Enron Execs Arrested In Scandal Over Blockbuster Video-on-Demand Venture

Authored by Mark Hefflinger on March 13, 2003 - 5:26am.

Houston -- Federal authorities have arrested two Enron executives on fraud charges, alleging they recorded $111 million in phantom revenue from a joint venture to develop a streaming video-on-demand service with video rental giant Blockbuster that never came to fruition. Kevin Howard and Michael Krautz, both accounting executives at Enron Broadband Services, were charged with fraud and face up to 25 years in prison if convicted. Blockbuster signed a 20-year contract with Enron in April 2000 to develop the video-on-demand service, which was slated to begin testing in December 2000 but not to begin showing profits for years. However, Howard and Krautz set up a venture codenamed "Braveheart" that recorded revenues of $111 million in 2000 and 2001, in spite of the fact that the venture recorded zero earnings and the contract with Blockbuster was terminated in March 2001.
http://www.usdoj.gov/opa/pr/2003/March/03_crm_153.htm
http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=2372400