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06-20885 UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

UNITED STATES OF AMERICA, Plaintiff-Appellee, v. JEFFREY K. SKILLING, Defendant-Appellant. DEFENDANT-APPELLANT JEFFREY K. SKILLING’S PETITION FOR PANEL REHEARING On Appeal From The United States District Court For The Southern District Of Texas, Houston Division Crim. No. H-04-25 (Lake, J.)

O’MELVENY & MYERS LLP WALTER DELLINGER JONATHAN D. HACKER SRI SRINIVASAN 1625 Eye Street, N.W. Washington, D.C. 20006 RONALD G. WOODS 5300 Memorial, Suite 1000 Houston, Texas 77007

O’MELVENY & MYERS LLP DANIEL M. PETROCELLI M. RANDALL OPPENHEIMER MATTHEW T. KLINE DAVID J. MARROSO 1999 Avenue of the Stars, 7th Floor Los Angeles, California 90067 Telephone: (310) 553-6700 Facsimile: (310) 246-6779

ATTORNEYS FOR DEFENDANT-APPELLANT JEFFREY K. SKILLING

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CERTIFICATE OF INTERESTED PERSONS The undersigned counsel of record for Defendant-Appellant Jeffrey Skilling certifies that the following listed persons and entities as described in 5TH CIR. R. 28.2.1 have an interest in the outcome of this case, United States v. Skilling, No. 06-20885. These representations are made in order that the judges of this court may evaluate possible disqualification or recusal: 1. 2. United States of America, Plaintiff-Appellee; Department of Justice, Counsel for Plaintiff-Appellee (Paul E. Pelletier, Joseph Douglas Wilson); 3. 4. Jeffrey Skilling, Defendant-Appellant; O’Melveny & Myers LLP, Counsel for Defendant-Appellant Jeffrey Skilling (Daniel Petrocelli, Walter Dellinger, Randall Oppenheimer, Jonathan Hacker, Matthew Kline, Sri Srinivasan, David Marroso, Meaghan VerGow, and Michael G. Williams); 5. Ronald Woods, Counsel for Defendant-Appellant Jeffrey Skilling. Respectfully submitted, /s/ Daniel M. Petrocelli Daniel M. Petrocelli Attorney of Record for Defendant-Appellant Jeffrey Skilling

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TABLE OF CONTENTS

I.

ERRORS IN DESCRIBING THE LJM RECORD ............................................1 A. Enron Did Not Repurchase The Barges ....................................................2 B. Fastow & Glisan Admit Valid Reasons For Buying Back Cuiaba............2 C. Skilling Contested His Alleged Involvement In Barges & Cuiaba ...........3

II. ERRORS IN DESCRIBING THE EBS RECORD ............................................4 A. The So-Called “Untraceable” $102M EBS Loss Was Disclosed..............4 B. EBS’s Alleged “Non-Core” Deals Were Proper And Disclosed...............5 III. IV. ERRORS IN DESCRIBING THE WHOLESALE RECORD........................7 ERRORS IN DESCRIBING THE 4Q 2000 RESERVES RECORD .............9 A. The Reserve Was Taken Before Year End, And Was Accurate ..................9 B. The Opinion Misconstrues The Accounting Process .................................10 V. ERRORS IN DESCRIBING THE EES RESEGMENTATION ......................11 A. The Transfer Was Done For, And Resulted In, “Efficiencies”..................12 B. Accounting & Disclosures For The Transfer Were “Rock Solid”.............12 C. The Three Alleged EES “Loss” Transfers Were Heavily Disputed ..........13

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TABLE OF AUTHORITIES

Neder v. U.S., 527 U.S. 1 (1999) .................................................................... 1, 4, 10

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The panel opinion affirming Mr. Skilling’s conviction rests on fundamental errors of law and fact. A separate petition for rehearing en banc focuses on several key errors of law. This petition for panel rehearing focuses on manifest factual errors and omissions of important evidence that, unfortunately, pervade the court’s review. Under the correct legal standard, the panel was obliged to analyze the entire record, and explain why, on that record, no rational juror could have agreed with Skilling’s defense and voted to acquit him of securities fraud. See Neder v. U.S., 527 U.S. 1, 19 (1999). The opinion’s review fails to meet that Neder test. Viewed objectively and completely, the securities-fraud record shows that the government’s case was sharply contested at every turn—by documentary evidence, admissions by government witnesses, and by testimony from third parties, an expert, and Skilling. The full trial record reveals many triable issues of fact as to Skilling’s guilt on the securities-fraud theory, and on each of the “five schemes” alleged. This contested record precludes any finding of harmlessness, and the panel should reconsider its opinion and reverse Skilling’s convictions.1 I. ERRORS IN DESCRIBING THE LJM RECORD The opinion contains major errors in describing the alleged LJM “scheme” involving Nigerian Barges and Cuiaba. Citing only Andrew Fastow’s testimony, it says Skilling promised Fastow that LJM would not lose money if it purchased the To assist the Court’s review of this petition, Appendix A (filed herewith) contains copies of all of the record evidence that Skilling cites in this petition. 1
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assets. To corroborate this, the opinion says Enron was “forced” to “buy the assets back from LJM … because both assets continued to deteriorate in value.” Op. 11. A. Enron Did Not Repurchase The Barges

Contrary to the opinion, Enron did not buy back the Barges. LJM sold them to a third party, AES, just months later. Documents confirmed this, GX24606, as did Fastow: “I don’t recall being familiar with the terms of the AES transaction; but, yes, LJM2 did sell their interest at that time,” R:22038-39. Also in error is the assertion that the barges “continued to deteriorate in value.” Op. 11. LJM made a $700,000 profit on the sale. GX24606; R:22039 (Fastow), 22629 (Chris Loehr). B. Fastow & Glisan Admit Valid Reasons For Buying Back Cuiaba

Enron did repurchase Cuiaba, but the opinion fails to address the evidence supporting Skilling’s defense that Enron had valid business reasons for doing so— all inconsistent with the ab initio “side-deal” that Fastow alleged. Fastow conceded Enron wanted to buy back Cuiaba “so that it would be able to control the board of Cuiaba or have more leverage in its negotiation with Shell,” Cuiaba’s other board member. R:21997-98. A March 2001 presentation on the Cuiaba “LJM Buyback” states that “ENE gets third seat on Board of Directors, gaining control of EPE,” DX17880:11, and the same issue was raised at the Board Finance Committee, DX4916:4849-54. Enron also needed to buy LJM out of Cuiaba because LJM raised complaints that Enron failed to disclose problems with

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Cuiaba when LJM invested in it. R:24627-29 (Glisan); DX4410; DX5155. The claim that Enron bought back Cuiaba to fulfill Skilling’s “promise,” Op. 11, is what the government alleged. It is not what a rational juror was required to find. C. Skilling Contested His Alleged Involvement In Barges & Cuiaba

Citing only Fastow’s testimony, the opinion asserts that for “all of Skilling’s many counterarguments, his personal involvement with respect to those two deals is not controverted.” Op. 12. This, too, is untrue. The only evidence of Skilling’s “involvement” came from Fastow, R:2127880, an admitted liar, Skilling Br. 27-29; Hueston, Behind the Scenes of the Enron Trial, 44 AM. CRIM. L. REV. 197, 199-200 (2007). Glisan testified he had no knowledge that Skilling ever gave such guarantees on Cuiaba or Barges, R:2461718, and no other witness said Skilling made these promises.2 Fastow further conceded that Skilling never used the word “guarantee”—that was merely Fastow’s “interpretation.” R:22271. Fastow admitted the “promise” was legally unenforceable, R:21818-20, and “there was some risk” to LJM in both deals, R:21268-69. The Barges and Cuiaba contracts make no mention of guarantees and contain integration clauses expressly disclaiming “all prior agreements and understandings, oral or written.” DX8756:8; DX8826:3181. Only by disregarding this evidence (and Skilling’s testimony) can the opinion conclude Skilling’s In fact, Glisan and Loehr said they heard that, if anyone, Rick Causey—not Skilling—implied LJM would not lose money on Cuiaba. R:24337, 22718. 3
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personal involvement was “uncontroverted.”3 II. ERRORS IN DESCRIBING THE EBS RECORD The opinion says Skilling committed securities fraud because he “failed to disclose fundamentally important facts about EBS’s problems.” Op. 13. The facts that Skilling supposedly hid—without exception—were publicly disclosed. A. The So-Called “Untraceable” $102M EBS Loss Was Disclosed

The opinion says in the first half of 2001, Skilling tried to “sell[] investors on the growth potential of EBS,” but “[w]hen EBS continued to deteriorate during the second quarter of 2001 (EBS was due to report a loss of $102 million), witnesses testified that Skilling approved a plan to merge EBS with wholesale, knowing that, as a result, the losses attributable to EBS would be untraceable.” Op. 13 (emphases added). No witness said this, and for good reason. Enron and Skilling repeatedly disclosed this $102M loss. As examples:  Enron’s July 12, 2001, earnings release states: “Enron Broadband Services reported a $102 million IBIT loss….” DX11907 at 959.  On a July 12, 2001, analyst call, Skilling said: “Broadband services reported $102 million IBIT losses in the second quarter….” DX20605 at 6. The same error pervades the opinion’s analysis of all “five schemes” alleged. Op. 15. Based on defense evidence the opinion omits, a rational juror could have accepted Skilling’s defense to these LJM “side deal” charges and acquitted him on all acts of securities fraud associated with LJM. Neder, 527 U.S. at 19. That same rational jury could have convicted Skilling for conspiracy and all of the other counts on the invalid honest-services theory that the government offered as alternative for each of the “five” schemes—e.g., here, that LJM posed a “Wall St. Journal” risk. R:36529-30; Remand Br. 25-29. 4
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 Enron’s 10-Q for the second quarter of 2001 clearly reports the same:

GX1034:2528 (highlights added). The $102M loss was never “untraceable.”4 B. EBS’s Alleged “Non-Core” Deals Were Proper And Disclosed

The opinion asserts EBS made earnings only through “transactions that fell outside of its core businesses,” including “the sale of part of its fiber-optic network to LJM2 at a price that no third party would pay”; the “hedging of a gain on its investment in Avici”; and the “monetization” of Blockbuster contracts. Op. 12. While the opinion asserts such deals were “non-core” and suggestive of fraud, Rice admitted “dark fiber sales and swaps are part of EBS’s intermediation business,” and made clear, “I don’t want to give the impression that there’s anything wrong with that.” R:17919-20. Enron’s head of Investor Relations, Mark Koenig, agreed the sales were “part of Enron’s business” and legal. R:16199-200. These so-called “non-core” transactions were also disclosed. For example, Enron’s 10-Q stated: “Gross margins for the first quarter of 2000 primarily reflects Indeed, government witness Paula Rieker pled guilty to insider trading for selling stock on July 11—a day before the $102M loss was disclosed. R:19195-97. As for Skilling’s “approv[ing]” a plan to merge EBS into wholesale to hide the loss, Op. 13, EBS’s CEO, Ken Rice, conceded that Skilling nixed an EBS-Qwest deal that would have eliminated EBS’s loss in Q2 2001. R:17990-95. 5
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earnings from sales of excess fiber capacity and an increase in market value of [EBS’s] merchant investments.” GX1033:2510 (emphases added). Other EBS disclosures similarly address these allegedly non-core business transactions—be they contracts monetizations, fiber deals, or gains and losses in merchant investments (e.g., EBS’s investment in a company like Avici). R:16200-02, 17917, 17920-21, 20999; GX1028:22; GX1032:2341; GX1033:2510. Both Rice and fellow EBS executive Kevin Hannon testified that all fiber sales and merchant investments were adequately disclosed. Asked whether there was “any problem with how Enron or EBS disclosed its gains,” Rice said: “No, there’s no problem that I know of.” R:17920-21. Hannon confirmed “there were repeated disclosures.” R:20999; accord R:16201 (Koenig: fiber sales disclosed). Rice and Hannon also confirmed that LJM2 paid a market price for the fiber it bought. Rice said, “It was a negotiated arm’s length transaction,” R:17922, and Hannon agreed, “they were all legitimate transactions,” R:20997, based on “heated discussions” with LJM2, R:21000-01; 17922-23 (Rice; same). Hannon confirmed that five months after EBS sold dark fiber to LJM2, the market price of fiber went up—meaning LJM2 netted a profit, R:21000, and the opinion’s claim that EBS sold fiber to “LJM2 at a price that no third party would pay,” Op. 12, is untrue. Like EBS’ other “merchant investments,” Avici was properly disclosed. Hannon admitted Avici was a shrewd investment, properly disclosed, and that the

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LJM hedge, despite the panel’s assertion to the contrary, Op. 12, “had nothing to do with” Enron’s reported gain, R:20999, 21003. Koenig initially claimed Enron’s Avici disclosure was inadequate, but conceded on cross he was wrong and it was properly disclosed in Enron’s earnings release. R:15270, 16229-54; GX1009:3. Lastly, the opinion targets monetizations of two Blockbuster-EBS contracts: one in Q4 2000, and another in Q1 2001. Op. 13. Enron properly disclosed these deals, labeled Braveheart I and II,5 and Rice admitted they were legal, R:17616-17. III. ERRORS IN DESCRIBING THE WHOLESALE RECORD The opinion states Skilling “falsely portrayed Wholesale as a low-risk company,” when it was actually a high-risk “trading” company, and says the only contrary evidence was “Skilling’s own self-serving testimony.” Op. 9-10. Again, this is untrue. To begin, Skilling never referred to Wholesale as “low risk.” The government accused him of fraud for describing Wholesale as a “logistics” company, rather than as a “trading” company (like Goldman Sachs), because, on its theory, the two labels “imply very different levels of risk.” R:24173. Skilling met this charge head on, with documents and other evidence. He

Enron disclosed Braveheart I in a press release: “[EBS] reported a $60[M] IBIT loss for 2000 [including a] successful monetization of a portion of Enron’s broadband delivery platform,” GX1011:3, and Braveheart II, which represented $58M of $83M in revenue, similarly: “Revenues in [Q1 2001] related primarily to a monetization of a portion Enron’s content services business,” DX30661:3. While Koenig said he himself misspoke about these transactions, he conceded Skilling did not and that Enron’s press releases were proper. R:16739-42, 16284-96. 7

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showed that Enron operated one of the largest physical energy networks in the world—something no “trading” company owns. R:28310-15; JKS:5-12. He also showed that whatever labels he used, Enron’s actual risks were fully disclosed. The proof of this was Enron’s SEC filings, which disclosed Enron’s “Value-atRisk,” or “VaR.” Enron’s Annual Report disclosed that Enron’s “commodity price risk,” a subset of “Trading Market Risk,” was as high as $81M in 2000 (well-up from 1999), and highlighted that “increased price volatility in power and gas markets caused Enron’s value at risk to increase significantly.” GX996:1180. Similar filings disclosed Enron’s risk. E.g., GX994:1050; GX1021:1549-50. Because these risks were disclosed, the government could object only to Skilling’s subjective label for Wholesale as a “logistics” company. But labels like “logistics” and “trading” have no accounting significance and are not addressed in any SEC or other rules. Based on proof of the VaR disclosures that Enron did make and proof of its extensive logistics network, a rational juror could find use of the term “logistics” was not misleading and was not done with any sort of criminal intent. Finally, although the panel cites a supposed single-day trading gain of $485M and a loss of $551M as proof of Enron’s risky trading, Op. 9, those figures were used in a “Kupiec” test, GX289:418, that, on cross, Koenig admitted he did not understand, R:16449-50. Enron’s Daily Position Reports (“DPRs”), documents recording the company’s true daily gains and losses, showed the actual gain and

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loss on those two days were significantly smaller and arose from anomalies in small trading positions, not speculative bets. DX5339; DX5346-47; R:28902-06. The DPRs, Enron’s VaR, and its passing tests like the Kupiec test, GX289:418, all showed that Enron’s actual “open” positions (i.e., those exposed to price risk) were modest, and that Enron’s controls worked. E.g., R:288907-11.6 IV. ERRORS IN DESCRIBING THE 4Q 2000 RESERVES RECORD The opinion asserts that Enron misstated gas-and-power reserves in Q4 2000 (misidentified as “2002”), because it shifted reserves into income “[a]fter the end of the accounting year, but before Enron had reported earnings,” so that Enron could report 41 cents of earnings-per-share. Op. 14 (emphasis added). This gets the facts, rules, and government’s charges wrong. A. The Reserve Was Taken Before Year End, And Was Accurate

“On December 29, 2000”—before the end of Q4 2000—Enron set a $369 million gas-and-power reserve to account for significant volatility in energy prices. GX4643; see R:21729-30; DX4126:5797; DX4893:68450. The reserve was not resized “after [the] accounting year” to make earnings, Op. 14; Enron’s earnings were at 40 cents on December 30, and another unit, not the Wholesale gas-andpower group, contributed the extra penny in earnings, R:19612-13, 18331-41. Government witness, and Enron’s leading trading risk expert, Vince Kaminski testified in his view Skilling never acted “illegal[ly]” and wrote an article (to which the government objected) explaining that Enron’s “trading operation does not make bets on the direction of the market prices.” R:23005, 30792-94; GX952:45. 9
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The accuracy and reasonableness of the $369M reserve was examined by Enron accountant Georgeanne Hodges in a memo to Arthur Andersen. GX4643. The opinion asserts this memo “falsely stated reasons for the reserve transfer,” Op. 14, but such credibility judgments were for the jury to make. Neder, 527 U.S. at 19. A rational juror easily could have credited Hodges’ memo, especially given the evidence corroborating it. That evidence, omitted from the opinion, includes:  Andersen’s approval of the analysis, which “concurred with the reserve theory and determined [$369M] was reasonable,” DX4126:5797;  Government witness Wes Colwell, who confirmed the memo “took into account the way some of these contracts might perform,” R:21735;  Defense expert, Walter Rush, who confirmed the memo’s analysis and validity, R33932-36; and  The Enron Board Audit Committee’s review of the reserve, R:33936.7 The opinion asserts the record does not show the reserve was reasonable, Op. 14, but again, no government witness challenged its accuracy, R:21734-41, and no one disputed that the way in which it was released in 2001 fully reflected abating market volatility—not a desire or effort to make earnings. R:19623-24, 18331-41. B. The Opinion Misconstrues The Accounting Process

Unable to show the reserve amount was flawed, the government attacked the reserve process, arguing Skilling committed fraud because the reserve amount was set, in part, based on Enron’s desired level of earnings. R:19345-47, 19350-61. But as Skilling’s expert testified, “backing” into a reserve is permissible under the Despite Skilling’s repeated requests that Hodges be immunized to testify about her memo, the government refused. R:34231, 4598-608, 34607-08. 10
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accounting rules if the final reserve amount is reasonable: “The requirement is that you get the reserve right. As long as you get the reserve right, that’s fine.” R:33930. And, again, no witness disputed the accuracy of the reserve. The opinion asserts that the rule permitting reserve adjustments based on earnings targets does not apply here because “the change was made after the end of the quarter.” Op. 15 n.5. Again, this is wrong factually (it was set December 29), and contradicts necessary accounting practice. An “accounting period” may end December 31, but the books remain open for weeks, as data is obtained and analyzed, and before results are publicly released. R:33916-18 (Rush); SR3:4182 (government witness Wanda Curry), SR3:4006-07 (Colwell).8 The opinion ignores all of this, declaring (it seems) that changes in reserves after the accounting period are fraudulent per se. Op. 15 n.5. This “rule” would be impossible to comply with, and notably the opinion cites no authority to support it. An inaccurate ipse dixit like this cannot justify a harmlessness finding. It should be corrected, in any event, to avoid the general business confusion it will cause. V. ERRORS IN DESCRIBING THE EES RESEGMENTATION The panel asserts that the jury necessarily concluded Skilling orchestrated an illegal resegmentation of EES, Op. 7-9, whose purpose was to hide EES’s losses in Contrary to the opinion, Op. 15 n.5, Skilling’s expert (Rush) did not testify reserves must be final by the “end of the accounting period”—i.e., December 31. Like Colwell, Rush said reserves may be set weeks later, and after all work is complete. R:33930, 33917-18; SR3:4017-18. 11
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the Wholesale unit. Not so—the evidence on these charges was sharply contested. A. The Transfer Was Done For, And Resulted In, “Efficiencies”

Enron had a good business reason to resegment EES. Wholesale’s and EES’s relationship long had been inefficient and contentious, culminating in an unauthorized $90M trading loss by EES to Wholesale in early December 2000. R:28976; DX21358. This triggered the resegmentation in late March 2001, and Enron publicly reported this efficiency rationale for the transfer. DX20603:6. While the opinion asserts the transfer “resulted in no efficiencies,” Op. 8, and suggests Enron’s stated reason was false, witness after witness—for the government and the defense—agreed the transfer created efficiencies.9 This testimony, which readily could have been believed by a rational jury, was a complete defense on all of the EES charges. It proved Skilling’s innocent intent. B. Accounting & Disclosures For The Transfer Were “Rock Solid”

Substantial evidence, not just Skilling’s “own say-so,” Op. 9, validated the accounting and disclosures for the resegmentation. Delainey testified that Causey and Colwell (Enron’s top accountants) told Skilling that the accounting for the transfer was “rock-solid.” R: 19976-78, 20277-79. Arthur Anderson likewise

R:20332 (Delainey: “Q: ...more efficient? A: Absolutely”); R:21209 (Hannon: done “to improve the operation of EES”); R:19445 (Curry: “better systems ... could be leveraged”); R:20174-75, 20193-94 (Belden: “better job could be done on supply acquisition,” “Better management now in place”); R:16559 (Koenig: “sure there were [efficiencies]”); R:26711 (Herndon: “definitely efficiencies”). 12

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approved the accounting and disclosures, R:20277-79, 33965-72, 33985-86, as did Skilling’s unrebutted accounting expert, Rush. R:33986, 33942-88. C. The Three Alleged EES “Loss” Transfers Were Heavily Disputed

The opinion identifies three so-called EES “losses” that allegedly motivated the resegmentation: so-called “bad debts,” “contract losses,” and “unanticipated expenses.” Op. 7. Skilling denied these and the other EES charges,10 and substantial evidence—not addressed by the panel—supported his defense. Bad-debt losses were not shifted by the resegmentation, Op. 7-8, because they always were recorded in Wholesale. R:29335. Enron’s “Schedule C,” which Colwell confirmed was a Wholesale reserves document, R:19339-40, confirms the “negative CTC exposure” (i.e., the “bad debt,” Op. 7) was carried on Wholesale’s books in 2000—months before the 2001 resegmentation. GX:2920; R:16776.11 Rush testified that the FASB accounting rules for establishing a reserve require that, when there is range of equally possible outcomes, a reserve must be set at the lowest alternative, even if zero. R:33921-24, 34059. The government’s key witness on alleged “contract losses,” Wanda Curry, claimed potential “losses” could be as high as $250M. R:19414. She admitted, however, her analysis was incomplete and she had no role in reserve decisions. SR3:4146, 4171. Delainey

E.g., R:28959-29027, 29317-41, 30254-76, 30354-428, 30747-80, 30827-33. 11 Skilling himself explained to investors that these credit reserves had always been booked in Wholesale. DX20603:26. 13

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dismissed Curry’s estimate, cutting it to $100-150M, but that was “eyeballed.” R:20460-63. Skilling testified that Lou Pai, Enron’s executive closest to the EES contracts, assured him that no losses were likely to occur, R:28990-92, and documents confirmed that Enron had eliminated its contract risk at Simon, its largest alleged exposure, R:29011-13, DX6998:129. Tellingly, Wholesale did not take a reserve for these contracts in Q1 2001, see GX2920—meaning the FASB reserve test was not met, and no EES “contract loss” was moved to Wholesale. Two analyses, DX33125 & DX20702, of a California energy surcharge (the alleged “unanticipated expenses”) done March 1, and 27-28, 2001, calculated potential impacts on EES. In these studies, Enron estimated the charge could result in a loss, an immaterial loss, or even a “$17M” gain—meaning the FASB reserve test was not met. Id.; R:33924, 29009-10.12 Delainey claimed the surcharge “loss” was real and led to the resegmentation, but admitted on cross, he knew nothing about the analyses showing Enron might realize a gain. R:19991-92, 20472-74. Delainey was also shown to have lied about key facts concerning this chronology. Skilling Br. 48-49; DX20728:31-32; R:19975-76, 30753-55; DX22380-83. Unable to show real loss prior to the March 29 resegmentation decision, the government noted that Wholesale took reserves after the decision but before the

The Enron employee running the analysis said, if he was forced to choose on March 1, the $17M gain was the most likely, DX20702, and that he did not have the final data necessary to determine the amount until May 2001, R:26623-24. 14

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Q1 2001 earnings release on April 17—for something called “Tariff” and “Tarifffuel adjustment.” R:30400-08. The government, however, offered no proof that Skilling knew about these reserves prior to the decision or that the reserves motivated the decision. Indeed, Delainey—Skilling’s accuser—admitted he had no knowledge of the “Tariff” reserves. R:20472-74. In addition, the government offered no evidence of the content of these reserves or how they were funded. Id.; R:34322-27, 30400-08; GX6621.13 If any such evidence existed on this point, the government would have elicited it from Wes Colwell—Wholesale’s top accountant, key decision-maker on reserves, and the architect of the EES resegmentation. Tellingly, the government never asked him any questions on these or any other EES topics, R:19300-73, as we argued in closing, R:36761. * * *

Panel rehearing should be granted, and Skilling’s convictions reversed. Respectfully submitted, /s/ Daniel M. Petrocelli Daniel M. Petrocelli O’MELVENY & MYERS LLP Attorneys for Mr. Skilling

GX2691 suggests much of the “Tariff” reserves had nothing to do with the surcharge, and Scott Stoness’ testimony, R:26607-10, and DX20702 suggested the reserve was funded using EES’s own supply hedge—proof there was no loss, as Skilling testified, R:29338-41, 29005-10. 15

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CERTIFICATE OF SERVICE This is to verify that true and correct copies of the following document (Defendant-Appellant Jeffrey K. Skilling’s Petition For Panel Rehearing) have been filed by hand and served by both Federal Express and electronic mail on this 14th day of July, 2011 on counsel listed below.

/s/ Matthew T. Kline Matthew T. Kline J. Douglas Wilson Enron Task Force U.S. Attorney’s Office 450 Golden Gate Avenue, 11th Floor San Francisco, CA 94102 Facsimile: (415) 435-7234
CC1:852879

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