Former Enron broadband chief sentenced to 16 months in prison, must pay $8.7M restitution

Ex-Enron broadband exec gets 16 months in prison

HOUSTON — The former chief executive of Enron Corp.’s failed Internet business was sentenced Monday to 16 months in prison for lying about the capabilities of the once mighty energy giant’s broadband network in order to help pump up the company’s stock price.

The former broadband unit CEO also agreed to pay $8.7 million in restitution.

Joseph Hirko apologized for his actions before being sentenced. He had previously pleaded guilty to one count of wire fraud as part of a plea deal with federal prosecutors.

“I’ve always tried to be an example for my kids, to show them by my actions to do right. I can’t do that anymore. The best I can do is stand here before you and accept responsibility for my actions,” Hirko said before he was sentenced by U.S. District Judge Vanessa Gilmore as his three adult children and his wife sat in the coutrroom.

Hirko’s attorney, Per Ramfjord, had asked for a sentence of a year and a day, telling Gilmore his client was not as culpable as other Enron broadband executives who were charged in the case and that there was no way to calculate the loss caused to investors by what happened in the broadband unit.

Prosecutor Jonathan Lopez disagreed, saying there was investor loss. A presentence report calculated that figure at $80 million.

But Lopez said prosecutors are standing behind the plea deal because Hirko has cooperated with prosecutors and he was less culpable than others. The plea deal recommended a sentence of between 12 months and 16 months.

Gilmore said she would accept the plea deal even though sentencing guidelines called for a sentence of up to five years because of the amount of investor loss.

Hirko, who now owns a business that rents tables, chairs and other equipment for parties and events, will remain free on bond until he reports to prison in the next few months.

Prosecutors said Hirko tried to profit by lying to shareholders and the market about the value of Enron’s broadband division by falsely touting its capabilities through press releases in 2000.

Enron executive said the unit’s broadband network was up and running and described it as “intelligent,” with capabilities such as providing bandwidth on demand that would bring in billions in revenues.

But Hirko and other executives were aware the broadband operating system was still under development and knew it couldn’t do what it was being promoted to do, according to the plea deal.

Enron, once the seventh-largest U.S. company, filed for bankruptcy in December 2001 after years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable.

The collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans.

Former Enron founder Kenneth Lay and ex-CEO Jeffrey Skilling were convicted in May 2006 for their roles in the company’s collapse. Skilling is serving a 24-year term but an appeals court in January ruled he should be re-sentenced. Lay’s convictions for conspiracy, fraud and other charges were wiped out with his July 2006 death from heart disease.

Hirko was one of five former executives from Enron’s failed broadband venture who were tried in 2005. Their trial ended in a hung jury.

Of the four other executives, one was acquitted at a retrial and another has pleaded guilty and is awaiting sentencing. The retrial of two others is still pending.