More Gatekeepers Under Fire: SEC Charges Two Former Enron In-House Attorneys

Yesterday, the SEC brought civil fraud charges against two former in-house attorneys of Enron Corp., Jordan Mintz, former VP and General Counsel of Enron’s Global Finance Group and Rex Rogers, former VP and Associate General Counsel.  SEC v. Jordan H. Mintz and Rex R. Rogers, Civil Action No. 07-1027 (SDTX) (March 28, 2007),  The SEC alleges that the defendants participated in a scheme to make material misrepresentations and omissions in Enron’s public filings; separately, the SEC charges that Mr. Mintz violated the books and records and lying to auditors provisions of the securities laws and that Mr. Rogers, a former SEC enforcement attorney, aided and abetted former Chairman Kenneth Lay’s violations of the insider stock sale reporting provision, permitting Mr. Lay in 2000 and 2001 to secretly sell millions worth of company stock.  In addition, the SEC charged the defendants with aiding and abetting Enron’s violations of the antifraud and periodic reporting provisions.  

In essence, the complaint alleges that Mr. Mintz was aware or should have been aware that in 1999 there was a fraudulent oral side agreement regarding an off-the-books special purpose entity controlled by Enron and created to purchase Enron’s troubled power project in Brazil and that he knowingly or recklessly directed the documenting and closing of the sham transaction.  The SEC further alleges that Messrs. Mintz and Rogers failed to disclose details of the fraudulent transaction to the company’s shareholders.  The SEC is seeking undisclosed disgorgement with prejudgment interest and civil money penalties, permanent injunctions, and officer or director bars.

Attorneys for Messrs. Mintz and Rogers vigorously deny the allegations.  According to the Associated Press, Mr. “Mintz’ attorney, Chris Mead, said that his client ‘denies the allegations and will fight them vigorously in court[,]’ and B. Michael Rauh, a lawyer representing Rogers, said: ‘Mr. Rogers is a person of great integrity and the highest moral character. He was never involved in any wrongdoing, and we look forward to vigorously defending (against) these baseless allegations.’” 

Once again, the SEC demontrated its commitment to bring actions agaist gatekeepers.