Enron’s former treasurer on Wednesday became the first of the failed energy company’s executives to be sentenced to prison for its crooked accounting schemes after he pleaded guilty to one count of criminal wire fraud.
Ben Glisan, who played a key role in designing Enron’s web of infamous off-balance-sheet partnerships, was sentenced to five years in federal prison, and also agreed to forfeit $938,000 in ill-gotten gains.
Mr Glisan’s plea came amid reports that he had been trying to negotiate a deal with prosecutors and raised immediate questions as to whether he could help the government develop cases against Enron’s most senior executives, including Jeff Skilling, the former chief executive, and Ken Lay, the former chairman.
Andrew Fastow, the former chief financial officer who was Mr Glisan’s boss at Enron, will stand trial in April after being indicted by a grand jury for insider trading and wire fraud.
The Justice Department said on Wednesday that there was no co-operation agreement for Mr Glisan. But lawyers said the former treasurer could still be assisting the government.
“When a guy pleads and he is quickly sentenced, he got to the front of the line over everyone else for a reason,” said Howard Schiffman, a lawyer at Dickstein, Shapiro, Morin & Oshinsky in Washington.
Mr Glisan was an accountant at Andersen, the accounting firm that audited Enron, before he joined the energy company. He worked closely with Mr Fastow and Michael Kopper, another finance official, to craft off-balance sheet partnerships that helped Enron to move billions of dollars of debt from its balance sheet.
Mr Kopper pleaded guilty to several criminal charges in August 2002 and began co-operating with the government.
Mr Glisan originally pleaded innocent when he was indicted along with Mr Fastow and another former Enron employee, Dan Boyle, in May. In yesterday’s plea, however, Mr Glisan admitted that he “and others at Enron engaged in a conspiracy to manipulate” the company’s financial statements.
He detailed his role in creating Talon, an off-balance sheet partnership that he admitted did not qualify for such treatment and should have been included on Enron’s books.
The $30m in supposedly “outside” capital invested in Talon actually came from Enron.
The government’s inability to secure Mr Fastow’s co-operation has proved a major impediment to the investigation, many legal experts believe. Mr Fastow has resisted prosecutors even though they increased the pressure against him by indicting his wife, Lea, on tax fraud charges in May.