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Banned
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Enron's Skilling Convicted of Insider Trading....and Mr. Bush ?
I see no difference in the insider trading crimes committed by Enron's Jeffrey Skilling and Harken Energy's George W. Bush. Aside from the connections and political influence that allowed Mr. Bush to avoid prosecution, doesn't the reported record make a persuasive case for an argument that Mr. Bush should at least have been tried in court, as Mr. Skilling was.....for insider trading?
Quote:
http://www.washingtonpost.com/wp-dyn...2700490_2.html
.......Skilling and Lay are to be sentenced Sept. 11, and both are likely to get double-digit prison terms. Outside court, Skilling's lawyer and Lay himself both insisted the men were innocent.
Analysts said staying off the witness stand may have been less of an option for Skilling, who was forced to defend himself against 10 insider-trading counts related to his sale of Enron shares.
Jurors acquitted him on nine of those counts but convicted him of one _ a $15.5 million sale six days after Sept. 11, 2001. Skilling initially told investigators he sold because of market fears after the terror attacks, but he had tried on Sept. 6 to sell 200,000 shares. On the stand, Skilling said he simply forgot that attempt.
Skilling was also convicted of 18 counts of fraud, conspiracy and lying to auditors. Some jurors said they could not reconcile Skilling's testimony with his reputation as a hands-on manager.
"It's hard to believe someone, such a hands-on individual, could not possibly know some of the things going on in the company," jury forewoman Deborah Smith said.
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Quote:
http://web.archive.org/web/200211010...ck_saleP.shtml
<b>Board was told of risks before Bush stock sale</b>
Harken memo went to SEC after probe
By Michael Kranish and Beth Healy, Globe Staff, 10/30/2002
WASHINGTON - One week before George W. Bush's now-famous sale of stock in Harken Energy Corp. in 1990, Harken was warned by its lawyers that Bush and other members of the troubled oil company's board faced possible insider trading risks if they unloaded their shares.
<b>The warning from Harken's lawyers came in a legal memorandum whose existence has been little noted until now, despite the many years of scrutiny of the Bush transaction. The memo was not received by the Securities and Exchange Commission until the day after the agency decided not to bring insider-trading charges against Bush, documents show.</b>
The memo, a copy of which was obtained by the Globe, does not say directly whether Bush would face legal problems if he sold his stock. But it does lay out the potential for insider-trading violations by Bush and other members of the Harken board, and its existence raises questions about how thoroughly the SEC investigated Bush's unloading of $848,000 of his Harken stake to a buyer whose name has not been made public.
The SEC cleared Bush after looking into whether he had insider knowledge of an upcoming quarterly loss at Harken. But the SEC investigation apparently never examined a key issue raised in the memo: whether Bush's insider knowledge of a plan to rescue the company from financial collapse by spinning off two troubled units was a factor in his decision to sell......
....''Bush has produced a small amount of additional documents, which provide little insight as to what Harken nonpublic information he knew and when he knew it,'' the memo said.
The SEC nevertheless cleared Bush on Aug. 21, 1991. One day later Bush's lawyer - Robert Jordan, now the US ambassador to Saudi Arabia - turned over the legal memorandum outlining concerns about insider trading. The nine-page memo, dated June 15, 1990, was titled ''Liability for Insider Trading and Short-Term Swing Profits'' and addressed the possibility that Harken board members might know more about the spinoff plan, which included a stock rights offering, than the general public did.
The memo, did not instruct the board members whether to sell. One week after the memo was written, Bush sold his stock. In the following six months, the stock price dropped from $4 per share to $1.25 per share, although the price later recovered.
White House spokesman Dan Bartlett said the memo does not suggest that Bush refrain from selling the stock. Bartlett also said that the memo was sent to the Harken board, of which Bush was a member, but did not mention Bush by name.
''This is a general memo that goes through the perfunctory guidelines of a rights offering,'' Bartlett said. ''It was not specific to the transaction that the president was contemplating.''
SEC reports on the case make it clear, however, that the memo was written in response to Bush asking Harken executives whether he could sell his shares. Bartlett said he did not believe that Bush had seen the memo, but instead thought that Bush was told about the advice by a company lawyer.
The memo raised a specific concern about the insiders' knowledge of the rights offering, which split Harken into three entities. The plan was recommended by Harken board member Michael Eisenson, the Harvard Management executive in charge of the university's Harken investment. Eisenson was trying to save the company from bankruptcy, according to board meeting minutes. Eisenson has declined to be interviewed......
.....Meanwhile, Bush was pondering the sale of most of his own Harken holding, which he came into in 1986 when Harken bought out his interest in another failing oil venture, called Spectrum 7. Bush has said that a Los Angeles stockbroker, Ralph Smith, called him in early June 1990 to ask if he would sell his Harken shares to one of Smith's clients. Bush said no, but said he might be interested in selling ''in a few weeks,'' according to the SEC memo.
<b>Shortly after the Smith call, Bush asked Harken's general counsel for advice. The counsel, in turn, asked Harken's law firm, Haynes and Boone, whose advice included this warning: ''The act of trading, particularly if close in time to the receipt of the inside information, is strong evidence that the insider's investment decision was based on the inside information. ... Unless the favorable facts clearly are more important than the unfavorable, the insider should be advised not to sell.''</b>
The memo notes that in Harken's May 22 announcement, it ''does not disclose the purchase price for which the rights will be offered and expressly states that `additional terms of the proposed rights offering are currently being formulated.'''
The price would not be announced until Oct. 3; that's when investors would know how much they would have to pay to buy shares in spun-off companies. The Globe could not determine when Bush and other board members learned what the price would be.
One week after the memo was written, Bush sold his shares on June 22 via the broker, Smith. Smith could not be reached for comment, but has been quoted as saying the buyer was an institution that he would never reveal.
Nearly a year would go by before the SEC investigated the transaction, a delay caused in large measure because Bush was late in notifying the agency of his insider sale.
During the SEC investigation, Bush's lawyer was asked by the SEC what advice was given to Bush about selling. The Bush lawyer told the SEC that no objection to the sale was made by Harken's law firm. ''Haynes and Boone informed [Bush] that they had met internally to consider the issue and, based upon the information they had, they saw no reason why Bush could not sell his shares,'' the SEC report said.
The summary was released a day before the agency received the legal memo in which Harken and Boone offered much more cautious advice to Bush and the board. Jordan could not be reached to discuss the apparent conflict. The SEC investigators also declined to comment.
Harken remains financially troubled, with its stock trading at 22 cents a share. It is currently in the middle of another effort to raise capital.
As for Bush, he has often said that he could not be faulted for insider trading because he was selling into good news; the prior January Harken had entered into a deal to drill for oil in the Persian Gulf nation of Bahrain.
Michael Aguirre, a California securities lawyer who filed the original Freedom of Information request that led to the release of some of the documents, said he is astonished that the SEC did not investigate the rights offering.
''It was something they either overlooked or consciously avoided,'' he said. ''It appears that Mr. Bush had insider information, that he was told that such insider information could be considered material, [and] was given express warnings about what the consequences could be.''
Thus, Aguirre said, it is ''imperative'' that Bush allow the buyer of his stock to be identified because that would clarify whether Bush knew the buyer and conveyed inside information to the buyer.
Michael Kranish can be reached at kranish@globe.com.
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The following article was reported two years before the Boston Globe reported on the newly revealed (as of Oct. 30, 2002) memo, described above.....
Quote:
http://quest.cjonline.com/stories/09...07005881.shtml
Web posted Thursday, September 7, 2000
Crisis at Bush's oil company
The Associated Press
WASHINGTON -- George W. Bush, <b>before he sold his stock in a Texas oil company, was fully aware that the firm was suffering from a severe cash crisis and was poised to lose millions, according to newly released records of a closed insider trading investigation of the sale.
"The full capacity of the company is dedicated toward resolving this liquidity crisis," Harken Energy Corp. President Mikel Faulkner told Bush and the other members of the board of directors two months before the $850,000 stock sale in June 1990.</b>....
.....Insider trading allegations have been an issue in both Bush's run for governor in Texas and his presidential bid. The SEC in the last month released several hundred pages of corporate documents from its investigation under the Freedom of Information Act.
Bush has said he had no knowledge the Texas-based company would report a $23 million loss two months after he sold his stock. "I absolutely had no idea and would not have sold it had I known," he said during his 1994 campaign for governor.
SEC investigators concurred there was no evidence Bush knew the loss would be of that magnitude. At most, the investigators found, Bush was aware of a projected $4 million loss, which was "consistent with Harken's publicly reported trend" of losses, states an SEC investigative document obtained by The Associated Press.
The Harken documents released under FOIA detail Bush's knowledge of the company's problems.
<b>As a Harken director, he received memos in spring 1990 that referred in stark terms to the company's cash-strapped condition as banks demanded it pay down its debts. One document said the company was in the midst of a "liquidity crisis" and another told Bush the company was "in a state of noncompliance" with its lenders.
Bush also was informed that a company plan to make a public stock offering to generate cash was being abandoned because one of its lenders objected.
</b>
"On the eve of filing this offering, the Bank of Boston refused to grant waivers and consents necessary to allow the offering to proceed," Harken said in a letter to the SEC in 1991. "Bank of Boston refused to alter its position and instead made demands that it be removed from the company's credit." The company solved the crisis when two of its biggest stockholders loaned it the $43 million it needed.
Even after his stock sale, Bush remained on the company's board of directors until 1993.
The SEC investigators never interviewed Bush about what else he might have known about the company's financial situation before selling the stock.....
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Quote:
http://web.archive.org/web/200012130.../bush0817.html
Report: Bush's business partners benefit from state business
HOUSTON (AP) -As Texas Gov. George W. Bush developed the group to buy the Texas Rangers baseball club for $86 million in 1989, he began an association with the businessmen who would figure in many other deals.
Two in particular were among the 70-member partnership: Fort Worth billionaire Richard Rainwater and Dallas investor Edward "Rusty" Rose.
The Bush partnership's purchase of the Texas Rangers was completed in April 1989, about three months after Bush's father became president
Government actions favorable to Rainwater and Rose began almost immediately and have intensified since Bush became governor, the Houston Chronicle reported Sunday.......
.........After Bush became governor, he voluntarily set up a blind trust and put most of his financial holdings into it. In such a trust, Bush should never know whether his official actions are benefiting his personal finances.
However, Bush's general partnership interest in the Texas Rangers never went into the trust, and that interest, known as GWB Rangers Inc., was involved in negotiations for the team's sale.
So through GWB Rangers Inc., Bush always knew he was in partnership with Rainwater, Rose and others. And Texas Rangers President Tom Schieffer kept Bush abreast of negotiations between Rose and Tom Hicks for the team's sale when Hicks bought the Rangers this year for $250 million.
When asked about his associates' complex dealings with state and federal governments, Bush angrily denied any involvement. Bush said he has sought to bring a "higher standard" to public service and public policy.
' "I didn't - I swear I didn't - get into politics to feather my nest or feather my friends' nests," Bush said.
Bush also was brought into some of Rainwater's oil and gas deals, as well as the purchase of a downtown Fort Worth office building, Continental Plaza. Those investments all were placed in Bush's blind trust.
About the same time Bush took office, Rainwater set up a commercial real estate investment company called Crescent Real Estate Equities Inc.
Bush became an investor in Crescent when Rainwater added Continental Plaza to Crescent's real estate portfolio. Bush's trust manager sold his interest in Crescent in January.
Rainwater is chairman of Crescent. The vice chairman, John C. Goff, and president, Gerald Haddock, were limited partners in the Texas Rangers with Rainwater and Bush. Crescent's vice president for administration is William D. Miller, the lawyer who put together the financial package for The Ballpark at Arlington.
Crescent will receive a $10 million bonus payment when a new Dallas sports arena is built using legislation that Bush signed into law last year. That new arena also will enhance the value of a hockey team owned by Hicks, the financier who bought the Rangers from Bush and his partners.
Several state actions during the past three years have benefited Crescent.
Bush sold his interest in the Rangers this summer for $14.9 million. He had invested a total of $606,302.27 and was one of two managing partners.
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<b>Further reading here:</b>
<a href="http://www.scoop.co.nz/stories/HL0210/S00178.htm">UQ Wire: Harken Energy Chronology</a>
Quote:
http://www.tfproject.org/tfp/showthr...or#post1473717
Did Bush evade $2.4 million income tax on his 1998 filing?
.........In 1998, Bush and his partners sold the Texas Rangers baseball team. Although Bush originally invested just 1.8% of the purchase price for the team, his partners "rewarded" Bush by compensating him with an additional 10.2% ownership interest. When the team was sold, Bush allegedly filed a federal tax return that stated all of the $14.9 million that he received from the sale, as a "capital gain", taxed at just a 20% rate, instead of the 39.6% rate that $12 million of his income should have been taxed at, since the IRS classified this portion of Bush's "ownership" of the team as compensation, and not as the "basis" for a capital gain:
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Last edited by host; 05-27-2006 at 11:47 AM..
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