do-not-call registry is a valid commercial speech regulation,” wrote a three-judge panel of the U.S. 10th Circuit Court of Appeals in Denver, overturning a lower-court ruling that the list was unconstitutional.

The decision cleared the way for the government to more aggressively enforce the registry, which contains 56 million phone numbers that are off-limits to telemarketers.

The head of the New York-based Direct Marketing Assn. said the organization was weighing its legal options, noting that about 2 million of the industry’s 6.5 million workers could lose their jobs if the appeals court ruling stands.

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Billionaire Anschutz to Buy Bay Area Papers

In a surprising move, billionaire Philip Anschutz announced that he was buying the San Francisco Examiner, two other small Bay Area papers and a printing plant, adding publishing to a burgeoning portfolio of holdings that includes telecommunications, sports teams, real estate and movie theaters.

The value of the deal was not disclosed, but the sellers, the Fang family, were asking $15 million for the properties.

Anschutz’s newly formed San Francisco Newspaper Co. plans to revive the once-proud Examiner franchise, Chairman Robert Starzel said. Anschutz will not try to compete head to head with the dominant San Francisco Chronicle, Starzel said.

The Examiner, a five-day-a-week tabloid with a circulation of about 75,000, will remain a free newspaper.

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For a preview of this week’s business news, please see Monday’s Business section.