| Verizon, AT&T's Enron Guy Headed to Jail |
| Written by Dave Burstein |
  Because he lied to Wall Street, Joseph Hirko, co-CEO of Enron Broadband Services, will go to jail for 16 months and pay $8.2M in fines. Verizon and SBC (now AT&T) were the crucial Enron partners in a claimed multi-billion dollar deal for TV over DSL. When Enron fell apart and the truth came out, Verizon eased out a Group President who was closely identified with the deal. No one at the telcos was ever indicted nor were they sued for fraud as part of the Enron litigation.They dodged a bullet.Enron claimed their BOS was an “intelligent” operating system and was described as, among other things, a standard protocol for accessing real-time bandwidth. The prosecuter claims Enron falsely represented the status of the BOS and implied that it was already embedded and functioning as a part of Enron’s network. The BOS “allows application developers to dynamically provision bandwidth on demand for the end-to-end quality of service necessary to deliver broadband content.” Hirko acknowledged the BOS could not dynamically provide bandwidth on demand or provide for the end-to-end quality of service necessary to deliver broadband content. In other words, it never worked.At the time, the word on the street was that Enron simply didn't have any of what they promoted. I never had enough proof to publish that, but it's highly likely the telcos knew enough to realize what was up. Presumably, Enron offered a deal so profitable they didn't mind the “misdirection.” Lying to reporters happens every day. Lying to the FCC is part of the DC culture everyone there takes for granted, and almost never has consequences. (See CenturyTel-Embarq deal for a recent example.) Lying to Wall Street is generally discouraged, however. Prosecutions like this are extremely rare, but if the word is out a CEO is lying his stock can be pummeled in the billions. |
