Former Enron treasurer Ben Glisan, called one of Enron’s “whiz kids” by prosecutors, pleaded guilty Wednesday to one count of conspiracy and was sentenced to five years in prison and three years of probation.
Glisan, whose prison term started right after his appearance Wednesday before U.S. District Judge Kenneth Hoyt in Houston, became the first former Enron executive to spend time behind bars.
Under his plea deal with prosecutors, Glisan, 37, agreed to forfeit $938,000 he made from a sham Enron deal. He also agreed not to seek a refund of $412,000 in income taxes he paid last year. He is not cooperating with prosecutors.
Prosecutor Leslie Caldwell, head of the Justice Department’s Enron Task Force, said that Glisan’s prison sentence “should send a chilling message” to others who were involved in Enron-related fraud.
Legal experts said that other Enron insiders will feel pressured to cooperate with prosecutors.
“This is a warning shot,” said Lee Rubin, an attorney at Mayer Brown Rowe & Maw, who represented fallen accounting firm Arthur Andersen, Enron’s former auditor, during its criminal case last year.
Legal experts also predicted that prosecutors will decide soon whether to file charges against former Enron chairman Ken Lay and former CEO Jeff Skilling for their roles in the Enron scandal.
Former Enron chief financial officer Andrew Fastow, indicted earlier this year on 109 counts, will stand trial in April. His wife and former Enron executive, Lea Fastow, goes to trial in January.
In his plea deal, Glisan, who worked closely with Fastow, admitted that he schemed in 2000 and 2001 to falsify Enron’s financial results. Glisan admitted that he and others used accounting entities called LJM and Talon to hide investment losses and illegally pay $41 million in profit to LJM.
In a related civil complaint filed Wednesday by the Securities and Exchange Commission, the SEC alleges that Glisan manipulated Enron’s financial results through several fraudulent deals, including the Raptor deals and the bogus 1999 sale of Enron’s interest in Nigerian barges to Merrill Lynch.
Under the SEC settlement, Glisan will be barred from serving as an officer or director of a publicly traded company.
Prosecutors are moving swiftly on one of the largest financial fraud cases in corporate history.
Glisan is the sixth Enron-related figure to plead guilty since the energy-trading giant filed Chapter 11 in December 2001. Prosecutors also have indicted 13 former Enron executives and three former British bankers on criminal charges.