Enron’s former treasurer pleaded guilty to conspiracy and was led away in handcuffs and ankle chains Wednesday to begin serving five years behind bars the first executive to go to prison in the scandal that brought down the energy company and rocked Wall Street.
Federal prosecutors said that Ben Glisan Jr. made no deal to implicate higher-ups such as former chairman Kenneth Lay but that the sentence the maximum under the law should send a “somewhat chilling message.”
Glisan, 37, admitted helping design financial deals that enriched him and illegally kept investment losses off Enron’s books.
“I think I would simply like to say I take full responsibility for my actions,” Glisan softly told U.S. District Judge Kenneth Hoyt.
He also agreed to forfeit nearly $1 million in profits from an off-the-books deal at Enron and agreed to not seek a refund of $412,000 in income taxes he paid on that profit.
U.S. marshals escorted Glisan outside the courthouse to be taken to a federal lockup. His suit jacket was slung over his handcuffed hands, and ankle chains forced him to take small steps.
Twenty-three counts against Glisan were dismissed, including money laundering and fraud. He will be on supervised release for three years after getting out of prison.
Glisan had pleaded innocent in May to 24 charges as part of a 109-count indictment against Andrew Fastow, his one-time boss and former Enron finance chief.
Fastow is accused of masterminding the schemes that led the Houston energy-trading company into bankruptcy in December 2001 amid disclosures of inflated profits, hidden debt and questionable accounting. He is awaiting trial in April.
Lay resigned as chairman and chief executive, but no charges have been filed against him.
Leslie Caldwell, head of the Justice Department’s Enron Task Force, said Glisan’s refusal to cooperate with investigators won’t hinder their case against Fastow or anyone else, and they do not need his help.
But she said others should take note of his plea and immediate imprisonment.
“He was viewed as one of the whiz kids at Enron,” Caldwell said. “The fact that he now admitted he created a fraudulent way for Enron to hide things off its books I think will send a somewhat chilling message to other people.”
Robert Mintz, a former federal prosecutor now with McCarter & English in Newark, N.J., said the significance of Glisan’s plea is more symbolic than practical. But Glisan avoided a jury’s possible wrath and prosecutors can point to a former Enron executive behind bars, he said.
Andrew Weissmann, a top prosecutor with the task force, added that plaintiffs suing Enron executives for fraud can use Glisan’s admission to bolster their cases. “This now makes their case a virtual slam-dunk,” he said.
The Securities and Exchange Commission filed and settled fraud charges against Glisan on Wednesday, with an agreement that he wouldn’t violate securities laws or serve as an officer or director for a publicly traded company. Hoyt also barred Glisan from ever serving as an officer or director and he cannot take a job that puts him in a fiduciary role without permission from the court.
Glisan, a one-time managing director, was the second former Enron executive to plead guilty in the scandal. An executive of equal rank, Michael Kopper, a managing director who was one of Fastow’s top lieutenants, pleaded guilty last year to money laundering and conspiracy. He is helping prosecutors while awaiting sentencing and has surrendered $11.8 million in ill-gotten gains from financial schemes.
Glisan was fired in November 2001, less than a month before Enron filed for bankruptcy, when an internal probe revealed his $1 million profit from a $5,800 investment in one of several deals at the heart of the Justice Department’s case against Fastow.
Last year, Glisan had tried without success to strike a deal and avoid prosecution by telling what he knows about the financial details.
He was added as a defendant to Fastow’s case when Fastow’s original 78-count indictment was expanded to the 109 counts and unsealed May 1. Also added was former Enron finance executive Dan Boyle, who faces just two counts of conspiracy.
Last week Hoyt ruled that Fastow would be tried separately from his co-defendants, partially because of the discrepancy in the number of counts against Fastow in comparison to his co-defendants, “as well as the impact that such evidence may have on a jury.”
Both Fastow and Boyle have pleaded innocent. Prosecutors have frozen about $23 million held in bank and brokerage accounts by Fastow, his family and others. That includes the $938,000 in an account in the name of Glisan and his wife.
In December, Glisan said in court documents that he had declared that money as income and offered to turn over $628,744 to prosecutors, less $412,000 in taxes. Wednesday’s plea deal required him to turn over the entire amount.
At Wednesday’s court appearance, Glisan hugged his wife, Barbara, and appeared to be suppressing tears before joining his lawyers in front of the bench. The family and the attorneys did not comment.