THE ENRON FERRARI!
One of the photos I scanned for my "Ferrari Passion" album was this photo of a Ferrari 360 Modena with a rather unfortunate sponsor... Enron.
The Enron scandal was one I could never fully wrap my head around beyond "the books were cooked by crooks", which is a simple-enough concept for me to grasp. However, try and explain the Enron scandal using bigger, non-rhyming, financial forensic investigation-type words and my eyes glaze over.
Thinking that the car and driver probably doesn't have much of anything to do with the sponsor beyond the driver taking their money to have their tilted E logo painted on the hood, I decided to try looking him up.
His name is... Ken Rice.
Turns out that my suspicions were wrong. Ken Rice didn't just drive a car with the Enron logo on the "bonnet", he was the CEO of Enron Broadband Services, Inc.
Here's a rather sunny article about the guy from about half a year before the scandal broke. The first hobbies he lists are "Ferrari and Formula One auto racing".
The article also mentions, somewhat presciently, that Enron was develping "a telecom model based on its gas and energy model". The fraud model. Ken Rice grossly understated the losses that the broadband division was incurring, and, in 2003, he was one of seven Enron broadband executives "charged in a 218-count criminal indictment that alleged conspiracy, securities and wire fraud, money laundering, and insider trading". He denied any wrongdoing for a year, before agreeing to a plea bargain to become a witness for the prosecution, agreeing to "to serve up to ten years in prison, forfeit $13.7 million in cash and property, pay a $1 million fine, and tell all."
In February, Ken Rice testified against Enron executive Jeff Skilling.
"That positioned Rice as a voice in court against his old dirt-biking buddy. Rice testified that it was at Skilling's urging that he lied about the state of Enron's broadband network to pump up the company's stock -- and that Skilling lied too. Skilling, he said, was determined to use broadband to add $10 billion to $20 billion to the company's market value -- "one way or another."
"Did Skilling fairly and accurately portray the true financial condition of EBS?" Berkowitz asked.
"No," Rice responded. Skilling presented the layoffs in the broadband unit as good news, Rice explained. "The reality was, we were cutting people across the board because our cost structure was too high," Rice told the jury.
Despite the restructuring, things got worse in the second quarter, Rice said in testimony. "We were selling the future revenues of our content services business," he said, "so we could take profits on it today."
Rice referred to the uncertain accounting practice as "one more hit of crack cocaine."
"I felt so much pressure to make our quarterly earnings," Rice said.
"Did you hit your numbers (for the quarter)?" Berkowitz asked.
"Yes we did," Rice responded."
So, is Rice himself corrupt, or is he just the product of a corrupt corporate culture at Enron, too afraid to blow the whistle until it was too late?
I don't know enough about that sort of thing to really have an opinion, but I like the notoriety behind that photo I took and I sure hope the Feds didn't take away his Ferrari, and I hope his stint in "Federal Pound Me in the Ass Prison" is short so he can get back to what really is most important in life: racing.
For more Ferrari-related scandal fun, be sure to read up on Stefan Eriksson, his scheme to dupe investors in Tiger's failed Gizmondo handheld gaming system, and his spectacular high speed crash of a "stolen" Ferrari Enzo.