104 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
Musquiz,
45 F.3d 927, 931 (5th Cir.1995) (“By withdrawing the challenge [to a member of the venire], Gatewood waived
his objection.”).
Because we presume prejudice in this case, it is the government’s burden to show that the district court empaneled an
impartial jury. It thus could be argued that traditional waiver rules do not apply; we disagree, because the district court
FN54. It is uncertain from the transcript whether he stated “you know” with the inflection of “come on, they are obviously
guilty” or instead with a tone suggesting that the veniremember was searching his mind to explain what he meant.
Juror 11 likewise expounded upon his view that “greedy” did “not necessarily” equate to “illegal,” agreeing that “greed and ambition
are the same thing.” He even asserted that he believed the defendants “earned their salaries,” but also that some “bonuses and
FN55. In
Mayola,
623 F.2d at 1001, we stated that the government can rebut a presumption of prejudice, but that “[o]f
course, it could not be [rebutted] merely by the jurors’ assurance on
voir dire
of their own impartiality”; we added that “[o]n
the other hand, a showing that none of the twelve jurors impanelled had ever been exposed, first or second hand, to the
inflammatory publicity, would probably suffice to negate the presumption of prejudice flowing from that publicity.”
Id.
We
did not suggest, however, that in all cases of presumed prejudice, the only way for the government to rebut the
CHAPTER 5: ETHICS AND BUSINESS DECISION MAKING 105
v. Bhd. of Maint. of Way Employees,
961 F.2d 86, 89 (5th Cir.1992), here there is a later Supreme Court decision. As
FN57. The district court sent a letter to counsel for a number of potential witnesses that the prosecution and defense had
jointly identified, informing counsel that
[the court has] been informed by the government that if you wish to speak with defense counsel: (i) you need not seek
permission from the government or notify them about the meetings; (ii) you have the government’s consent to meet with
1. All counsel in a criminal proceeding may seek to contact and interview witnesses before trial.
2. Whether or not a witness wishes to talk to the attorneys or representatives of either party in this case is entirely up to
the witness.
3. Should a witness decide to provide information or assistance to the defense, the government will not view the
witness’s decision to cooperate with defense counsel as any lack of cooperation with the government, and the
FN58. Although the district court’s letter mitigated the potential prejudice Skilling may have suffered, it did not necessarily
render any misconduct
per se
harmless. That is, the letter is relevant to whether any misconduct was harmless, but it
alone is not sufficient.
106 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
FN59. The court stated that “[t]he primary reason a person asserts a Fifth Amendment privilege is because the person is
guilty of criminal conduct and wants to avoid incriminating himself by testifying,” and that “[g]iven the number of people
who have pleaded guilty and have been found guilty for perpetrating Enron-related crimes … there is a reasonable
likelihood that the proposed witnesses have asserted their Fifth Amendment privilege for this reason, and not because of
fear of government reprisals if they testified.”
[21] The Supreme Court has recognized that the Constitution entitles a criminal defendant to a fair trial, not a perfect one, and has
emphatically rejected automatic reversal without regard to whether the error was harmless beyond a reasonable doubt.
See United
States v. Hasting,
461 U.S. 499, 508-09, 103 S.Ct. 1974, 76 L.Ed.2d 96 (1983). The district court’s statement that witnesses may
have asserted their privilege against self-incrimination due to their guilt did not result in a blanket dismissal of Skilling’s arguments
or a denial of his right to be heard. As discussed*567 below, the district court still examined Skilling’s proffered evidence of
[22] “The Sixth Amendment guarantees a criminal defendant the right to present witnesses to establish his defense without fear of
retaliation against the witness by the government,” and “the Fifth Amendment protects the defendant from improper governmental
interference with his defense.”
United States v. Bieganowski,
313 F.3d 264, 291 (5th Cir.2002) (internal quotation marks and
citations omitted). “[A]s a general rule, ‘[w]itnesses … to a crime are the property of neither the prosecution nor the defense. Both
sides have an equal right, and should have an equal opportunity, to interview them.’ ”
United States v. Soape,
169 F.3d 257, 270
A. Hearsay Declarations
Skilling presented hearsay evidence that potential witnesses did not meet with him because they feared government reprisal. The
district court learned of this evidence third-hand, in affidavits from Skilling’s attorneys, who received the information from the
witnesses’ attorneys, who purportedly conveyed the views of their clients. On appeal, Skilling argues that the court erred in failing
to credit the hearsay evidence in its conclusion that there was no prosecutorial misconduct, as Federal Rule of Evidence 804(b)(6)
FN60. Rule 804(b)(6) reads, “The following are not excluded by the hearsay rule if the declarant is unavailable as a
FN61. Skilling counters that it was obvious on the face of the declarations he presented that Rule 804(b)(6) applied,
suggesting that he raised this particular argument below. The Federal Rules of Evidence, however, require a party who
complains of the district court’s decision to exclude evidence to show that “the substance of the evidence was made
known to the court by offer or was apparent from the context within which questions were asked.” FED. R. EVID.
Cir.2002). To meet this burden, Skilling proffered the hearsay declarations that his attorneys had obtained. The district court found
that these declarations did not meet Skilling’s burden, except for two declarations of attorneys Wendell Odom (“Odom”) and Robert
Sussman (“Sussman”), who represented several witnesses who had expressed concerns about what would happen if they met
FN62. We know of no Fifth Circuit precedent on this question. In fact, only one unpublished decision,
United States v.
Nelson,
242 Fed.Appx. 164, 170-71 (5th Cir.2007), even addresses Rule 804(b)(6).
FN63. Skilling also argues that the district court should have ordered a full evidentiary hearing regarding each allegation
of misconduct based on these declarations. However, he has waived that argument for failure to brief it adequately.
See
FED. R.APP. P. 28(a)(9) (noting that briefs must include “contentions and the reasons for them, with citations to the
authorities and parts of the record on which the appellant relies” and “a concise statement of the applicable standard of
review”);
United States v. Lindell,
881 F.2d 1313, 1325 (5th Cir.1989) (holding that a party waives an argument that it
inadequately briefed). Instead, Skilling merely argues in his brief that, at the very least, the district court should have held
108 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
*569 [24] As noted above, the district court was particularly cautious regarding the declarations that it believed might demonstrate
prosecutorial misconduct. The court held an evidentiary hearing regarding alleged threats to Sussman, a lawyer representing
several former Enron employees. At the hearing, Sussman indicated that a number of factors informed his advice to his clients that
they should not cooperate with Skilling. He acknowledged that the “possibility” that the government might look “unfavorably” at
cooperation was one of them, but he also expressly testified that the potential for government reprisal was only one “[a]mong a
number of other[ ]” factors impacting the decision and that there were “a variety of reasons.” Of particular importance, Sussman
testified that the government had made no explicit or implicit statement that his clients should not meet with defense counsel.
Accordingly, the district court did not clearly err in concluding that the government had not substantially interfered with Skilling’s
ability to interview Sussman’s clients.
Likewise, Skilling claims that the government improperly persuaded Michael Anderson (“Anderson”), another former Enron
employee, not to cooperate. Prosecutors allegedly did so by having an FBI agent threaten Odom, Anderson’s lawyer, warning
Odom not to talk to Skilling and his lawyers because “those are bad guys.” Concerned, the district court held an evidentiary hearing
to question Odom.
Skilling asserts that the government’s plea agreements with Merrill Lynch and Canadian Imperial Bank of Commerce (“CIBC”)
improperly forbade witnesses from cooperating with his defense. He claims that the agreements prohibited witness testimony from
any employee who would contradict the terms of the agreement, that the agreements prohibited meetings between the defense
and witnesses*570 out of the presence of the prosecution, and that the agreements did not permit information-sharing between the
defense and employees of Merrill Lynch or CIBC. None of these alleged errors require reversal.
Assuming,
arguendo,
that the plea agreements created some ambiguity, leading potential witnesses to conclude that the plea
agreements forbade their cooperation with the defense, the district court’s letter to the witnesses clarified the government’s position
and eliminated any potential confusion or misunderstanding.FN64 The district court stated that the witnesses-even those subject to a
plea agreement-were free to testify on Skilling’s behalf at trial. Thus, although the
corporations
could not take a position contrary to
the plea agreement, their
employees,
acting in their personal capacities, were free to testify for the defense. The district court also
notified potential witnesses that they did not need to seek permission from the government or notify it of meetings with Skilling or
his lawyers, and that the district court’s letter conveyed the government’s consent for the witnesses to meet with the defense to the
extent that any plea agreements required such consent. Finally, the district court clarified that the potential witnesses were not
limited in what information they shared with the defense. Accordingly, Skilling failed to provide any evidence that the plea
agreements were “sufficiently egregious in nature and degree so as to deprive [Skilling] of a fair trial,” especially given the manner
in which the district court interpreted and clarified the plea agreements.
See Weddell,
800 F.2d at 1411.
FN64. As is common with plea agreements, the government retained “sole discretion” to determine whether the
agreements were breached. The district court’s letter informed potential witnesses that the letter was consistent with the
government’s position.
Skilling also argues that some potential witnesses entered into plea agreements that forbade them from speaking about what they
FN65. In the district court, Skilling also argued that it was illegal for the government to require those who entered into an
agreement with the government to agree not to reveal what they learned
from
the government. Because Skilling did not
raise this issue adequately on appeal, however, we cannot consider it. Skilling’s cursory argument and references to
77-78. That case is distinguishable for multiple reasons, the most obvious being the party that prevailed in the district court. There,
FN66. Although
Carrigan
involved a petition for a writ of mandamus, meaning that the court reviewed the district court’s
order for a clear abuse of discretion,
see
804 F.2d at 602, the court expressly stated that it “[could not] say that the
[district] court’s findings of fact are clearly erroneous,”
id.
at 604.
The district court determined that the best way to counter any concerns about government retribution was for the court to address
those concerns directly through letters to the potential witnesses. As discussed above, these letters informed potential witnesses
have done something nefarious, because “the proof was in the pudding.” However, Skilling fails to present any direct evidence of
witness intimidation. Thus,
United States v. Hammond,
598 F.2d 1008, 1012 (5th Cir.1979), which Skilling cites, is not on point,
because there the defendant presented direct evidence of witness intimidation. In that case, an FBI agent actually approached a
defense witness and threatened him with “nothing but trouble” in a different proceeding if he “continued on” in the defendant’s trial.
Id.
By contrast, here there is no direct evidence of witness intimidation.
Hammond
does not require this court to find an
inference
of
The government responds that it sent the email because of a potential conflict of interest between Cogdell and Rice, given that
Cogdell represented a number of Enron-related defendants with arguably divergent interests. Weissmann offered the court a
110 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
declaration to that effect, saying that in his “experience as a prosecutor, it is unusual for one lawyer to represent multiple targets in
an investigation while also representing a cooperating witness.” Skilling argues that this explanation is merely pretext for an
FN67. Weissmann would have done well to have brought the issue to the court’s attention instead of emailing Rice’s
lawyer.
Skilling also contends that the government threatened Tim Belden (“Belden”), another former high-level Enron employee, with
FN68. Skilling contends that additional evidence in the supplemental record shows that the government ordered Belden
not to contact any of his former colleagues. Skilling offers as evidence an email in which Belden’s attorney asked for
Cir.1997) (quoting
Varnado v. Lynaugh,
920 F.2d 320, 321 (5th Cir.1991)). Because the issues surrounding the email
involve questions of both law and fact, we cannot review this particular argument.
Skilling also avers that a voicemail transcript of a phone call from Weissmann to the lawyer for David Duncan, an Arthur
Andersen partner, suggests prosecutorial abuse. Again, Skilling failed to present that transcript to the district court, and
FN69. Skilling also points to evidence suggesting that the government called Larry Ciscon’s lawyer three times in the two
weeks leading up to his scheduled testimony in another Enron-related case to reiterate that he was still a “target.” Skilling
contends that this shows that governmental interference was responsible for Ciscon’s choice not to cooperate with
Skilling. Skilling also argues that the government told Rex Shelby that it would not be a “good idea” to speak with the
attorneys for Joe Hirko (a co-CEO of EBS) in another related case. These claims are similar to the one involving Palmer
499-500 (5th Cir.2008). Moreover, a defendant must establish that his or her failure to discover the evidence was not the result of a
lack of due diligence.FN70
See United States v. Mulderig,
120 F.3d 534, 541 (5th Cir.1997);
United States v. Marrero,
904 F.2d 251,
261 (5th Cir.1990). Where a defendant fails to establish any one element of
Brady,
we need not inquire into the other components.
See United States v. Runyan,
290 F.3d 223, 245 (5th Cir.2002)
; United States v. Hughes,
230 F.3d 815, 819 (5th Cir.2000).
FN70. Some of our cases have treated this “due diligence” requirement as a fourth element of a
Brady
claim.
See, e.g.,
Walters,
351 F.3d at 169.
[26] Of the
Brady
components, materiality “is generally the most difficult to prove.”
Mahler,
537 F.3d at 500. In assessing
(1995)). We concluded that “[t]he sum of these four guideposts means that to show a due process violation when the state
withholds evidence, a defendant need not prove that his trial necessarily would have had a different outcome; a lack of faith in the
result is sufficient.”
Id.
Additionally, materiality depends largely on the value of the suppressed evidence relative to evidence that
the government disclosed.
Sipe,
388 F.3d at 478.
[27] We review
Brady
questions de novo.
See, e.g., Runyan,
290 F.3d at 245;
Hughes,
230 F.3d at 819. As a preliminary matter,
he would be spending ten years-and no less-in prison. After Skilling’s conviction, however, a judge sentenced Fastow to
approximately six years. Based on the disparity between the amount of time the government told the jury Fastow would serve and
Fastow’s actual sentence, Skilling alleges two distinct but related
Brady
violations: (1) that the government improperly bolstered
Fastow’s trial testimony and (2) that the government and Fastow had an undisclosed side deal regarding Fastow’s testimony.
[28] Skilling did not raise his first claim in the district court. As Skilling presents this claim as a
Brady
violation, we cannot address it
already known to him, or that he could have obtained from other sources by exercising reasonable diligence.”(alteration and
internal quotation marks omitted));
United States v. Brown,
628 F.2d 471, 473 (5th Cir.1980) ( “In no way can information known
and available to the defendant be said to have been suppressed by the Government.”). With such knowledge, Skilling could have
objected if he felt that the government’s characterization of Fastow’s plea agreement was inaccurate, or he could have raised this
issue on cross-examination.
FN71. Skilling contends that he raised this issue in the district court. The only reference he provides for this assertion,
however, is a brief mention of Fastow’s sentencing in his petition for bail pending appeal. This is insufficient. Skilling did
not squarely raise the issue of this
Brady
claim or move to reopen the verdict. He did not request an evidentiary hearing
and never referenced any legal authority. Skilling never called upon the district court to decide whether the government
had violated
Brady,
and consequently, he never properly raised the issue in the district court.
Cf. United States v. Cohen,
disclosed evidence.
See United States v. Mulderig,
120 F.3d 534, 541 (5th Cir.1997);
United States v. Mmahat,
106 F.3d 89, 94
(5th Cir.1997) (“[T]here is no authority for the proposition that the government’s
Brady
obligations require it to point the defense to
specific documents within a larger mass of material that it has already turned over.”),
overruled in part on other grounds by United
States v. Estate of Parsons,
367 F.3d 409 (5th Cir.2004) (en banc);
Marrero,
904 F.2d at 261 (“While the Supreme Court in
Brady
held that the government may not properly conceal exculpatory evidence from a defendant, it does not place any burden upon the
task. In Skilling’s words, “it would have taken scores of attorneys, working
around-the-clock
for several
years
to complete the job.”
Ultimately, Skilling argues that the government’s production of the voluminous open file, as a matter of law, suppressed
exculpatory evidence.
CHAPTER 5: ETHICS AND BUSINESS DECISION MAKING 113
*577 [31] There is little case law on whether a voluminous open file can itself violate
Brady,
and the outcomes of these cases seem
he fails to provide sufficient evidence to even hint at such deceit. If there is something exculpatory still in the open file, we must
assume-as there is no compelling evidence to the contrary-that the government does not know about it either.
We do not hold that the use of a voluminous open file can never violate
Brady.
For instance, evidence that the government
“padded” an open file with pointless or superfluous information to frustrate a defendant’s review of the file might raise serious
Brady
issues. Creating a voluminous file that is unduly onerous to access might raise similar concerns. And it should go without
FN72. Skilling contends that the destruction of the draft 302s violated
Brady
. We need not address this issue at length, for
even if the government unlawfully destroyed draft 302s, the government has now provided Skilling with the interview
notes. Because the draft 302s are merely an intermediary step between what Fastow said-recorded in the raw notes-and
what the government reported Fastow as saying-recorded in the 302s-any destruction of the draft 302s is immaterial for
FN73. The parties dispute whether the government acted in bad faith in not disclosing all of the interview notes. Because
Rule 33.
While Skilling’s appeal was pending, this court ordered the government to turn over the interview notes in their entirety. Upon
reviewing the notes, Skilling contended that they contained exculpatory and impeachment evidence that the government was
114 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
required to disclose under
Brady.
This court allowed Skilling and the government to submit supplemental briefing on these issues.
FN74.
See e.g., United States v. Williams,
998 F.2d 258, 269 (5th Cir.1993) (“After an
in camera
review, the district court
concluded that nothing in the Forms 302 would tend to exculpate the defendant, reduce his sentence, or assist him in
impeaching a government witness. We find nothing in the record which would cause us to believe that the district court’s
conclusions were clearly erroneous.”);
United States v. Mora,
994 F.2d 1129, 1139 (5th Cir.1993) (affirming a district
court’s determination that notes were not discoverable under
Brady
on a finding of no clear error where the government
error.”(citations omitted));
United States v. Strifler,
851 F.2d 1197, 1202 (9th Cir.1988) (“We adopt the rule that we will
reverse for denial of
Brady
material from a probation file if, on review of the file, we find that the district court committed
clear error in failing to release probative, relevant, material information.”).
The government provided the district court with the Fastow Binders, which contained almost all of the interview notes in question.
After Fastow had finished testifying, the district court returned the Fastow Binders to the government, stating, “I don’t think [the
The government provided Skilling with 302s summarizing the contents of the interview notes. As noted above, materiality *580
often depends on the value of the suppressed evidence relative to the disclosed evidence; where suppressed evidence is merely
cumulative, no
Brady
violation occurs.
Sipe,
388 F.3d at 478 (citing
Spence v. Johnson,
80 F.3d 989, 995 (5th Cir.1996)). In
Skilling’s case, this means that there was no
Brady
violation if the information in the 302s is duplicative of that in the interview
CHAPTER 5: ETHICS AND BUSINESS DECISION MAKING 115
1. Global Galactic
Skilling first claims that the 302s omitted one of Fastow’s statements in the interview notes relating to the Global Galactic
document. As we mentioned earlier, Global Galactic was Fastow’s handwritten list that memorialized the otherwise undocumented
side deals between LJM and Enron. In preparation for a meeting with Skilling, Fastow compiled a list of talking points that included
FN75. It is unclear whether the “list” spoken of refers to Global Galactic or the talking points list.
We find the omission of this statement from the 302s troubling. Perhaps even more troubling is that the government never
2. The Raptors
As we described above, the Raptors were structured finance vehicles that Enron used to hedge its investments and transfer
underperforming assets off of its books. Enron enlisted the Fastow–run LJM, an “independent” third party, to own *581 a portion of
the Raptors. The government alleged that a secret side deal, or “quid pro quo,” existed between Enron and LJM, meaning that LJM
was not an independent third party because its equity was never at risk. Under this quid pro quo, Enron guaranteed LJM that it
would recoup its $30 million dollar investment in the Raptors plus $11 million dollars in profit (the quid) and, in return, LJM would let
Enron hedge any asset at any price without performing due diligence (the quo). The documents creating the Raptors did not
include this secret side deal.
Skilling argues that the government suppressed exculpatory statements that Fastow made regarding the Raptors and posits that
Fastow’s trial testimony was inconsistent with a number of pages in the interview notes. The government responds that Skilling
misunderstands the notes, and we agree.
a. Whether Arthur Andersen Knew About the Quid Pro Quo
The government asserted that Skilling and Enron hid the quid pro quo from Arthur Andersen. As part of his reliance defense,
however, Skilling claimed that Arthur Andersen was fully informed about and approved the transactions involving the Raptors. At
116 CASE PRINTOUTS TO ACCOMPANY BUSINESS LAW
hiding this.
This statement does not indicate that Arthur Andersen knew of the quid pro quo. Further, the 302s relate the information that
members of Causey’s group knew about the quid pro quo. Thus, this statement in the interview notes was consistent with the 302s.
Skilling also asserts that the government improperly withheld the following statement from the interview notes, which we copy
exactly as it appears in Skilling’s supplemental brief:
Every lawyer involved understood this [quid pro quo].
Not a secret. Never on ASF’s mind that hidden from AA.
*582 Again, as the government points out, Skilling misrepresents the interview notes. The interview notes do not indicate that
every lawyer involved knew of the quid pro quo, as Skilling’s alteration suggests. This statement appears under the heading, “Who
knew there was no business purpose to $41 Mil put,” referring to the $41 million dollars that Enron guaranteed LJM. In the
statement, “Every lawyer involved understood this,” “this” refers to the lack of a business purpose. The lack of a business purpose
was “Not a secret.” Moreover, it was “Never on ASF’s mind that [the lack of a business purpose was] hidden from AA.”(alteration
added). The government included this information in the 302s, which stated,
Mike Edsall and every other lawyer involved in fashioning the Raptors understood that there was no business purpose for the $41
million put. It was never a secret and Fastow never thought it could have been a problem for AA.
Thus, the government did not suppress any exculpatory information by refusing to disclose this statement in the interview notes.
Third, Skilling asserts error in the government’s refusal to disclose the following statements from the interview notes, again copied
exactly as Skilling presents them in his supplemental brief:
QPQ-discussed w/RC [Causey] + BG [Glisan]. (1)
not a secret.
No reason not to discuss together. Was built into structure in a
way, but not valuation issue. (2) discussed w/RC, JS [Skilling] + BG. (a)
QPQ valuation issue was not a secret to AF-no attempt
to conceal.
What does this say about AA’s role. (1) Opinion AA’s role was to help EN find ways to navigate through the rules to find a way for
EN to get treatment it desired. They did this through a very technical analysis of the rules. (2)
Did AA know this was return of
money? AF’s opinion: AA knew.
AA actively helping EN to find ways to navigate around the rules.
AF believed they (AA) were complicit. AF never doubted that EN was sharing entire deal w/AA.
The first statement, although cryptic, says nothing about Arthur Andersen. Although Skilling appears to emphasize the statements
that the quid pro quo was not a secret, these seem to relate only to the fact that it was not a secret to the individuals named in the
note. Further, the 302s indicate that both Causey (RC) and Glisan (BG) were aware of the quid pro quo. The 302s also state that
Skilling knew that the purpose of the Raptors was to conceal Enron’s valuation of the assets. The first statement thus contains
nothing regarding Arthur Andersen’s knowledge of the quid pro quo, and the 302s disclose the other information.
CHAPTER 5: ETHICS AND BUSINESS DECISION MAKING 117
Skilling next contends that the government suppressed statements indicating that he did not know about the quid pro quo. At trial,
Fastow testified that he discussed the quid pro quo with Skilling. But during his first interview with the government about the quid
pro quo, Fastow identified only four people-besides himself-who were aware of the quid pro quo. Skilling was not one of those
people. Skilling asserts that the government violated
Brady
by refusing to disclose that Fastow did not mention Skilling during this
first interview.
Skilling, however, is mistaken. The government released two 302s, one from December 2003 and one from January 2005. In the
first 302, Fastow listed a number of people that knew of the quid pro quo and did not include Skilling. In the second 302, Fastow
said that Skilling did know of the quid pro quo. Skilling should have recognized that Fastow’s recollection had changed.FN76
Consequently, it is not clear to us that Fastow’s failure to mention Skilling during the first interview was even suppressed, much
less material.
FN76. The government explains Fastow’s shifting recollection by asserting that Fastow remembered more things as he
reviewed additional documents.
1) Told JS that BG [Glisan] solved problem on back end.
2)
Don’t know if JS can say he didn’t know about QPQ,
but shouldn’t matter b/c entire purpose of Raptor is to conceal financials of
ENE-This continues through Restructuring etc.
The indication in the undisclosed statement that Causey and Glisan explained the quid pro quo to Skilling suggests exactly what
the 302s state: that Skilling understood the quid pro quo. Additionally, the differences between the December 2003 and January
2005 302s mitigate any harm *584 from the nondisclosure of this statement. In later interviews, Fastow repeatedly stated that he
valuations of assets that Enron hedged in the Raptors. At trial, Fastow testified that LJM allowed Enron to put assets into the
Raptors “at whatever level they wanted” without performing due diligence because LJM had no equity at risk. Skilling contends that
LJM entered the Raptor transactions not because it had no equity at risk, but because an independent appraiser-Arthur Andersen-
approved the valuation. Skilling posits that the interview notes support his assertion. As Skilling states in his supplemental brief,
In an interview with the Task Force, Fastow conceded he “instructed LJM people to accept [Enron’s] valuations” not because LJM2
FN77. Skilling attempts to bolster his arguments with Fastow’s testimony in litigation that occurred after Skilling’s trial. For
3. Cuiaba
In September 1999, Enron sold a minority interest in a Brazilian power plant called Cuiaba to LJM, allegedly to meet its third
quarter earnings targets. According to the government, Skilling promised Fastow*585 that if Enron could not find another
purchaser for Cuiaba, it would buy back the interest from LJM at a price that would ensure LJM did not lose any money on the
deal. This guarantee eliminated any transfer risk, rendering Enron’s recording of earnings from the sale improper. Skilling asserts
FN78. It is not clear to us that the 302s indicate that the idea originated with Skilling; they seem to indicate only that
Skilling wanted the deal to happen.
Second, Fastow testified at trial that Skilling told him that he would not lose any money in the Cuiaba deal. One 302 indicated that
“SKILLING gave FASTOW a ‘bear hug’ which was an assurance that LJM1 would not lose any money on the Cuiaba project.”
Skilling contends that Fastow’s language in his testimony and the 302 are different from that used in the interview notes. In one
an interview on January 6, 2004, states,
Someone figured out selling Cuiaba would fill hole in earnings for 3Q.
a) Spoke to JS, RC,
b) Someone suggested LJM buy. Went to JS. Said understood that they want LJM to buy, but it is at end of Quarter and nobody
could do the due diligence. JS said LJM would not get stuck w/asset-or something similar.
As the government asserts, Skilling again misrepresents the context of this statement. Skilling and Fastow formed LJM to conduct
a particular transaction with Enron, and Cuiaba was the first deal thereafter. Thus, Cuiaba was the first opportunity for such a
guarantee between Skilling and Fastow. In this context, it is difficult to imagine how Fastow could indicate that such guarantees
had been done before; he was discussing the second-ever deal between Enron and LJM. The interview notes confirm this
conclusion. The relevant portion of the interview notes reads as follows:
w/Cuiaba” appearing in one of the *587 interview notes. The district court did not review this note, as the government failed to
include it in the Fastow Binders. For the reasons stated above, we will not address this
Brady
claim for the first time on appeal.
b. Whether Skilling Confirmed the Guarantee in a Conversation with Michael Kopper
Fastow testified that Enron was going to repurchase the Cuiaba interest from LJM, but that he wished to avoid any unwelcome
scrutiny of the transaction. To do this, Fastow was to nominally transfer his interest in LJM to Michael Kopper, and Kopper then
Enron would continue to do deals with LJM. Fastow is uncertain whether he specifically mentioned Cuiaba when he asked
Skilling to meet with Kopper.
Skilling contends that the government suppressed evidence in the interview notes relating to Kopper and these transactions. In
particular, Skilling points to the following statement in the interview notes:
AF might have told MK to talk to JS about buyout. AF doesn’t know if MK went to talk w/JS.
FN79. In support of this assertion, Skilling relies on statements contained in Kopper’s 302. This document is not in our
record, and there is no indication that Skilling presented it to the district court. Indeed, Skilling stipulates that he obtained
access to the document only recently when “counsel in another matter provided it to Skilling on the condition that [he]
could use it solely in connection with [his supplemental] brief and for no other purpose without further approval.” Even if
4. Nigerian Barges
According to the government, Enron wished to unload its interest in energy-producing barges moored off the coast of Nigeria.
Although Fastow at first was reluctant to have LJM buy the barges, Fastow testified that Skilling again gave him an implied
guarantee, or “bear hug,” that LJM would not lose money in the deal. Fastow thus agreed to purchase the barges, if necessary, but
wished to wait six months. To keep the barges off of its books for the interim, Enron purported to sell the barges to Merrill Lynch.
from Skilling, because he could rely on it.
Yet this statement does not clearly indicate that Skilling gave Fastow a guarantee. Indeed, it instead reflects the interview notes
quite accurately:
In Barges conversation. Due to discussion w/JS. Comfortable would not be stuck with Barge.
Skilling does not point to anywhere in the 302s where Fastow indicated that Skilling gave him a guarantee concerning the barges
1) Did not see Email b/4 today. Object to word obligated. Not bothered that it is ENE w/obligation.
Skilling argues that the government improperly withheld Fastow’s statement that he objected to the word “obligated” in the Glisan
1) The 1st Paragraph-Description of transaction.
2) Summary not consistent w/AF’s memory b/c not word “promise”
3) It was EN’s obligation to use “best effort” to find 3rd Party takeout + went on to say there would be 3rd party b/c AF is manager