Footnote 8

494. Through its familiarity with the Teresa transaction, BT/Deutsche Bank knew the taxbenefit it reflected would not be available until some undetermined date, years in the future, whenEnron’s corporate headquarters was distributed to Enron and Enron was able to take increaseddepreciation deductions. BT/Deutsche Bank also knew that on a present value basis, Teresa wouldnot provide Enron with tax savings. Instead, as BT/Deutsche Bank knew, the Insiders’ goal was togenerate financial accounting income by improperly recording deferred tax assets in advance offuture tax deductions, even before the resulting increased basis could attach to a depreciable asset.In the end, the Insiders and BT/Deutsche Bank used Teresa to improperly create $229 million ofafter-tax, financial statement income for Enron.(d)Tomas495. Responding to an Insider’s request, BT/Deutsche Bank designed and proposed theconcept of the Tomas transaction to Enron in 1998. Tomas’ principal goal was to side-step Enron’sneed to report a financial statement expense from the disposal of a portfolio of low-tax-basis assets.Ultimately, the Insiders used Tomas to record permanent tax benefits as pre-tax gains on Enron’sfinancial statements – gains of $25.6 million in 1998 and $18 million in 2000. In addition todesigning and promoting the Tomas transaction to Enron, BT/Deutsche facilitated the transactionby investing in the SPE created to implement the transaction and served as leasing agent for the SPE(for a separate fee), although the SPE did not engage in any leasing activity.496. The Tomas structure worked as follows: Enron contributed assets with a low basisfor both accounting and tax purposes – assets it wanted to sell – to an SPE called Seneca. That SPEhad specifically been designed to allow Enron to receive back, or swap, low tax basis stock of anaffiliate that held cash equal to the sales value of the low basis assets. The low basis stock couldthen be liquidated without Enron having to recognize tax gain.604041v1/007457-160-