Canales Setting Them Up And Knocking Them Down

At EBS, Bill Collins wrote an almost incoherent email in which he said that BOS was a “bitch on the sofa”. I think the poor guy was thinking of “the lipstick on the pig” concept but got confused. For some reason the government loved that email. Strangely, the email did not go to any engineers who could actually have set Collins straight. Scott Yeager, however, was a recipient.

Yeager’s attorney, Tony Canales, always referred to the email as “the pig on the sofa” email instead of “bitch on the sofa”. For some strange reason, this irritated prosecutor Ben “Opie” Campbell terribly, so of course, Canales being Canales, he kept doing it. At one point, Campbell stood up and declared, “Your Honor, there are no pigs in this case!” Everyone at the defense table started laughing.

Prosecutor Says Ellison's Fortune "Built On Lies", Seeks Restraint Of Assets

In a pretrial conference this morning, Department of Justice prosecutors argued that Cara Ellison’s entire net worth, estimated to be between $12 and $16 billion, is entirely the result of fraud at Cara Ellison Corp. and the government would like to restrain all assets. Ms. Ellison is accused of 753 counts of fraud, money laundering, conspiracy, inisder trading, perjury, blackmail, bribery and tax evasion. To demonstrate that many of Ms. Ellison’s assets were bought with laundered funds, Judge Carly Cantwell allowed brief testimony from forensic accountant Eugene Bucknell. The methodology to determine laundered funds was “first in, last out,” Bucknell stated, meaning the first money in an account was presumed to be clean while any sequential funds were considered dirty.

Attorney Hugh Langston, one of Ellison’s lead attorneys on the case, vociferously denounced the methodology as “arbitrary.” “There ain’t no accountant in the world who will stand by such shoddy, sloppy, downright criminal work,” Langston said.

After a long morning of arguing among the attorneys, it was determined that for the purposes of restraint, not forfeiture, Mr. Bucknell’s methodology was adequate. Using Bucknell’s methodology, the government showed that Cara Ellison bought numerous cars, boats, properties, and jewelry with tainted funds. The judge ruled that all of Ellison’s international assets, including a home in South Africa and several boats and aircraft in Portofino, Italy, would be restrained.

The judge restrained several brokerage accounts and two of Ellison’s race cars. “Your client will have living expenses and attorneys fees available,” Cantwell said at the end of the hearing.

“Thank goodness for that,” Langston said, “I was afraid she’d have to hire a cheap Mexican attorney.”

Yoga Pants + Boulder Shoes

I’m not proud.

Why Was The Government Afraid Of Its Own Indictment?

Should a jury always have an opportunity to read the indictment for the defendant whose fate they are deliberating?  I believe the defendant should always be given the right to decide if the indictment is given to the jury or not.  The reason is that the indictment is a government spin document — literally nothing in the indictment should be accepted as fact, not even background data.  Lots of judges, including Gilmore, routinely do not give the indictment to the jury because defense attorneys routinely object.
 
That’s what makes the EBS situation so fascinating.  Here the defense attorneys moved to place the entire indictment, the core spin document written by the government, into the hands of the jury.  The defense wanted it in the jurors’ hands because it is an inane document and because the government failed to even address the bulk of their accusations.  In other words, the government did not follow the record of their indictment during the trial. 
 
The government, who wrote the document, objected to the jury seeing it.  Gilmore said she would not give the document to the jury because it had bad things about the defendants in it.   What a farce!  The government panicking over its own indictment! 

Kathy Ruemmler's Stupid Question

During Jeff Skilling’s trial, there was a moment I found absolutely maddening. Cliff Baxter’s widow testified briefly for the defense. When it was Kathy Ruemmler’s turn to cross-examine her, she asked Mrs. Baxter, “Did you ever work at Enron Corporation?”

Mrs. Baxter answered, “No.”

Kathy Ruemmler had no further questions.

This seems to me the stupidest question she could have asked. Carol Baxter may not have worked at the company but surely she was closer to her husband, Cliff Baxter, than any other person. Surely she knew from him what was happening at the company.

But Kathy Ruemmler didn’t work at Enron Corp. either and furthermore, she never had an inside track on the company. All she knows of it came from her prosecution witnesses.

Mrs. Baxter was far too polite to point this out, of course.

Crunchy Girl

I have lived in Boulder, Colorado for fifteen days. I’ve lost fifteen pounds. I wasn’t aware that I was on any kind of diet; lord knows my Twizzler habit hasn’t lightened up a bit. But the fact that I’ve lost weight without trying isn’t the only weird thing going on. I hate to admit this but I’m starting to talk like a Boulderite. I caught myself saying today, “The building manifests itself with the energy around it.”

I know. I wanted to kill me too. It was awful.

But the weight loss, at least, has a realistic explanation. I’m hiking and trail running every day, sometimes two or three or even four (!) times a day. I’m becoming acclimated to the thin air so I’m able to run faster, and thus burn more calories. And since I am in Boulder, I eat like a Boulderite: fresh veggies, fruits… and I sneak my Twizzlers like any self-respecting Texan.

Back in the day, I used to be a great cyclist. I’ve won races before – tough races like the MS150 and the Bluebonnet Metric Century. I remember from those days, the constant vigilance over my body. Babying my legs, complaining loudly about the agony of my muscles, the whole macho culture of it. Well, that is all they do here in Boulder. Every conversation starts and ends with the injuries you’re nursing, what you’re doing to fix it, and how terribly painful it is. Injury itself is a sport in Boulder. I have problems with my calves. It’s not glamorous like knee problems, but you know, that’s all I have to offer.

I’ve gotten back into yoga. This is why I think I started talking like a hippie.

Most alarming, I’ve begun to be in bed by ten and up by eight. Boulder is an early to bed kind of town, they roll up the sidewalks at a quarter to eight. This is because everyone is so health focused that on weekends, there are races that start early, and if you’re not racing you have to get to the rocks by nine or you can just forget it – you’ll never get a chance to climb.

Boulder is also the friendliest place I’ve ever lived. I’ve already made several good friends. They come over and sit on the back deck or the front porch and we drink wine. But even strangers like to chat. People will just come up to me and ask my name, ask what is my story, etc. I was very put off the first few times but now I’m used to it.

Also, I’ve started to skateboard. That needs its own post.

Clean living, my boyfriend’s grandmother would call it. Good food, good air, a nice solid routine of hard work. I’m living the way I always sort of intended to but was just so hard in Los Angeles, Houston, DC, and New York. This place is not heaven; it has no skyscrapers, even the cowboys are hippies (that deserves its own post too), there is no cinema, no art scene, no Enron echo.

And yet I find that I bound out of bed every morning, excited about my trail run, followed by an hour of yoga, followed by five hours of writing, followed by a homemade dinner, followed by friends stopping by to chat and have some wine.

There are worse lives. I’m scared to like it. I don’t want to be a hippie! But I will settle for being a crunchy girl.

Road Pristine

Sent on the Now Network from my Sprint® BlackBerry

Enron Is Back In Business! (Sort Of)

HBJ reports on the exciting news:

A global energy power player led by a former Enron executive is plugging into an initial public offering.

AEI, registered in the Cayman Islands with operational headquarters in Houston, has filed with federal regulators to raise as much as $862.5 million and gain a listing on the New York Stock Exchange.

The timing and size of the offering are regarded as positive signs by analysts who see the IPO market beginning to thaw out after being frozen shut since August 2008 (see related box below).

Starting with the assets of a predecessor company, Prisma Energy International Inc., AEI has quietly grown into a multinational utilities giant in the power distribution and natural gas pipeline industries.

Prisma Energy emerged from the ashes of Enron Corp. after the once high-flying Houston corporation crashed in late 2001. Since then, Prisma and subsequently AEI focused on electrical power and natural gas distribution and generation, and also owns retail fuel centers.

While based in Houston, AEI does business in emerging international markets, with operations in 19 countries spread across Latin America, Europe and Asia.

AEI generated $9 billion in revenue in 2008 from more than 50 subsidiaries and other operating companies from China to Jamaica in which it has invested, according to the filing.

In a May transaction, AEI acquired a 19 percent stake in Emdersa, an Argentine power distribution holding company, in exchange for cash and AEI shares.

Oscar Serrate, an AEI spokesman, cited regulatory requirements in declining to comment further on the filing or the company’s business model.
essence of Enron

James Hughes joined AEI in 2007 as chief operating officer and was appointed to his current position as CEO later that year.

A former securities attorney in Dallas and Poland, Hughes spent a decade with Enron, as president and chief operating officer of Enron Global Assets and also as general counsel of Enron International. Hughes was later Prisma Energy’s president through 2004.

The largest AEI individual stockholder is high-profile energy executive Ronald Haddock, with 1.5 million shares. Haddock, AEI’s chairman of the board, was the company’s CEO from 2003 to 2006.

A former Enron director, Haddock has several decades in the energy business, with lengthy stints at Exxon and later at FINA, where he was CEO from 1989 to 2000.

Other former Enron executives in key AEI positions include: Brian Zatarain, executive vice president for risk management, who worked in international business development at Enron; and Brian Stanley, executive vice president of operations, who previously oversaw all of Enron’s power plant operations and was CEO of Enron Engineering & Operational Services, responsible for global construction and operation of power generation and natural gas processing facilities.

British wealth management and investment firm Ashmore Investment Management Ltd. is AEI’s largest shareholder, with a 55 percent stake.

AEI was spawned in early 2006 when Ashmore transferred certain energy interests to an affiliate, Ashmore Energy International LLC. Ashmore Energy then purchased Prisma Energy from Enron for $1.8 billion in two stages in May and September of that year. Prisma Energy was the last of the three key business entities under Enron’s bankruptcy plan to be distributed to creditors or sold.

After the sale, the combined Ashmore-Prisma Energy entity was reincorporated in the Cayman Islands and changed names to Ashmore Energy International, which more recently was shortened to the existing AEI.

Financial disclosures in the IPO prospectus show:

• Power distribution is AEI’s most lucrative business, contributing 52 percent of earnings before income taxes, depreciation and amortization, or EBITDA, in 2008. Geographically, South America is AEI’s most lucrative market, with Brazil and Colombia accounting for 71 percent of EBITDA last year.

• Total revenue dipped to $3.7 billion for the first six months of 2009 compared to $4.6 billion for the year-earlier period, but income before taxes remained constant at about $348 million in both periods.

• AEI focuses on emerging markets for their long-term growth potential, based on those countries’ need for large-scale infrastructure development, and has spent $1.5 billion since early 2007 to acquire well-positioned power and energy companies in those markets.

• Considering the company’s large number of operating subsidiaries, AEI carries a debt load of nearly $3 billion.
Power rivals and pitfalls

Emerging market infrastructure development is attracting plenty of interest, says Travis Miller, senior equity analyst with Morningstar Inc.

I am PSYCHED. I want a job with them. Pronto.

Also, have you noticed how long it has been since we heard about any IPOs? I blame the lack of IPOs on Sarbanes-Oxley, which of course, people blame on Enron. But this harsher business environment makes the barriers to going public too much trouble, so small companies stay private. Thanks, government!

The Brilliant Wisdom of Tony Canales

As I pointed out in a previous post Scott Yeager’s attorney, Tony Canales, is an astonishingly good, brilliant attorney. He will use whatever tools he has at his disposal to get his point across. Often it is humor; some of his lines are laugh out loud funny. But he is also not afraid to be loud, obnoxious, forceful, in-your-face, relentless, and definitely Alpha. In other words, he is my ideal man.

It was Tony Canales who flushed out the truth about the Shelby 2 video – that it was NOT played during the 2000 Analyst Conference. And man oh man, was it fun to watch. He was unstoppable. Even Judge Gilmore tried to tangle with him and he put her in her place. The lesson is clear: you do not trifle with Tony Canales. Ever. You will lose.

On April 19, 2005, Tony Canales began his crossexamination of Ken Rice. The day started out with a jocular enough tone:

Mr. Canales: Your Honor, the court reporter has instructed me to slow down once in a while. So, if I look at her, she’s going to give me a frown, I’m going to slow down.

The Court: Don’t give her the evil eye, now.

Mr. Canales: Only if absolutely necessary.

A little friendly back and forth with the judge is never a bad thing. So Canales starts in with Rice. He’s very polite,
everything is ordinary. He gets Ken to talk about how he was out of the office a few days before the Analyst Conference due to a cold. It’s always the innocuous stuff with Tony Canales. He never starts crap over nuclear issues, he goes for the small stuff, and then completely screws up your day, like this:

Q Would you agree with me then, sir — let’s look at the big map — at the big calendar — that if you missed the 9th, 10th, 11th, you’re saying in the e-mail on the 13th that you were rejoining from the world — you know, coming back to the world of the living, you were out at least since the 9th to the 13th?

A That’s probably true.

Q Now, you — did you intend, sir, to leave the impression with this jury that, at some point in time before the
Analysts’ Conference, you met with Scott Yeager to conspire and plan and confederate and every other adjective for the Analysts’ Conference? Is that the impression you’re trying to leave with this jury?

MR. CAMPBELL: Objection to form, Your Honor.

THE COURT: Objection sustained.

Q Sir, did you meet with Scott Yeager on the 9th?

A No.

Q On the 10th?

A No.

Q On the 11th?

A No.

Q On the 12th?

A No.

Q On the 13th?

A I don’t think so.

Q You don’t think so?

A I don’t remember everything I did on the 13th.

Q But you have talked — have you not, sir, testified for three days before this jury date, time, location to
Mr. Campbell’s questions because you knew exactly what you were — where you were and who you met with? Did you not do that earlier?

MR. CAMPBELL: Objection.

THE COURT: Objection sustained. First of all, that isn’t even true, Mr. Canales, so come on now.

MR. CANALES: Sure it’s true, Judge. He testified to –

THE COURT: Objection is sustained. I said stop it. It’s not true. Ask another question.

MR. CANALES: I believe it’s true, Judge.

THE COURT: You know what, leave, because this lawyer, obviously, needs some talking to.

THE COURT SECURITY OFFICER: All rise.

THE COURT: Go on out, please.

(The jury begins to leave the courtroom.)

THE COURT: I am not going to argue with you in this courtroom, Mr. Canales. If I make an objection — if an
objection is made and I sustain it, that means stop talking.

MR. CANALES: And I will. And I will but you cannot tell that what I said wasn’t true. You’re attacking me,
Judge. You said –

THE COURT: First of all, it’s not true because you can’t just sit up here and say this is what you did all during the trial. That’s not true. Now, you –

MR. CANALES: Yes, it is.

THE COURT: Stop it. Just cut it out. That is not going to be happening in here. I’m not going to argue with
you. If I make a ruling, that is it. I’m not arguing with lawyers.

MR. CANALES: And I accept the Court’s ruling. I do not accept the Court telling me that I did something that was
not true. That, I do not accept.

THE COURT: I said that what you said about this witness’s testimony was incorrect, and that is not true.

MR. CANALES: Well, that’s the way I took it, Your Honor.

THE COURT: Well, if the objection is sustained, that means that’s it.

MR. CANALES: And I accept it. But I do not accept the Court saying that I said something that wasn’t true. That’s why I objected.

THE COURT: You know what, that’s just too bad for you. Go to lunch and see if you can get your attitude together over the lunch break.

MR. CANALES: I — yes, ma’am.

THE COURT: Get out of here. Go. Get out of my courtroom. We’re at lunch. You-all be back at –

MR. CANALES: What time do you want me back?

THE COURT: — 1:35 this afternoon.

Something else happened in this transaction that you probably didn’t notice. In the official record, in a pre-trial conference, one of the attorneys (I believe it was Zimmerman but I may be mistaken) made the grave error of calling Judge Gilmore “ma’am.”

“Don’t ma’am me,” Judge Gilmore snapped. “I hate that. I won’t have it in my court room.”

Nobody called her “ma’am” again until this point when Tony Canales sneaked in a brilliant passive-aggressive “ma’am”. But it gets even better.

During lunch, the attorneys huddled over the fact that Gilmore had admonished Canales in front of the jury, just as they were getting up to leave. So naturally, they had something to say about it after the recess. Gilmore doesn’t sound very judge-like here. I love this exchange with all the attorneys being so polite and she’s just losing her mind.

[Mr. Sepenuk represents Joe Hirko]

MR. SEPENUK: Good afternoon, Your Honor. Your Honor, on behalf of Mr. Hirko, as the old guy member of the team, I would respectfully move, Your Honor, for a severance of the case regarding Mr. Hirko.
My reason for asking that, Your Honor, is this. Mr. Rice is the pivotal, crucial witness against
Mr. Hirko. When Your Honor engaged in the colloquy with Mr. Canales –

THE COURT: You mean when he was screaming at me?

MR. SEPENUK: Well, I believe that’s the one, Your Honor. And when you admonished Mr. Canales and actually told Mr. Canales that he had improperly characterized Mr. Rice’s testimony, I think Your Honor’s words were, “You’re not telling the truth, Mr. Canales.” You did that, Your Honor, I respectfully note, in the presence of the jury. You did it not once. You did it twice. You had asked the jury, I think very properly, to file out, but while the jury was just beginning to file out, Your Honor, you made the comment again to Mr. Canales that Mr. Canales was not telling the truth. That, Your Honor, I believe –

THE COURT: I did not say — use those words.

MR. SEPENUK: Well, that’s my recollection, Your Honor. And I apologize to Your Honor if I have improperly characterized it.

THE COURT: That’s not what I said. You know that’s not what I said.

MR. SEPENUK: Well, that — Honestly, Your Honor, that’s the way I heard it. I think what’s happened is that you have –

THE COURT: Okay.

MR. SEPENUK: — I’m sure inadvertently, bolstered Mr. Rice’s credibility.

THE COURT: No. I haven’t bolstered anybody’s credibility. The issue had to do with the objection of whether or not Mr. Canales was improperly characterizing earlier statements that “every single time, every single date, that he asked you about” — “every time, every date, every place, you got exactly right.” Well, that just wasn’t correct.
The objection was sustained because the witness forgot some stuff before, remembered some things, remembered some things accurately, remembered some things inaccurately. It just wasn’t correct that every single time he got the exact date, time and place correct on every single question. It just wasn’t true, which is exactly what the question was. In any event, let me cut it short for you. Your request for a mistrial is denied.

MR. SEPENUK: Your Honor, just one more moment. Needless to say, I know you’ll squash me like a bug if I argue with you, and I don’t intend to do that, truly.

THE COURT: Are you still on the motion for mistrial that I’ve already ruled on?

MR. SEPENUK: Actually, the motion was for a severance. If you deny the motion for severance, Your Honor, then we would ask for a mistrial –
THE COURT: Okay.

MR. SEPENUK: — based on what I’ve previously stated.

THE COURT: No severance. No mistrial.

MR. SEPENUK: And then, finally, Your Honor, very, very respectfully, we would ask the Court to let the jury
know that it’s the duty of counsel to present evidence on behalf of their client, have colloquies with the Court on disputed issues –

THE COURT: It’s not the duty of counsel to scream and holler at the Court. I’m not putting up with that.

MR. SEPENUK: Your Honor, could you at least tell –

THE COURT: In this day and age, with what’s been going on with judges recently, judges do not have to put up with lawyers that are openly hostile to them. That’s why we’re not having any podium in here from now on. Y’all can
question from your seats. I don’t want any lawyers that are that openly hostile that close to me, the witness or my jury.

[NOTE: She enforced this new question-from-your-seats rule for about a day before she gave up trying to enforce it. It was silly. How do you pass exhibits to the witness from your seat? Even Gilmore eventually saw the stupidity of that ruling. ]

MR. SEPENUK: May I make one final, respectful request that you tell the jury that nothing you said to Mr. Canales or, indeed, to any lawyer in the case is meant to reflect your opinion of any issue in the case or your opinion with respect to the credibility of any witness?

THE COURT: I’ll do that at the end of the case.

MR. SEPENUK: Thank you, Your Honor.

MR. TOMKO: We join that motion, Your Honor, for Mr. Shelby.

THE COURT: No need to stand up just to say “Amen”.

MR. LAVINE: Your Honor, on behalf of Mr. Howard, we join the motion for mistrial, but we’d like to put on the record that there is a different basis, that the prejudice from the exchange between the Court and Mr. Yeager’s counsel would flow to Mr. Howard, and we’d move for mistrial on that basis.

THE COURT: Okay. So, that means that anytime a lawyers decides that they — things aren’t going too well for them they just start standing up and screaming and hollering at the Court and then everybody stands up and says, “Oh, my God. We need a severance because somebody has been screaming and hollering at the Judge and that’s going to reflect poorly on all of us”? That’s a good tactic. Your request is denied.

MR. LAVINE: We move for a severance, in the alternative, based on that.

THE COURT: Denied.

MR. LAVINE: Same basis, Your Honor. In addition to the request for jury instructions that Mr. Hirko’s counsel has asked for, we would ask that the Court instruct the jury that they are the exclusive finder of fact as to what the witness –

THE COURT: I’ll tell you what. Why don’t you guys submit what you want for the jury instructions at the appropriate time, and I will definitely look at every single thing that you give me.

MR. LAVINE: We would ask that those instructions be given to the jury now, Your Honor.

THE COURT: I’m going to do it at the end of the case.

MR. CAMPBELL: Can I ask one question, Your Honor? It’s merely procedural. Would you like us to object from — sitting down or do you want us to stand up for objections?

THE COURT: You need to stand up for objections. Otherwise, I won’t even know who it is.

MR. CAMPBELL: That’s — I thought it would be easier to hear if we stand up.

THE COURT: But everybody can question from their seats. This is not a day and age where courts have to put up with hostility from people in the courtroom and where anybody should have to, and I’m not going to. Go get the jury.

Campbell is such a toadie. In any case, Canales wasn’t through. Oh heavens no. His next “fuck you” to the judge came that same afternoon. There has been a lot of quiet talk about Gilmore’s racial prejudices, her general dislike for “rich white guys” and I think Tony Canales was picking up on that, and giving it back to the judge, not necessarily Ken Rice, when the following exchange took place:

Q. Did you confer with anybody – anybody – as to whether or not at that 2000 Analyst Conference Shelby 2 was played?

A. I talked to my lawyer, Mr. Dolan, and he doesn’t — he told me he doesn’t know more than I do.

Q. He was no help to you?

A. All that money. No.

Q. Maybe a cheap Mexican lawyer could help you out.

A. I didn’t hear you.

Mr. Canales: Forgive me, Your Honor, for that.

Well, we must give credit to Ken Rice – that was a cute comment. But wow, Canales hits hard when he wants to.

He then argues with the judge about giving the Prosecution time to view the tape that they had given the defense. It made no sense then, just as it makes no sense now. But Canales eventually prevails and shows the tape of the Analyst Conference which shows that only one Shelby tape was played.

If Gilmore bolstered Ken Rice’s credibility with her comments that Canales was lying, Canales certainly reversed that with his proof that Ken Rice was at least mistaken.

What Could Possibly Happen In 32 Seconds?

All the Enron Broadband defendant attorneys are brilliant, of course, and they all have strengths that are unique to themselves, and which contributed to the overall strength of the defense (and this is one reason, apart from the defendants’ innocence, why I think there were exactly zero convictions.)

I do not want to tangle – ever – with Per Ramfjord because he apparently has a photographic memory. If you lie to him, he will catch you and make you pay. David Angeli is a brilliant tactician. He has some weird voodoo mind-control power that makes you act exactly as he wants you to act on the stand. Ed Tomko is low-key and friendly, which, I think, lulls victims witnesses into a false sense of security. Zimmerman is polite to a fault. But my favorite is Scott Yeager’s attorney, Tony Canales. Tony Canales cracks me up. Tony Canales will have you laughing in the seconds before he snaps your back in two and leaves you mortally wounded on the witness stand. It is so smooth, you don’t even feel it at the time. And It might take him a whole day to get to his point but when he does, you are done. He reminds me of one of those supreme sushi chefs who will cut open a fish and leave its heart beating for a few seconds so the patrons can see that this fish is fresh.

It was Tony Canales that asked Ken Rice, “If you said that second [Shelby] tape was played at the conference you’d be a liar, wouldn’t you?”

Poor Ken Rice had no idea what was about to happen to him. None.

Snap.

I’ve heard from people who know Canales that he’s a total pain in the ass, but that only makes me love him more.

In today’s venture into the Broadband trial, Tony Canales is funny because he gets his client to point out that the key slide from the 2000 AC that was in front of the jury the entire trial had a few key points on it. The entire case is based on if those specific things existed or not on that date and if not then the entire Analyst Conference was a lie. This included the notion of Shelby II but after that was blown out of the water the emphasis was on this slide.

Here is the slide:

Out of an 8 hour day and over 289 or so slides this slide was in front of the analysts for 32 seconds. That is it. The case is based on a slide and definitions of words on a slide that lasted 32 seconds out of an 8 hour day. That is what drove up the Enron stock on Jan 20th 2000 and caused Enron to fail 18 months later?

Also, it drives home why Yeager believed the slide told the truth, the presentation was true and the definitions the Government are forcing on the jury are wrong. Yeager did not have to stand up and say anything because he believed then and still does that everything presented was true. EBS was using real definitions of functionality, not the made up distorted ones the Government used. Those definitions were industry standard ones. The case is full of examples of crossexamination by Angeli and Per on how EBS was redefining QoS and the EIN was by definition a new kind of Network that included applications running on servers.

Here is Canales questioning Yeager on this subject:

Q. As a result of doing this study and the business plan and so forth, sir, did you reach any type of — by
January the 20th, 2000, did you reach any type of belief or an opinion that you honestly held regarding the functionality of the EIN network?

A. Yes.

Q. And what was that belief or opinion that you reached, sir?

A. On January 20th, my belief was that we had come a long way during ’99. We had uncovered issues, dealt with them and we had, I believe, at that point, a 14-city fiber optic backbone composed of plenty of bandwidth, conduct business for Media Cast and Media Transport. We had the pooling points in place, which were critical. We had written the software for all of that. It was integrated together. We had a network control system. We had everything we needed to not only deliver those services, but to expand them and to grow new services and
revenues.

Q. How did you know those things?

A. I knew them from working at the company and going around to different locations within the company. I knew them from observing the actual use of the applications and the equipment, both physically inside of our network in buildings and by going to customer locations.

Q. So, you actually traveled throughout the United States?

A. Yes.

Q. Did you, actually, physically go to visit customers?

A. Yes.

Q. What, sir, was your belief on January the 20th as to what the EIN network consisted of?

A. Based on what we had as a group or the company had decided to expand the definition of the EIN from earlier, it was very clear to me on that day that the EIN was fiber, servers, pooling points and software.

Q. Did you hold a belief or an opinion, sir, as to whether or not there was the existence of Network Control Software?

A. Yes.

Q. And what was that opinion or belief based on?

A. It was based on my experience and knowing what Network Control Software does in networks and what I saw when I was at EBS.

Q. And what did you see when you were at EBS?

A. When I was at EBS, I saw the network operations control center operational earlier in ’99. I saw Jim Rowh give a
presentation in August of ’99 where he articulated all of the software that we had in place and it was up and running. I physically went to it. And then later we were building a NOC in Houston. And, so, it was a lot of different ways that I knew about it.

Q. Now, when you say they were building a NOC in Houston, is that a physical place, the NOC?

A. There is a physical thing called a: Network operations control center”, which is the term we would use with this,
and it’s a room where there’s a lot of computers and software connected through a dedicated private network to
all of the elements inside of the network.

Q. And where was it established here in Houston, this NOC?

A. Well, there’s one in Portland, but the one in Houston — There was a room in the Enron building — the main Enron building that was the room you could go into and see all the screens of all the software that was controlling the network.

Q. Well, I’ve heard something in this case — or have you heard something in this case about a location on Shepherd Street here in Houston?

A. Yes. There was also a location on Shepherd.

Q. What was that location on Shepherd?

A. My recollection is the location on Shepherd has a lot of equipment, but it was more of the staging area for preparing all the servers and the routers and the LAN switches and other things to ship out as we expanded the EIN.

Q. So, then the NOC, as you were describing it to us, was physically located in Downtown Houston?

A. Well, since the — The notion of a NOC is a little — By definition, our notion was a distributed system. The way that you could see the NOC was in a room, and the — there was a room in Houston — in Downtown Houston.

Q. In the Enron building down the street?

A. Right. But some of the servers could have been on Shepherd, they were in Portland, and they were spread all
over the United States on all the EIN POPs.

Q. What about the NOC in Portland?

A. The NOC in Portland was another — was the first instance of it. And there’s people that work in the NOC;
so, that’s why we think of it as a room, because you actually had people man the NOC.

Q. Okay. There’s been a lot of testimony regarding this particular chart here. Do you have a recollection, sir, as
to whether or not this particular chart I’m showing you –And I think it’s a demo exhibit, Government’s Demo
Exhibit 1. Do you see it, sir?

A. Yes.

Q. Now, does this same exhibit appear in the Analyst Conference?

A. Yes.

Q. All right. Was there a PowerPoint?

A. It was a slide in the PowerPoint.

Q. All right. And I believe that slide was Slide No. — Let me see. I have it right here. Just a second.
Let’s see YD2464 at 182. Out of YD2464. Now, do you have a recollection, sir, as to whether or not this PowerPoint that we’re seeing here ending in 563, as you’ve told us, appeared in the Analyst Conference as part of the video?

A. Yes.

Q. All right. And do you know, sir — Well, have I asked you to time how long this particular slide appeared at the
Analyst Conference?

A. Yes, you did.

Q. And how long, sir, did this particular slide appear at the Analyst Conference?

A. From viewing the raw footage, it was 32 seconds.

Q. And how long did you tell this jury that this conference was, sir?

A. It was all day.

Q. Eight hours?

A. Roughly eight hours.

Q. So, you’re talking 32 seconds out of eight hours that this particular slide appears?

A. Yes.

Q. And, sir, can you tell the jury whether or not at my request you’ve counted the number of slides that appeared at
the Analyst Conference?

A. Yes. I attempted to count the slides in there, yes.

Q. And how many?

A. There’s like 289 slides or something.

Q. 289 slides. That’s from the beginning, in the morning?

A. From the morning through the afternoon. All day.

Q. Sir, did you have any type of role or participation in the preparation of this particular slide for the Analyst
Conference?

A. No.

Q. Did you have any role or participation as to whether or not this would be inserted or deleted?

A. No.

Q. At the Analyst Conference, sir, did you make any comments on this particular slide?

A. No.

Q. Well, sir, you — Are you surprised at all, sir, that, you know, you got indicted for a slide that you did not
prepare and that was only up for 32 seconds?

MS. MONACO: Objection, Your Honor.

THE COURT: Objection sustained.

That last question cracks me up. Why did the Government object? I’d be curious to know Mr. Yeager’s answer. And I adore Canales for asking it, though he probably knew that the government would object and pro-government Gilmore would sustain the objection. He had a few of these sly insertions, which I will explore in my next post.