Jury Splits in Retrial of an Enron Case

Jurors rendered split verdicts Wednesday in the retrial of two former executives from Enron Corp.’s defunct broadband unit, convicting one while acquitting the other of all charges.

Former broadband unit finance chief Kevin Howard was convicted of five counts of fraud, conspiracy and falsifying records. Former in-house accountant Michael Krautz was acquitted of the same charges, concluding a monthlong retrial after their original case ended with a hung jury last year.

The verdict came six days after another local jury convicted Enron founder Kenneth L. Lay and former Enron Chief Executive Jeffrey K. Skilling of fraud, conspiracy and other charges.

Lay and Skilling were convicted of conspiring to run a massive fraud. The company careened into bankruptcy in December 2001.

Howard and Krautz were accused of participating in a small piece of that 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 and appeared stoic as U.S. District Judge Vanessa Gilmore announced the eight-woman, four-man panel’s decision. Krautz, 37, wept after learning he had been acquitted.

Howard declined to comment. Jim Lavine, one of Howard’s attorneys, said he would appeal.

“We are surprised, we’re disappointed, we don’t think the evidence supported a guilty verdict,” he said.

Lead prosecutor Van Vincent declined to say whether he was disappointed by the split verdict.

Gilmore scheduled Howard’s sentencing for Sept. 11. Howard faces a maximum of 25 years in prison; five years for each count.

Howard and Krautz were the first of five broadband executives to be retried in separate cases after the original trial of the entire group ended in a hung jury. The broadband unit was created in 1998.

Both men testified, as they did in their first trial, that Braveheart was legitimate. Investors were not bought out and lost their money along with other creditors when Enron collapsed.

Jurors left the courthouse Wednesday without comment.

Of the other three defendants, former Vice President Scott Yeager’s May 30 retrial on charges of insider trading and money laundering has been postponed indefinitely pending an appeal. Joseph Hirko, former broadband unit CEO, and Rex Shelby, former senior vice president, face retrial Sept. 5 on conspiracy, fraud and insider trading charges.