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. Last Updated: 07/27/2016

Enron Probe Takes Unique Turn

NEW YORK -- Widening the potential scope of the criminal investigation into the Enron Corp., the U.S. Justice Department plans to form a special task force of prosecutors from across the country to conduct the inquiry into the company and its eventual collapse, government officials said Wednesday.

At the same time, the decision will reduce the burdens going forward on Enron, which has been struggling with the demands from multiple civil and criminal investigations. By consolidating the criminal investigations, the company will have only one coordinated group of prosecutors seeking information, decreasing the potential demands for documents and limiting the number of officials to persuade of its position.

Legal experts said the decision to create such a task force on a white-collar case involving a single company was virtually unheard-of and signaled that the government might elevate the case to a level of significance usually reserved for investigations of entire industries.

The task force will bring together prosecutors from several United States attorneys' offices -- including those in Houston, New York and San Francisco -- with all of them reporting through the department's criminal division, officials said. In addition, prosecutors from the fraud section, part of the criminal division, will be part of the task force.

"This is a case of national scope and national significance that is going to require coordination and manpower, and the task force is a way of achieving that," one official said.

Robert Bennett, a Washington lawyer who represents the company, said Wednesday that he saw the department's decision as positive. "I'm pleased that there now appears to be some centralization and coordination because it is very difficult and expensive to deal with half a dozen different entities," he said. "This is a company in bankruptcy, and it needs to be given a fair shot to come out of bankruptcy and increase the value for stakeholders. If we get caught in a cumbersome scandal machine, that may not happen."

While the decision to form the task force is final, many details have yet to be worked out, officials said. Some prosecutors involved in the case have not been notified of their specific roles in the task force, and other decisions about where the group will work and how the various strands of investigation will be coordinated have not been determined.

Legal experts who examined the Enron case said Wednesday that by bringing together the pieces of the sprawling criminal investigation of the company, the government is overcoming hurdles that might have hampered the inquiry if it was conducted in separate offices.

For example, while federal prosecutors in Manhattan have the most experience in investigating white-collar cases, they may face difficulty in meeting the requirement that potential crimes took place in their geographical jurisdiction. And while prosecutors in Houston, where Enron is based, would have no such problems, they do not have the same experience in white-collar cases.

By bringing the prosecutors together, while simultaneously adding the manpower from the department's fraud section, legal experts said, the government is raising the probability of indictments.

"Prosecutors tend to indict what they investigate," said John Coffee Jr., a law professor at Columbia University who has testified in Congress on the Enron case. "This kind of task force for an individual investigation is without precedent, and while it doesn't guarantee an indictment, it certainly raises the stakes."

But some past efforts by the Justice Department to take a more central role in a criminal investigation of a corporation with influence in Washington have raised concerns about potential political influence over the inquiry.

Enron, whose officers have been close to President George W. Bush and Vice President Dick Cheney, has exercised political influence in the past.

In addition to the inquiry being conducted by the Justice Department, Enron's collapse is being investigated by the Securities and Exchange Commission and several congressional committees.