Probably Not The Real Joe Hirko

Imagine my shock when I learned that Joe Hirko is shopping for a gun. In Cleveland, Ohio.

Joe Hirko seems like a pretty unique name. I’m surprised to find that there’s another one.

And then there is the rather…. undignified? fact that a funeral is advertising on the same page about an article for guns.

Good lord, people.

In A Corn Field With My Shorts Around My Ankles: More Bill Collins

Back in the day, when Bill Collins was literally losing his mind, he went around two of his bosses and talked to Microsoft, and flat out lied to Microsoft; this is not in doubt. He admitted under oath that he lied. Anyway, his cracked-up self was starting to make Enron and EBS look bad, so Joe Hirko stepped in and told him that from now on, only Jeff Skilling would be talking to Microsoft. He viewed this as Joe getting between him and success, and he threw his hissy fit about it.

So not only are these emails funny, they demonstrate a very salient point about an incident that came up again and again.

Here, Bill does what he always did: ran to Scott Yeager and begged him to kiss his boo-boo. Also notice the paranoia in his reply, claiming Joe Hirko was “hostile” when he only asked to see where Bill was getting these cockamamy numbers.

With everyone babysitting Bill Collins, I’m shocked any work got done at all.

FBI Form 302

When the DOJ launches an investigation, FBI agents are dispatched to basically get a read on the subject. They might try to judge whether this a friendly witness (meaning one who will agree with the DOJ) or an antagonistic witness. They will ask questions, and write down the answers, and later – sometimes weeks later – write it all down in a narrative. This document is called a 302. It is a spin document, the first chance an FBI agent has to write down the story he will want to tell a grand jury or, later, a judge.

Efforts to get the raw notes are often futile; you will recall Jeff Skilling’s long battle for the Fastow Notes. So the 302 becomes the “official story”. Thus, when agents interviewed Joe Hirko, it must have been even worse than the write-up. Imagine having FBI agents with handguns come to your home and tell you not to talk, but just listen!

It is also interesting that the agents told Hirko that EBS was under investigation and then two weeks later told Rex Shelby that it was not. That is not just a small lie — it is a major lie.

In one of the Bill Collins 302s, Collins says that Joe Bloomer called him one night all in a panic over the ETF. He was afraid of the ETF prosecutors, afraid that they would indict him. When the defense attempted to use the 302s at trial to show this, and demonstrate the fact that Bloomer was testifying because he was scared out of his mind of being indicted, Judge Gilmore simply said no.

These are powerful documents because no matter how something sounds when you say it, it looks truer when it’s written down. And if the agents want to say something horrible, like, “So-and-so confessed to XYZ”, there is absolutely no recourse to correct the record. In some cases – like the Bloomer/Collins situation, they accidentally write too much and then cover it up at trial.

Joe Hirko’s 302s

A Form 302 is the report an FBI agent writes after he interviews a subject. I’ve read most of the Enron defendant’s 302s, but I re-read Hirko’s today and I couldn’t get over how aggressive these agents were in trying to get Hirko to start casting blame to save himself. The “Houston vs. Portland” argument, for example, is an opportunity for Hirko to get into the “right” group. Hirko didn’t do that.

Secondly, the thinly veiled threat that the “window won’t be open for long” was a prompt for him to panic and blame someone else. He didn’t do that either.

And lastly, the agents taking pictures of the outside of his home? What the hell? I’ve never even heard of that in a white collar case.

The Broadband Verdict

Five years ago today, the jury delivered its verdict on the initial Enron Broadband trial: some acquittals, some hung counts, and *zero* convictions. This was a disastrous outcome for the government’s Enron Task Force which had charged five defendants (Kevin Howard, Michael Krautz, Joe Hirko, Scott Yeager, and Rex Shelby) with nearly 200 counts among them. The trial lasted more than three months and took place during the height of the press and public anti-Enron witch hunt frenzy. The Houston jury pool was strongly biased against anything or anybody associated with Enron. The Enron Task Force was confident of an easy victory and assumed that the expected convictions would build momentum for the upcoming trial of Ken Lay and Jeff Skilling. The Task Force used every dirty trick in the book, all the same abuses which they also used in the Lay/Skilling case. The judge at the trial heavily favored the government in all pre-trial and trial rulings.

So, with all those massive advantages, why did the Enron Task Force lose the trial?

Pundits have given various explanations. One popular theory is that the “mistakes” of the Enron Task Force prosecutors cost them the trial. Perhaps the most mentioned mistake is when the prosecutors coached one of their witnesses into saying a video was played at the January 2000 Enron Analyst Conference which, in fact, was not shown there. Such a mistake undoubtedly did not help the prosecutors, but I just don’t buy the mistake theory as an explanation for the trial’s outcome. Sure, mistakes at trial always hurt the people who make them. But, from my reading, both sides made mistakes during the trial in about equal measure. And the video mistake occurred so early in the long three-month trial that there was plenty of time for the prosecutors to recover if they had actually had a case.

Based on my reading of the trial transcript and exhibits, the reason the Enron Task Force got zero convictions at the Enron Broadband trial is because it had no case, pure and simple. It is genuinely impossible to decipher a coherent story from the prosecutors’ meanderings during the trial. The tales of the prosecution witnesses were vague and often unrelated to the charges. And the prosecution witnesses performed horribly on cross-examination by the defense attorneys because they could not keep their lies straight. Basically, the government and its witnesses zig-zaged on their story more often than a squirrel crossing a busy highway.

In contrast, the defense witnesses were generally much more compelling and consistent. From my reading, the best witnesses were the defense team’s technology guys, the engineers who had worked with Rex Shelby at Enron Broadband. Those guys gave awesome testimony which made logical sense and which held across both direct and cross examination. In addition, each of the five defendants also took the witness stand in his own defense and did a good job. In other words, the defendants beat the prosecutors because the prosecutors had no case and were unable to manufacture one during trial which would convince even an initially biased jury. It is pretty much as simple as that.

In any case except an Enron one, the prosecutors would have dismissed the hung counts after the trial. Instead, the government continued to hound all the defendants. The government forced Howard and Krautz through a second trial and then threatened Howard with a third trial! The government is currently threatening Shelby with a second trial in spite of the fact that his co-defendant, Scott Yeager, just won a Supreme Court appeal on the very grounds that Shelby also has for dismissal of his remaining counts!

I get the sense (and I hope this is true) that people are finally starting to look at the Enron cases without the blinders of witch hunt bias. Most of the Enron cases have been shameful exercises in federal government abuse and over-reach. The Enron Broadband case has been a particularly shameful and sickening medicine show by the prosecutors, especially the Enron Task Force. For anyone out there who has not been paying attention to the government’s Enron fiasco, now is a good time to start!

The Cost of a Witch Hunt

I have been holding back on this news for a while now out of my deepest concern and sympathy for Joe Hirko and his family. But the news seems to finally be emerging, at least on the Web if not in the mainstream media, so I will talk about it now.

On May 15th, a Saturday, Joe Hirko’s wife, Kathleen, was visiting Joe at prison as she has been doing regularly since he was sent there back in December of last year. During the visit, Kathi suffered a stroke and died. Kathi’s three children are left without their mother, her four grandchildren without their grandmother, and Joe without his wife.

The tragedy and raw injustice of this event is almost too painful for me to write about. Joe Hirko, an obviously innocent man, was hounded by federal prosecutors for years. At trial, Joe was acquitted of a number of counts, and the jury hung on others. Instead of then dismissing the remaining ridiculous charges, as would have happened in all but an Enron case, the federal prosecutors continued to hound Joe, threatening him with another trial. As many innocent people have done, Joe decided to enter into a plea deal — he undoubtedly did this, at least in part, to spare his family more stress. The death of his wife, half-way through his prison term, is an unspeakable tragedy.

John Kroger, the federal prosecutor who originally brought the indictment against Joe and the other Enron Broadband defendants, admitted in his book that the Enron Task Force was under pressure “to get scalps quickly.” Well, this is what happens when scalp hunters are given free rein because the rest of us not only allow the abuse to happen but many of us cheer it on. Please pay attention to the Enron story, if not for the defendants, if not for the people such as Kathi, then for yourself and your love ones who may one day face the same abuse.

Kathleen Hirko’s obituary can be found here.

Why Would Ken Rice Join A Conspiracy?

I’m reading some of the Official Record of the EBS trial, and I found a certain motion by the government arguing against Yeager and Hirko’s motion for a summary judgement of acquittal (Shelby did not jointly file with the motion.) As I’m browsing along, I found this and it jumped out at me [I've taken a screenshot because I don't want to be accused of taking anything out of context.]

So, according to the United States government, Ken Rice joined a conspiracy already in progress, ostensibly among Joe Hirko, his co-CEO, Scott Yeager, Rex Shelby, and also, in a different sector of the same company, Michael Krautz and Kevin Howard. Joe Hirko, the Boy Scout with a record of prudent business practices, Scott Yeager who didn’t give a crap about anything but technology, and Rex Shelby, an entrepreneur who sold his company to Enron, were already involved in a conspiracy. There is a problem with this, as I’ve demonstrated many times. They weren’t friends. They didn’t know each other outside of work. A conspiracy only works if you trust the guys you’re conspiring with. They never even had a beer together outside of work.

Okay, whatever, the gov alleges that they’re all involved in some nefarious plot. Then Ken Rice shows up. Ken RICE! The very best friend of the company’s CEO! Did they invite him in? If they did, why didn’t Ken Rice tell Jeff Skilling what was happening? The government alleges that Ken Rice was also misbehaving before he got to EBS. How lucky does this bastard have to be to go from one conspiracy, in Corporate, only to discover – hold on to your hat – that there’s another conspiracy almost exactly like the one in Corporate happening in EBS! Either Ken Rice was the luckiest man alive, or the government is just full of crap because real life doesn’t work that way.

This is a small thing, but these small things add up. These documents mean something and since the government won’t actually be accountable for its blather that it passes off as some sort of conspiracy among ordinary guys, then I will do the best I can to expose its arrogance and ignorance.

Ken Rice is not a boy scout. But he’s also not a conspirator in some elaborate company-wide plot at Enron either.

Joe Hirko Enters Prison

Joseph Hirko entered prison today to begin serving his sixteen month sentence after pleading guilty to approving a press release that contained no controversial information at all. Mr. Hirko is not guilty, but he chose this path for the benefit of his family, who was exhausted after eight years of being pursued by the corrupt Department of Justice.

We have a government that routinely lies to us, pays bribes to itself, and casually throws billions down a rat hole. And these idiots are putting Joe in prison for “hype” in a press release.

I wish Joe and his attorneys had been willing to fight longer. They gave up too soon. I understand the exhaustion of Joe and his family, but I hate that the DOJ is able to put innocent people into prison by exhausting them. Its reminds me of the mafia “protection” racket. The DOJ brings the false charges and then forces the accused to accept the “protection” of a shorter prison sentence to escape the risk of a longer draconian prison sentence. It is a no-win situation for the accused person.

And most of the press and the public either ignore this or clap their hands over the entertainment value of sending a businessman to prison.

My thoughts are with Joe and his family on this sad day.

Joe Hirko, Please Run For Office

I read this morning that the White House is just making shit up now about the stimulus money. That was amusing for about five seconds until I realized that Joe Hirko is going to prison for something vague he supposedly admitted into a press release while the government routinely lies about accounting and all kinds of basic information. It is well know that the government does not even try to be accurate. And yet federal prosecutors go after corporations and executives while the government lies openly!

Joe Hirko is a hero, a man of integrity, kindness, balance, honesty and blazing intelligence. He doesn’t lie about the numbers. He doesn’t do abracadabra magic tricks with figures, or make them up, or misappropriate them.

The Obama administration is a joke, so perhaps the standard isn’t very high, but based solely on financial acumen and personal integrity, Joe Hirko would make a far better president than Barack Hussain Obama.

If Joe Hirko Were CFO of Enron Corporation

When Portland General was acquired by Enron Corporation, Joe Hirko was CFO. As CFO, he had a reputation for being honest, scrupulous, and conservative. I wonder if Jeff Skilling had fired Fastow and put Hirko in the CFO chair at Enron Corporation, what would the trajectory look like? When I think of a few pivotal moments that could have changed things, none paint so dramatic a picture as this hypothetical.

Joe Hirko had the trust of Wall Street. When things started getting sketchy after 9/11 and commercial paper was hard to roll (for anyone), I think Hirko could have bolstered confidence. He was known for his good judgement where Fastow was known for his risk-taking. In that post-9/11 environment, the good judgement would have been invaluable. Paper would have rolled; the decline in stock price might have abated somewhat, and Hirko’s assurances would have gone far to soothe nervous counter-parties.

Joe Hirko would not have stolen money – ever, under any circumstances. There would have been no highly publicized firing of the CFO from the company, which would drive prices down even farther. Instead, Hirko would have provided consistent, steady leadership.

With Joe Hirko as CFO, the LJM and Raptors probably would have still existed. There was nothing wrong with them – legally or accounting-wise. But some of the transactions were risky. I am thinking specifically of Osprey – which would trigger the financial collapse. I don’t think Hirko would insure one asset with the price of Enron stock over the long term; that just doesn’t sound like his style. So when the stock price did decline, it would be felt as a pinch, not as a wall of bricks crumbling upon the company.

LJM would have been better managed.

Ben Glisan probably would never have acquired the Treasurer position. That might have kept him out of the Southampton deal.

Sherron Watkins may have never written that memo to Dr. Lay in August 2001. If she had, she would not have been moved from Global Finance to Human Resources to protect her from Andy Fastow. I’m not sure what impact her remaining in Global Finance might have had but I am sure there would have been some effect.

In Enron Broadband Services, Ken Rice would have been full CEO instead of sharing the role with Joe Hirko. I decline to speculate on what might have become of EBS with just Ken Rice at the helm.

In any case, the Enron story would have been completely different. Today, instead of a man condemned to prison for sixteen months, Mr. Hirko might very well be CEO of Enron Corporation. Implying, of course, Enron Corporation would still be here.

Joe Hirko’s Sentencing

Joe Hirko looked exhausted at his hearing this morning. Still good looking, of course, but tired, like he’d been up all night.

I felt like I was still asleep. I just kept thinking… it’s a dream. It isn’t happening.

But it was.

Sixteen months. For approving a press release.

Even now, it seems unreal.

It makes me question not just our justice system but the meta issue of the role of business in society. It seems that Joe Hirko was caught up in the mounting anti-business hysteria that was started, I am ashamed to say, by President Bush and has gained real traction under President Obama. Even if he was guilty – and he’s not, but let’s pretend he is guilty of telling lies in press releases, so what?

What impact could that possibly have in the world? Who the fuck cares?

This is not a crime. Raping a 13 year old child and running away to France is a crime. Giving tax advice to a sex-slave ring is a crime. Failing to pay your taxes is a crime. Dealing drugs and stealing things are crimes.

Lying in a press release is not a crime.

And Joe Hirko is not a criminal. Joe Hirko is the kind of guy you want on your team. He is honest and kind. He has created wealth and opportunity in America. I am thinking of Obama’s bullshit statement that he “created or saved 600,000 jobs” in the last ten minutes or whatever. I think: how many jobs has Joe Hirko created? How much good has he done?

For seven years, he’s not created any jobs because he’s been ensnared in this nightmare. And he won’t create any jobs for 16 more months. And he won’t be productive and he won’t be paying taxes and we all lose. We all lose when Joe Hirko goes to prison.

They’re taking a good man and making it impossible for him to do good. And bad people, bad-intentioned, bad-minded, small, stingy, outright evil, walk around unburdened by the DOJ.

It’s just wrong. And I’ve tried very hard to explain why it is wrong. I’ve angered some people (for that I am truly sorry). I’ve messed up once or twice. But I swear, I swear on everything I hold dear, I swear my intentions have only ever been to show that Joe Hirko and indeed most of Enron, was good. Good for society, good for business and just objectively good.

That’s all I meant to do.

If I have failed, I’ve failed myself more than anyone else.

I am incredibly sad that Mr. Hirko is going to prison. I’m sad that we live in a world where it is even possible.

Joe Hirko Gets 16 Months In Prison

Joe Hirko, CEO of Enron Broadband Services, was sentenced to sixteen months in prison.

I did not want to write this and I have nothing else to say about it right now. Later, when the grey dull sickness passes, maybe I will be angry and maybe I will be better able to articulate why this is such a terrible injustice. But for now, I’m just sick inside.