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| 2002 News and Press Releases |
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HEADLINE:
E-Mail Evidence Allowed in J.P. Morgan Case; Official's Messages May Bolster Claim That Company Helped Enron Hide Debt
By: Peter Behr
The Washington Post. December 24, 2002
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EXCERPT: A federal judge ruled yesterday that e-mails from a J.P. Morgan Chase & Co. official referring to "disguised loans" may be entered as evidence in a civil trial, supporting allegations that the company helped Enron Corp. conceal its growing debt before its collapse. U.S. District Judge Jed S. Rakoff had initially kept the memos by Chase Vice Chairman Donald Layton to others within the financial giant away from the jury, saying their impact could be "explosive." But yesterday he admitted them after reviewing the issue. The trial in Rakoff's New York City courtroom involves a commercial dispute between Chase and a group of insurance companies. But the ruling also helps attorneys for former Enron shareholders, who hope to expand their class-action lawsuit against Enron's former top executives to include the Houston company's deep-pocketed bank lenders and legal advisers. The shareholders' attorneys have made the same claim -- that complex securities transactions known as "pre-pays" by Chase and other financial institutions enabled Enron to hide its true indebtedness. Last week, U.S. District Judge Melinda Harmon in Houston gave shareholders' attorneys the right to seek documents and testimony from banks and law firms to support their case. Over the decade, Chase raised $ 3.7 billion for the Houston company in return for Enron's promise to make future deliveries of oil and natural gas. The transactions were counted as energy trades on Enron's books. According to a Senate investigations subcommittee, the deals were really loans, steered through an offshore company called Mahonia Ltd. that the subcommittee said Chase controlled. Chase officials insist that Mahonia, based in the Jersey Islands, is independent and that the transactions were true commodity trades.
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