Rush Limbaugh In Hospital With Chest Pains

Rush Limbaugh was rushed to the hospital today and admitted with chest pains, according to multiple reports. For several weeks, I’ve been meaning to write about the importance of Rush Limbaugh, and now seems like an excellent time to do that.

I first began listening to Rush in the late 1990s. Then, for whatever reason, I drifted away. I returned in 2002 and have listened pretty regularly since then. Rush Limbaugh is an entertainer, detractors say in an effort to discredit his opinions on politics and issues of the day. It is true that Rush is an entertainer, but so is Barack Obama.

Rush Limbaugh revolutionized entertainment and brought conservatism into the mainstream. Liberals went batshit crazy when they got wind of a man who was unapologetically conservative and stone-cold certain of himself. The Orwellian named “Fairness Doctrine” was created solely to put Rush out of business, but Rush has endured. Some twenty one years on, he’s still infuriating liberals.

And delighting conservatives. Yet for all our adoration, Rush actually does very little. He doesn’t organize protests. He had nothing to do with the 9/12 movement and the Tea Parties this summer. He believes those things will spring up organically.

The big secret about Rush Limbaugh is that he is ‘reactive’. He reads the papers and comments on them. He doesn’t just start launching into a tirade. Always, his comments are in reaction to one of the goons in the media or Congress doing something stupid.

Rush Limbaugh is irreplaceable. There is nobody else who can come close to him. I look forward to his three hours of sanity every day. Usually I listen to the podcast while I run, and it always inspires me to go just a little father, a little faster than I believed myself capable. For the world, he provides commonsense commentary on the insanity of liberalism. And yes, he does it in an entertaining way.

I hope Rush gets well soon. He’s supposed to be back on the golden EIB microphone on Monday. I’m looking forward to it.

The Honest Services of Jeff Skilling and the TSA

Our Glorious TSA, a post on Volokh Conspiracy, is a great read, and there was a truly intriguing comment:

If I were granted a monopoly on offering a specific service, and then I pretended to offer it far more than actually offering it, would that be honest services fraud? Certainly it does seem to be a scheme to falsely deny us the intangible right to honest services regarding airport security more directly than almost any application of that law, such as that of Jeff Skilling. Is the TSA above the law? (Assume for the moment that the Supreme Court does NOT strike the law down.)

Wow. That’s a fascinating take on the whole trainwreck that is the TSA. Whatever one thinks of Jeff Skilling, the illustration of honest services becomes clear when applied to the TSA. The only possible problem in the analogy is that the TSA’s “shareholders” are the bureaucrats in Washington, not the ordinary citizens who require its services to fly. If the TSA is working to appease bureaucrats, it is probably doing a solid “B+” job. If it is working to make travel safe, then it’s depriving all citizens of its honest services.

I’d love to see someone bring a lawsuit to TSA based on honest services fraud. Watching the government explain why it is exempt from Honest Services while Jeff Skilling, one of the best and most brilliant businessmen of our generation, rots in prison due to that same government’s capricious honest service fraud allegations would please me very much.

Go Jeffrey Go.

[Cross-posted at The Enron Blog]

Will You Stand With Iran?

As I watch Phase Two of the Iranian Revolution unfold on television, a poignant thought occurs to me: this is the first struggle for freedom in history where the revolutionaries can not look to the United States for support.

I am sad for the people of Iran, but I am sadder still for our own country.

America is supposed to be an oasis of freedom in a world of war, oppression, poverty, and tyranny. As such, our leaders have a special burden to encourage freedom whenever it happens. In years past, our leaders overtly signaled to the hell holes of the world that we would support them as the green shoots of freedom burst through the oppression.

This summer, six months in office, President Obama went out to have ice cream while beautiful Neda was shot down in the streets of Tehran by Basij, the brutal paramilitary force that was beating back civilians protesting the outright fraud of the Iranian elections. He said that we would “bear witness” as those protesters risked their lives to send information via Twitter and Facebook and texts and pictures uploaded from mobile phones to show the West what was happening. Yes, we did bear witness, but President Obama waited nearly two weeks to utter even the most lukewarm statement in favor of the protesters.

The crowds settled down. At night, reports said, one could hear plaintive chants of “Death to the Dictator” shouted from rooftops. But America, bearing witness, simply turned off the channel.

Now the protests are gaining force again, and again the Basij is killing people in the streets.

In response to the attempted terror attack on Christmas Day flight, President Obama, from his vacation in Hawaii, tells us that we will not rest in the terror fight. Then he went back to his bodysurfing and mojitos. He has not said anything at all about Iran in days, even as the protests heat up.

President Obama is content to encourage stupid security measures, such as forbidding passengers from having anything in their laps the last hour of the flight. Fine, blow the plane out of the sky in the middle of the flight. Or in the beginning of the flight. Don’t use a blanket, use a big shirt – or even better, a burqua.

The stupidity of these tiny security theater gestures is matched only by the president’s belief that by “engaging” Iran, he will sway the mullahs to his point of view. What arrogance. What Obama will not do, the young people of Iran are doing themselves. Without America.

This is a huge loss for us. It is a quantum leap in the way America sees its role in the world. But it is exactly what President Obama wants. He wants us to not be seen as a beacon of light in a dark and dangerous world. He wants to bow to these tyrants and show them that we’re as humble as the people they rule.

If Iran overthrows its government, I will cheer from my living room.

If America overthrows its government, I will cheer from my living room.

Unlike our president, I am always, unconditionally, in favor of freedom.

The Opinions Of Robots [Pic]

Sometimes Captcha is really funny.

Angelina Jolie Smacks Her Bitch Up

Angelina Jolie gave an interview to Das Neue in which she said:

“I doubt that fidelity is absolutely essential for a relationship. It’s worse to leave your partner and talk badly about him afterwards.

“Neither Brad nor I have ever claimed that living together means to be chained together. We make sure that we never restrict each other.”

She added, “The sparks fly at home if the nice Brad fails to see that he’s wrong and reacts in a defiant way. Then I can get so angry that I tear his shirt.”

While I’m usually amused at celebrity babble, this quote really bothers me for a two separate reasons. The first is the issue of fidelity and the second is domestic violence.

I don’t understand the purpose of trying to have a relationship in which both of you acknowledge you’ll be cheating on the other. Why not just date?

Secondly is the more fascinating subject of domestic violence. I read the original story at the Puffington Host and many of the comments were appalled that Angelina Jolie would be so physically abusive.

Granted, the commenters are generally liberals who would love to find a victim in every story, but I have to wonder if “tearing his shirt” is really domestic violence. That last paragraph annoys me because it’s so arrogant and condescending. “Nice Brad”? I have the feeling that Brad Pitt basically hates his life right now. At first it was probably cool to be her boyfriend. She’s a free spirit with an exciting dangerous streak in her – she likes to fly airplanes, tromps all over the globe trying to save refugees, and has a fascination for knives. She’s certainly beautiful and she has children, which he claimed to want. For at least a year, it seemed like a pretty cool union, if you don’t count the fact that he left his wife for her. Then slowly, he began aging before our very eyes. On magazine covers, he looked like:

with children hanging all over him. He began to wear that ugly grey goatee and all the sexiness was washed out of him. He looked profoundly bored. He reminded me of a very nice guy who was trying extremely hard to make someone happy who simply would not be made happy, and it was exhausting him.

He does not seem like the type who would ever hit a girl. I think of Angelina came at him with a frozen leg of lamb, which I can totally imagine, he would just hold up his arms and try to talk her out of it while she whacked him with it.

It seemed like an intense, passionate union that was a bad idea — which was probably obvious within six months. So yeah, “nice Brad” is about right. I can imagine him sitting in George Clooney’s kitchen saying, “I left my wife for her. She’s crazy! I can’t dump her, I’d look like an idiot.”

“That’s because you are an idiot,” Clooney would say.

Brad, pacing the floor, would say, “You think I don’t know that? You think I don’t realize I’m a fucking moron?!”

“This is why I don’t get married,” Clooney would say.

“I’m not married to her,” Brad would say.

“Oh, right. Well that’s why I don’t date crazy girls.”

And Brad would have no comeback to that.

So he bravely carried on, being photographed walking through airports in France and Germany with his twenty-eight children and his stunningly gorgeous, crazy-ass girlfriend who publicly says she’s screwing other people. Heaven forbid anyone be “restricted”.

So frankly, when Angelina Jolie talks about “tearing his shirt”, I think she’s minimizing what she really does, which is fly at him, all hair and nails, and beats the crap out of him whenever Brad “fails to see that he’s wrong and reacts in a defiant way”.

Sidebar: “reacts in a defiant way”? Isn’t that a phrase you might attribute to a child?

Anyway, as Angelina states that she tears his shirt, PoHuff readers say she’s abusing him. And maybe she is, but I’m oddly unsympathetic. I think any person who allows a partner to hit them gets what they deserve. My rationale is this: she doesn’t respect him. If she respected him, she would never raise a hand to him. And if she doesn’t respect him, it is because his behavior has made it clear he is unworthy of respect. (This applies to men too, of course.)

I think Tiger Woods’ wife, Elin Nordegren proves this when she whacked him with a golf club (thank God he’s not a champion bowler.) He did something absolutely reprehensible. He deserved what he got. It is certainly not something I would do, but you can’t act surprised when your wife comes at you with a golf club after you’ve been caught sleeping with fourteen other women.

However I also think Woods’ situation is different from Angelina Jolie and Brad Pitt’s. I think if Brad Pitt is getting the crap kicked out of him (and I do), it is because Angelina is an entitled, immature person who is unable to see that her partner does not exist only to act in way that she ordains, and she reacts physically. He’s not confident enough in himself to say, “Step off, bitch.”

Oddly enough, even the commenters on PoHuff who feel we should not be judgmental of their open relationship believe it is fine to disapprove of Angelina “tearing his shirt.” I think it’s fine. If that’s how they relate to each other, why should we intrude any more than we do when she leaves him with her sixty-four children to sleep with someone else?

What is the difference? Apparently, even as they’ve “agreed” that they’ll have an open relationship, they have agreed that he can get smacked when he doesn’t agree with her. Maybe he likes it. Or maybe he feels that it is a fair compromise in order to be with her.

I think it’s funny that some are so accepting of the sexual mores between couples but get nervous when that same principle of “it works for us” is applied to physical abuse.

States even sanctify this with “domestic abuse syndrome” which is typified by women who stay with abusive men and even resist pressing charges against them. Nonsense. If these women wanted to leave, they would. I agree it’s hard, particularly if children are involved. But unless they are tethered to a pipe in the basement, they can leave. Obviously they’re getting something out of the relationship.

But extreme feminists have attempted to criminalize even the most gentle domestic disputes. Our society now reacts in horror at even “tearing his shirt”.

I can’t imagine tearing a man’s clothes, unless I was tearing them off, but I don’t consider that domestic abuse. I think the PoHuff people need to put on their big girl panties and think of Brad Pitt as a man who is making the choice to stay with the shirt-ripping Angelina, just as he’s staying with her as she bangs strangers in hotel rooms. For Brad, a life of babysitting six kids, followed by a girlfriend drifting home smelling like semen, and then smacking him because he fails to see things her way might just be a great life.

Maybe that’s why he divorced Jennifer Aniston.

Obama Makes Christmas About Him

Pesident Obama issued a Christmas message yesterday (Christmas Eve) and the script was all about him.

Try to look surprised. With this kind of thing happening constantly, it is difficult to look upon this with “extra” indignation, but the fact that he made even Christmas about him has outraged me.

PRESIDENT: Hello everyone, and Merry Christmas. As you and your families gather to celebrate the holidays, we wanted to take a moment to send greetings from our family—from me, from Michelle, from Malia and Sasha—and from Bo.

Great! Being greeted by the White House dog makes me feel extra special.

FIRST LADY: This is our first Christmas in the White House, and we are so grateful for this extraordinary experience. Not far from here, in the Blue Room, is the official White House Christmas Tree. It’s an 18-foot tall Douglas-fir from West Virginia and it’s decorated with hundreds of ornaments designed by people and children from all over the country. Each one is a reminder of the traditions we cherish as Americans and the blessings we’re thankful for this holiday season.

Really? That Christmas tree features baubles with himself transposed on Mt. Rushmore, transvestites, and Mao. The dude who killed 80 million people. Who Anita Dunn, former White House Communications Director, “goes to” for inspiration.

So each one is a reminder of American traditions. Not a word about Christianity? Odd for a president. But let’s see. Maybe it gets better.

PRESIDENT: That’s right, especially as we continue to recover from an extraordinary recession that still has so many Americans hurting: parents without a job who struggled to put presents under the Christmas tree; families and neighbors who’ve seen their home foreclosed; folks wondering what the new year will bring.

But even in these tough times, there’s still so much to celebrate this Christmas. A message of peace and brotherhood that continues to inspire more than 2,000 after Jesus’ birth. The love of family and friends. The bonds of community and country. And the character and courage of our men and women in uniform who are far from home for the holidays, away from their families, risking their lives to protect ours.

Wow, he mentioned Jesus. Cool.

To all our soldiers, sailors, airmen, Marines and Coast Guardsmen—I have no greater honor than serving as your Commander in Chief. I’ve been awed by your selfless spirit, your eagerness to serve—at the Naval Academy and West Point. I’ve been energized by your dedication to duty—from Baghdad to the Korean Peninsula. Michelle and I have been moved by your determination—wounded warriors at Walter Reed and Bethesda, fighting to recover, to get back to your units.

And I’ve been humbled, profoundly, by patriots who have made the ultimate sacrifice for our freedom. In flag-draped caskets coming home at Dover. In the quiet solitude of Arlington. And after years of multiple tours of duty, as you carry on with our missions in Iraq and Afghanistan, your service, your readiness to make that same sacrifice, is an inspiration to us and to every American.

Read those two paragraphs again. What is the subject of every sentence?

FIRST LADY: And so are your families. As First Lady, one of my greatest privileges is to visit with military families across the country. I’ve met military spouses doing the parenting of two—keeping the household together, juggling play dates and soccer games, helping with homework, doing everything they can to make the kids feel OK even as they try to hide their own fears and worries.

I’ve met kids who wonder when mom or dad is coming home; grandparents and relatives who step in to care for our wounded warriors; and folks trying to carry on after losing the person they loved most in the world.

Notice that every single sentence is about the hardship of military families. Not the fact that the troops are doing good work.

And through it all, these families somehow still find the time and energy to serve their communities as well—coaching Little League, running the PTA, raising money to help those less fortunate than they are, and more.

But even these strong military families can use a hand, especially during the holidays. If you live near a military base, you can reach out through your workplaces, your schools, your churches. There are so many ways to help—with child care, with errands, or by just bringing over a home-cooked meal. Even if you don’t know a military family nearby, your family can still help by donating or volunteering at organizations that support military families.

Community organizing, anyone?

PRESIDENT: You can also reach out directly to our forces around the world. Kids can make a card that will bring a smile to an American far from home. Adults can send a care package or a pre-paid phone card that makes the tour at little easier. Every American can do something to support our troops, even if it’s as simple as just saying thank you. For more ways to let our troops know you care, go to

So to all our men and women in uniform spending the holidays far from home—whether it’s at a base here in the states, a mess hall in Iraq or a remote outpost in Afghanistan, know that you are in our thoughts and our prayers. And this holiday season—and every Holiday season—know that we are doing everything in our power to make sure you can succeed in your missions and come home safe to your families.

FIRST LADY: And to all Americans, from our family to yours, Merry Christmas.

PRESIDENT: Merry Christmas, everybody.


Christmas At The Blogs

It is Christmastime once again, which means it is time for my yearly Metaphorical Gifting.

For Tracey, I give a church that will make you feel as at home as your own living room, and a life-sized stuffed zombie doll. Correction: an awesome life-size stuffed zombie doll.

For Sheila I give a trip to Iran and all the twelve Soviet republics: Armenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan. Also: a handsome, friendly stranger who speaks English to act as a tour guide.

For Jessicarrot, I give eternal health, and an entire Michael’s craft store because you and your kids can rock a crafts store.

For John Hawkins, I give an hour in a locked room with Nancy Pelosi.

For Rude1, I give my thanks and friendship and a healthy new horse who is NOT A PASTURE ORNAMENT.

For David Foster, I give an entire library. You already know so much about so much that I think it would be nice to give you easy access to all the documentation you could ask for.

For DBW, I give a dashing Sherlock Holmes style hat. You would look awesome in a Sherlock Holmes hat. I forbid you to try to wear it with irony.

For Observer2000, I give my eternal thanks and a high five for your astute observations about the Enron case.

For John Smith, I give my eternal gratitude and admiration.

For Evan, my heart. Also: Boobs.


I’m a dork. I’ve forgotten some people. For Patriot Xeno, I give the biggest, baddest collection of robots and other hardware that anyone has ever seen in the whole wide world. He doesn’t really need it — he’s kicking ass and taking names without the help of a robot army, but I bet he thinks it would look pretty cool. Also: peace on earth.

For Preston Taylor Holmes, a nice basket of muffins, and two hours of time with President Obama, with a polygraph machine, live cameras, and four Hooters girls.

The Cara Ellison Corp. Christmas Party Emails

From: Abby Christiansen
To: Elizabeth Dougherty
Date: December 23, 2009 1:59pm

Hey, I saw you called last night but I was at the office party. My head still hurts – it was so lame. Every year, the company rents out a restaurant and has music and presents and it’s actually pretty cool. Well this year, they got a ballroom at the Four Seasons. It sounds okay, but I thought it just had no personality. The food was good and there was an open bar but it seemed like everyone was kind of guarded this year. Then the band was pretty good but when they left to take their break, this DJ came on and I swear he put on Every Little Step by Bobbie Brown. Dude. That was painful. Amazingly, people actually got up and danced to it. Accountants and lawyers doing the running man for 4 minutes straight? My definition of hell. Incidentally I met Cara’s new husband, John Tice. He’s hot but he and Cara did not spend one second together at the party. I think those rumors that it’s a marriage of convenience so she doesn’t have to testify against him and vice versa are true.

The juicy part came when Cara Ellison gave her little speech. Now, with the Task Force crawling all over our finances, plus our entire C-suite under indictment, our outlook is pretty damn scary. Anyone who can get another job has jumped ship, our stock price is embarrassing, and we have been informed that we’re no longer allowed to carry our spouses on our insurance if their employer offers insurance. So basically we’re suffering. Anyway, Ellison got up there and lied through her teeth about how the stock price is an incredible bargain right now, and we should grab it while we can, and so on. I don’t think anyone believed her. And by the way, if you have not already dumped that albatross from your portfolio, you should. One cool thing: she had announced that nobody was getting bonuses this year, but at the party she told us to show up today so we could collect our bonuses. Mine was $1500. Last year it was $18,000. We only had a half-day today though, and we’re off until January 4.

But none of that compares to what I am about to tell you. You have to swear to keep this a secret. Seriously: NOBODY can know about this because it isn’t public yet. I heard from one of the guys in Hayes’ old group that the gov is going to offer to bailout CEC if Cara leaves. They’re supposed to make some big announcement after Christmas.

Fuck. Anyway, what is the email address of that HR guy at your company? I think I’ll send him my resume now.

From: Elizabeth Dougherty
To: Abby Christiansen
Date: December 23, 2009 2:11pm
Subject: Re:

1. We didn’t get a Christmas party at all. Not even pizza delivered to the break room.

2. We didn’t get a bonus at all. Not even $1500.

3. We have to work on Christmas Eve, and New Year’s Eve.

4. I haven’t had health insurance for a year.

5. I haven’t had a raise in three years.

6. Show a little gratitude for what you have. You sound so entitled, and you know, whatever the internal politics of CEC, that company has always taken care of you. You’ve never been hungry so quit comparing yourself to last year and five years ago. Either man up and realize you are one of the lucky ones, or just go away.

7. Our HR dude was laid off last week – just before Christmas. And his pregnant wife, who has no insurance at all now, is due to deliver in a week, so shucks, it looks like you just can’t catch a break.

8. Merry Fucking Christmas, you ingrate.

Love, Actually

One of my favorite movies is Love, Actually, the wonderfully splendid Christmastime tale of half a dozen London urbanites, including the Prime Minister, and their interwoven attempts to negotiate love in all its messy, crazy forms.

I have seen it probably fifteen times, and every time it is still fresh – I still cry, I still laugh, I still feel that stunned aching joy of the message of the movie.

As Hugh Grant narrates to us at the beginning of the movie, while it is not particularly noteworthy or dignified, love is all around us.

That was a difficult lesson to internalize since I spent much of 2008 and 2009 feeling set adrift. When you are waiting for the next shoe to drop, it is easy to start feeling like your life is basically one long trial and you just have to get through it in once piece. If I’d calmed down a little, I would not have been so completely blind to what was right in front of me.

On my blog, I’ve called him Evan, and before that, The One Who Endures. I want to tell you a little more about him.

I’ve met a lot of very good people in my life. I have met CEOs I adore as Randian icons, and people who flush billions of dollars into charity, and church-going types who are happy to explain the prescription of a Godly life to me. But I have never met anyone as purely good as Evan. He is good all the way through. It’s his natural state: he always opts for the good and the right, especially in the tough situations. He does not lie or cheat or take a short cut. He doesn’t just pretend to be a good, moral person when he’s in the company of others. He’s just plain good, all the time.

He is a natural leader, though I think if you asked him about that, he wouldn’t really know what you’re talking about. It is intrinsic to him. He leads by example; he makes people want to go where he’s going. He has never, ever told me to do something. He just inspires me to do the right thing – every time.

He is unmemorized, without policy. He meets each circumstance as if he’d never encountered it before.

He likes criticism better than compliments.

I speak in generalities because the “why” of love is, I think, as mysterious as the how. For instance: I love him because he takes vitamins every day, because he laughs at my corny jokes, because he’s sweet and tender and brilliantly blazingly intelligent, because he has funny stories about when he was a boy, because he stands beside me, this calm, certain presence, when I feel weak and want to cry. I love him because he’s strong, an unmovable mountain of will. Also because he can be vulnerable, as open and silly as a ten year old boy.

I love him because he’s him. None of these qualities matter if they are not embodied in him. In any other person they would be admirable, but not precious.

Last year at this time, I had ideas about this should unfold. But like I said, he has no use for prescriptions and formulas. He’s like a cat; you can’t order him around (not that I would want to). So I had to learn the gift of Patience, and once I got Patient, I had to learn how to let myself be surprised.

“I take you seriously,” he said. “You are a woman of substance to me.”

Never in my life had anyone ever said that to me, and he said it with such solemn simplicity. That was when I knew for sure.

It was a humbling thing, to be considered a substantial person by the most substantial person in the world. My brain split into fractals while my heart began to stitch together.

I began to take myself seriously. When he was gentle with me, I could be gentler to myself. When he treated my body like a sacred thing, I began to respect it too. The smudges of darkness inside me rose to kiss the fingers that disturbed the quiet edges.

This was the year I learned was love is and I learned to recognize it, even when it doesn’t happen the way I think it should.

It is proof that there are no limits to the whim of circumstance.

He is a fixture in my life now, like a load-bearing wall. How blessed I am to have him, to cup my hands and gulp from the dailiness of love.

SEC Complaint Against Cara Ellison


Securities and Exchange Commission,





Civil Action No. H-12-0275 (Harmon)

Plaintiff Securities and Exchange Commission (the “Commission”) for its First Amended Complaint alleges as follows:

1. Cara J. Ellison, the President and Chief Executive Officer of Cara Ellison Corporation, Duncan A. Hayes, the former Chief Accounting Officer of Cara Ellison Corporation, and others at Cara Ellison Corporation engaged in a scheme to defraud in violation of the federal securities laws. From at least 2003 through late 2009, Ellison, Hayes, and others manipulated Ellison’s publicly reported financial results and made false and misleading public statements about Ellison’s financial condition and its actual performance. As a result of their scheme to defraud, Ellison, Hayes, and others made billions of dollars by unlawful insider trading and other means, at the expense of Ellison shareholders, the investing public, and Ellison employees.

2. The Commission requests that this Court permanently enjoin Ellison and Hayes from violating the federal securities laws cited herein, prohibit each permanently and unconditionally from acting as an officer or director of any issuer of securities that has a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (“Exchange Act”) or that is required to file reports pursuant to Section 15(d) of such Act, order each to disgorge all ill-gotten gains, to pay civil penalties, to have the amount of such penalties added to and become part of a disgorgement fund for the benefit of the victims of their unlawful conduct, and order such other and further relief as the Court may deem appropriate.


3. The Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. �� 78u(d) and (e) and 78aa].

4. Venue lies in this District pursuant to Section 27 of the Exchange Act [15 U.S.C. � 78aa] because certain acts or transactions constituting the violations occurred in this District.

5. In connection with the acts, practices, and courses of business alleged herein, Ellison and Hayes, directly or indirectly, made use of the means and instruments of transportation and communication in interstate commerce, and of the mails and of the facilities of a national securities exchange.

6. Ellison and Hayes, unless restrained and enjoined by this Court, will continue to engage in transactions, acts, practices, and courses of business as set forth in this First Amended Complaint or in similar illegal acts and practices.


7. Cara J. Ellison resides in Houston, Texas. She was employed by Ellison Corporation from at least 2002 through early December 2009. From 1997-2001, Cara Ellison was employed by the consulting firm of McKinsey & Co., where she provided consulting services to Enron Corporation. When Enron Corporation collapsed in 2001 due to the fraud and malfeasance of its executives, Ellison bought numerous of Enron’s assets and created Ellison Corporation. As CEO of Ellison Corporation, Ellison was the senior manager of the company’s commercial operations and finances and one of its principal spokespersons with the investing public. Ellison closely supervised on a day-to-day basis the activities of each of Ellison’s business units and the heads of those business units, as well as the activities of the senior Ellison managers who conducted the company’s financial and accounting activities. She signed Ellison’s annual reports filed on Form 10-K with the SEC and she signed quarterly and annual representation letters to Ellison’s auditors.

8. Duncan A. Hayes resides in Houston Texas. He was a certified public accountant and worked for Enron Corporation from 1991 through early 2001. In September 2001, Hayes was made Chief Accounting Officer (“CAO”) of Ellison Corporation and an Executive Vice-President. As Ellison’s CAO, Hayes managed Ellison’s accounting practices. Hayes reported to Ellison’s Chairman and CEO, including to Ellison. Ellison and Hayes, along with Ellison’s Chief Financial Officer (“CFO”) Owen Kind, its Treasurer and others were the principal managers of Ellison’s finances. Hayes also was a principal manager of Ellison’s disclosures and representations to the investing public. He signed Ellison’s annual reports on Form 10-K and its quarterly reports on Form 10-Q filed with the SEC and he signed quarterly and annual representation letters to Ellison’s auditors.

Ellison’s Scheme To Manipulate Its Reported Financial Results

9. The objectives of the scheme to defraud carried out by Ellison, Hayes, and others were, among other things, to produce reported recurring earnings that grew smoothly by approximately 15 to 20 percent annually; to meet or exceed the published expectations of industry analysts forecasting Ellison’s reported earnings-per-share and other results; to avoid publicly reporting any large “write-downs” or losses; to persuade investors that Ellison’s profitability would continue to grow; to maintain an investment-grade credit rating; to deceive the investing public and credit rating agencies about the true magnitude of growing debt and other obligations; to make proceeds from borrowing transactions appear as cash from operating activities and thereby mask an imbalance between its earnings and its cash flow from operating activities; and to artificially inflate the share price of Ellison’s stock. Due to the efforts of Ellison, Hayes, and others, Ellison’s publicly reported financial results and filings and its public descriptions of itself were false and misleading, and bore no resemblance to its actual performance.

10. For a time, the scheme to defraud succeeded, and supported Ellison’s stock price and its credit rating. In early 2008, Ellison’s stock traded at approximately $45 per share. By August 2009, even after a 2008 stock split, Ellison’s stock had risen to over $80 per share and Ellison’s had become the seventh-ranked company in the United States, according to the leading index of the “Fortune 500.”

11. At the same time, the rise in Ellison’s stock price enriched Ellison, Hayes, and others at Cara Ellison Corporation in the form of salary, bonuses, stock options, grants of artificially appreciating stock, and prestige within their professions and communities. Between 2002 and 2009, Ellison received approximately $700 million from the sale of Ellison stock netting over $340 million in profit, and received more than $44 million in salary and bonuses. Between 2002 and 2009, Heyes received more than $140 million from the sale of Ellison stock, netting over $60 million in profit, and received more than $12 million in salary and bonuses. Ellison’s other executives and senior managers also sold hundreds of millions of dollars worth of Ellison stock at artificially inflated prices.

12. Ellison, Hayes, and others employed various devices in furtherance of this fraudulent scheme, including but not limited to:

a. manufacturing and manipulating earnings through improper use of reserve accounts to mask volatility in Ellison’s wholesale energy trading earnings and conceal and retain large amounts of those trading earnings for later use in order to achieve desired earnings results;

b. manufacturing earnings and artificially improving Ellison’s balance sheet through over-valuation of assets in Ellison’s merchant investment portfolio;

c. concealing large losses and failures in Ellison’s two highly-touted new businesses, Ellison Broadband Services (“EBS”) and EES, by manipulating Ellison’s “segment reporting” and using its reserved energy trading earnings to hide EES’s losses, and by manipulating expense accounting to hide the extent of EBS’s losses;

d. manufacturing earnings by falsely touting Ellison’s EBS business to drive up Ellison’s stock price, then misleadingly presenting earnings from the stock price increase as recurring earnings from energy operations;

e. structuring financial transactions in a misleading manner in order to achieve earnings objectives, avoid booking of large losses in asset values, and conceal debt, including through the use of an allegedly third-party investment entity that in fact was not truly independent from Ellison and which was used only to achieve Ellison’s financial reporting objectives and to enrich Ellison executives and senior managers;

f. structuring financial transactions in a misleading manner in order to report smaller amounts of debt and to create the appearance of greater cash flows, including through alleged energy transactions between Ellison and large banks that were not reported as debt but in reality only a means for Ellison to borrow billions of dollars; and

g. presenting and describing Ellison’s financial results in a false and misleading manner in conferences with Wall Street investment analysts, press releases, media statements, filings with the SEC, and other forms of communication with the investing public.
Manufacturing and Manipulating Reported Earnings through Improper Use of Reserves

13. By reason of the foregoing, Ellison and Hayes violated and aided and abetted violations of Section 10(b) of the Exchange Act [15 U.S.C. � 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. � 240.10b-5].

Violations of Section 13(a) of the Exchange Act [15 U.S.C. � 78m(a)] and Exchange Act Rules 12b-20, 13a-1 (Hayes & Ellison), & 13a-13 (Hayes)
[17 C.F.R. �� 240.12b-20, 240.13a-1, 240.13a-13]

14. By engaging in the conduct described above, Ellison and Hayes knowingly and substantially caused Ellison to file materially false and misleading annual reports on Form 10-K and materially false and misleading quarterly reports on Form 10-Q with the Commission.

15. By reason of the foregoing, Ellison and Hayes aided and abetted violations by Ellison of Section 13(a) of the Exchange Act and Exchange Act Rules 12b-20 and 13a-1, and Hayes also aided and abetted violations by Ellison of Exchange Act Rule 13a-13.

Violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act [15 U.S.C. �� 78m(b)(2)(A), 78m(b)(2)(B)] and Exchange Act Rule 13b2-1 [17 C.F.R. � 240.13b2-1]

16. By engaging in the conduct described above, Ellison and Hayes, directly or indirectly, falsified and caused to be falsified Ellison’s books, records, and accounts subject to Section 13(b)(2)(A) of the Exchange Act in violation of Rule 13b2-1 thereunder.

17. By reason of the foregoing, Ellison and Hayes aided and abetted violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and violated Rule 13b2-1 thereunder.

WHEREFORE, the Commission respectfully requests that this Court:

A. Grant a Permanent Injunction restraining and enjoining Ellison and Hayes from violating the statutory provisions set forth herein; prohibiting each permanently and unconditionally from acting as an officer or director of any issuer of securities that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of such Act; and ordering each to pay disgorgement of illegal gains, and civil penalties;

B. Pursuant to Section 308 of the Sarbanes-Oxley Act of 2002, enter an order providing that the amount of civil penalties ordered against Ellison and Hayes be added to and become part of a disgorgement fund for the benefit of the victims of the violations alleged herein; and

C. Grant such other and additional relief as this Court may deem just and proper.

Dated: December 22 ___, 2009

Respectfully submitted,

Jonathan E. Summers
Director, Enforcement Division

Louis Gantz
Assistant Chief Litigation Counsel
Attorney-in-Charge, Plaintiff
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-0911
Phone: (202) 942-4744
Fax: (202) 942-9569

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