A former Enron executive who pled guilty and testified against former CEO Jeffrey Skilling and founder Kenneth Lay is now headed to jail for his own role in artificially boosting the company’s fortunes.
Kenneth Rice, once the CEO of the Enron Broadband Services, was sentenced Monday to two years and three months in prison. Rice pled guilty to securities fraud nearly three years ago, but his sentencing was delayed while he helped federal prosecutors on other Enron cases. Rice had faced up to 10 years in prison and a fine of up to $1 million, according to the report.
“I’m sorry. I wasn’t raised that way and I’m ashamed of that,” he said in court before he was sentenced, according to the Associated Press. “I’m committed to turning my life around.”
Under his plea deal, Rice relinquished $13.7 million in cash and property, including jewelry and a pair of exotic sports cars, the wire service noted.
Rice was charged with selling 1.2 million shares of Enron stock for more than $76 million even as he knew Enron Broadband Services was failing, the AP noted. The indictment and plea documents signed by Rice state that while at EBS, Rice and others made a series of false statements about the products, services and business performance of EBS in order to mislead investors and others about the success of the company and to inflate artificially the price of Enron stock, according to the Department of Justice.
Under the agreement, Rice admitted to making false statements about the company’s development of various software capabilities and its fiber-optic network, including at analyst conferences in 2000 and 2001.
Rice also admitted that he and others falsely portrayed EBS as a commercial and business success and falsely claimed that EBS had developed a revolutionary network control software known as the “Broadband Operating System” and that it was “up and running” on the EBS network. In reality, Rice admitted the software had not progressed beyond the internal development stage.
According to the DOJ, Rice also failed to disclose that the company stood to sustain operating losses in 2001 and that it lacked a sustainable customer and commercial base.