September 17, three former executives at Merrill Lynch &
Co. were charged with conspiracy to commit wire fraud and
falsify books and records. One was further charged with perjury
and obstructing a federal investigation into the Enron Corporation's
multibillion dollar collapse.
indictment alleges that three Merrill Lynch executives agreed
in late 1999 to be party to a phony sale from Enron -- letting
Enron "park" some of its assets with Merrill Lynch
so Enron could fraudulently enhance its year-end financial
position to the public and use that position to justify unwarranted
bonuses for its executives.
"park"? Enron had tried in 1999 to sell its interest
in electricity-generating power barges moored off the coast
of Nigeria; when it failed, it arranged for Merrill Lynch
to serve as a temporary buyer and recorded that amount as
earnings...promising in return by oral agreement that Merrill
Lynch would receive a 22% rate of return on its investment
and a set profit within six months. This non-risk agreement
effectively disqualified the transaction as a legal "sale."
Assistant Director of the Criminal Investigative Division
Grant Ashley stressed the critical efforts of the FBI-Department
of Justice Enron Task Force, assisted by the SEC, IRS, and
other agencies, in bringing to justice corporate executives
who engage in deliberate fraud to conceal a "company's
poor performance and to enhance their personal prestige and
wealth." Since the task force was formed in January 2002,
24 individuals have, to date, been charged, more than $67
million restrained or seized, and an $80 million civil settlement
achieved by the SEC, bringing the total recovery to more than
need your help.
Ashley specifically thanked the public for using the FBI's
Corporate Fraud Telephone Hotline to report alleged fraud.
Some 1,300 calls have been received on it in the past seven
the work is ongoing. Today the FBI is conducting 126 active
investigations of Corporate Fraud, and at least 15 of these
involve losses to public investors that exceed $1 billion
each. If you have any information that might assist the FBI
in investigating corporate fraud, please call the tollfree
Corporate Hotline at 888-622-0117.