Return to Transcripts main page

American Morning

Interview of William Larach, Enron Shareholders' Attorney

Aired January 14, 2002 - 08:12   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA ZAHN, CNN ANCHOR: And a lawsuit filed on behalf of a group of Enron shareholders claims they were defrauded by company executives who made huge personal profits, while misrepresenting Enron's finances. William Larach is an attorney for the plaintiffs. He joins us now from San Diego this morning, where it is very early there. Thank you very much for joining us at this ungodly hour on your coast.

WILLIAM LARACH, SHAREHOLDER ATTORNEY: Good morning.

ZAHN: Sir, your suit alleges that 29 executives materially misled the investing public, and that ordinary Enron shareholders were left out of the loop because of the company's booking and the way they did their accounting. Now, as you know, Enron Attorney, Bob Bennett, says that is not the case. That there is no proof that executives did anything wrong.

Let me read a little bit about of what he has had to say so far in this interview in the "New York Times." "This issue is being investigated," he says, "but at this point in time, I am unaware of any evidence that supports the allegation there was improper selling by members of the board or senior management. In many instances, the sale of the stock was preplanned according to a strict timetable." What evidence do you have to the contrary?

LARACH: Well, my friend Bob Bennett is a real master of innocent spin of culpable conduct. The undeniable fact of the matter is that this $1.1 billion worth of insider stock sales by 29 top executives and directors was undertaken and accomplished during a time period when they have now admitted they were overstaying the reported profits of Enron by $600 million, and the stockholder equity of the company by $1.1 billion.

Now who do you think cooked those books? Some janitor or low level employees? Let's be direct here. These books were cooked by Lay, Fastow, Skilling, and the other top executives who put hundreds of millions of dollars in their pockets, while the employees of Enron were victimized and hundreds of thousands of other investors lost billions of dollars.

ZAHN: So, William, you're not only charging they cooked the books here. You are also saying that they cooked this preplanned timetable, at the point at which they'd sell their stocks?

LARACH: The preplanned timetable was a complete subterfuge to try to protect their illegal insider selling. At the time they put those plans into effect, they had already been falsifying Enron's financial reports for many, many months. So they get no protection by that subterfuge.

ZAHN: All right. On the screen now, we're going to give viewers an idea of just the -- the value of the stock that rolled over here. And as we watch this list go by, I wanted you to talk about what you're asking a judge to do. You've actually asked him to freeze the assets of executives named in your suit. What difference will that make to your clients? Are they going to ever see any of this money?

LARACH: It can make a huge difference. We have asked Judge Lee Rosenthal (ph), a federal district court judge in Houston, to grant us an extraordinary remedy. That is, to freeze or attach the $1.1 billion in insider trading proceeds right now, so that when we win this case later on for our clients, that money will be there to pay a judgment or a settlement. And we won't find that the money is in Swiss bank accounts or the Grand Cayman Islands or it's been used to buy yachts or whatever.

The judge has ruled that she has the power to grant that relief. That was a big victory for our clients. Next, now, we look to where is the money. We want to know where is it? What bank accounts is it in? What yachts have been bought? Where is the money? And if that judge sees that that money has been dissipated or is being secreted, I'm highly hopeful she'll take appropriate action to protect our clients.

ZAHN: William, I'm not trying to diminish the pain of your investors here, but -- but what about those folks who say that your employees simply put too much in one stock? And you've just got about 10 seconds to answer that.

LARACH: The answer is, those employees are under tremendous pressure from the corporate culture to support the company. It's like blaming the victim for the fraud perpetrated by others. That's very unfair.

ZAHN: William Larach, we're going to have to leave it there this morning. Thank you, again, for getting up basically in the middle of the night to join us with the latest.

LARACH: Thank you.

ZAHN: I appreciate your time.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com