Assignment task:
In 1999, Andrew Fastow, chief financial officer of Enron Corp., asked Merrill Lynch, an investment firm, to participate in a bogus sale of three barges so that Enron could record earnings of $12.5 million from the sale. Through a third entity, Fastow bought the barges back within 6months and paid Merrill for its participation. Five Merrill employees were convicted of conspiracy to commit wire fraud, in part, on an "honest-services" theory. Under the theory, an employee deprives his or her employer of interests, when the employee promotes his or her own interests, rather than the interests of the employer. Four of the employees appealed to the US Court of Appeals for the 5th Circuit, arguing the charge did not apply to the conduct in which they engaged. The court agreed, reasoning that the barge deal was conducted to benefit Enron, not to enrich the employees of Merrill employees at Enron's expense. Meanwhile, Kevin Howard, chief financial officer of Enron Broadband Services (EBS), engaged in "Project Braveheart" which enabled EBS to show earnings of $111 million in 2000 and 2001. Braveheart involved the sale of an interest in the future revenue of a video-on-demand venture to nCube, a small technology firm, which was paid for its help when EBS bought the interest back. Howard was convicted of wire fraud, in part on the "honest-services" theory. He filed a motion to vacate his conviction on the same basis that Merrill employees had argued. Did Howard act unethically? Explain. Should the Court grant his motion? Discuss.