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Exam. IV, App. G at 33. Consistent with this understanding, Toronto Dominion documentsrepeatedly referred to the prepays as “loans.” See, e.g., TDB-EX(1) 015115, TDB-EX(1) 015117,TDB-EX 000558, TDB-EX 000170-98, TDB-EX 002057 (quoted in Exam. IV, App. G at 23).613. Toronto Dominion also knew the Insiders’ disclosures of the Toronto Dominionprepays were completely at odds with the transactions’ economic substance. First, TorontoDominion knew the prepays were accounted for “as price risk management liabilities, not as debt,”TDB-EX 002319-45 (emphasis in original) (quoted in Exam. IV, App. G at 45), and that theprepays, therefore, “do not affect Enron’s debt covenants since they are not classified as debt,”TDB-EX(1) 019962 (quoted in Exam. IV, App. G at 45). Second, Toronto Dominion knew theInsiders accounted for the cash proceeds from the Toronto Dominion prepays as cash flow fromoperating activities. Toronto Dominion knew the Insiders used the prepays to generate cash flow,and also knew the Insiders reported assets from price risk management – including the Toronto604041v1/007457-210-
Dominion prepays – as cash flow from operations. See Exam. IV, App. G at 46-47. In addition,Toronto Dominion executives knew, from their own examination of Enron’s financial statements,that the statements contained no meaningful disclosure of the Toronto Dominion prepays. SeeExam. IV. App. G at 51.614. Toronto Dominion therefore knew that, by structuring and closing the TorontoDominion prepays, it was assisting the Insiders in creating misleading financial statements andhelping to deceive rating agencies and others who relied on Enron’s financial statements. TorontoDominion understood that the prepay structure had “significant advantages” over a syndicated loan,“specifically, favorable balance sheet treatment.” TDB-EX 001255 (quoted in Exam. IV, App. Gat 45). Internal credit approval memoranda displayed the Risk Management Group’s increasingconcerns with the “manipulation” of Enron’s balance sheet. See, e.g., TDB-EX 002319-45, TDB-EX(1) 019965 (quoted in Exam. IV, App. G at 20). An internal e-mail in November, 2000,acknowledged: “[W]e’ve been warned about the balance sheet games at least twice in the last fewmonths.” TDB-EX 001266 (quoted in Exam. IV, App. G at 47). The head of Toronto Dominion’sRisk Management Group wrote in November 2000, in response to the credit approval request forthe London prepay:I find such transactions inconsistent with our objectives of ensuring transparency inour relationships with customers/counterparties and it leads me to question why weshould have any relationship to what is increasingly becoming a large unregulatedderivatives trading house. In my view we should completely hedge our direct Enronexposure and future derivative dealings should be on a M2M collateralized basis.TDB-EX 001526 (quoted in Exam. IV, App. G at 20).615. All the Toronto Dominion prepays were completed at year-end or at the end of afiscal quarter. As usual, this was not a coincidence. Toronto Dominion knew the Insiders wereusing the Toronto Dominion prepays to conceal the company’s true financial condition by inflatingcash flow from operations and hiding debt at critical reporting periods. One Toronto Dominion604041v1/007457-211-
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ENRON CORP., et al.Reorganized Debt
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DEUTSCHE BANK TRUST COMPANYDELAWARE
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TABLE OF CONTENTSPageI. NATURE OF T
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d. The Insiders engaged in a scheme
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(d) Barclays’ improper appropriat
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(a) LJM1 and the Rhythms Hedging tr
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COUNT 17COUNT 18(Avoidance of the C
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F. COUNTS 42 - 44 (Against Merrill
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COUNT 67(Recovery of the Challenged
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Steele ............................
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REORGANIZED DEBTORS’ FOURTH AMEND
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3. A second large group of transact
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these partnerships secret from Enro
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approved the employment of Stephen
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managed by a new board of directors
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17. Plaintiff and the affiliated en
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headquarters at 270 Park Avenue, 35
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Germany. Deutsche Bank AG does busi
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55. Defendant Deutsche Bank, S.A. i
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67. Defendant Merrill Lynch Capital
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successor, agent, co-conspirator, c
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10. The RBC Defendants92. Defendant
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107. Not Used.108. Defendant Sphinx
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118. Defendant Enron Sterling Credi
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126A. Each of FleetBoston Financial
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eports. In these reports and their
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Fastow was fired in late 2001 and E
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c. Fastow and Kopper orchestrated (
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immediately. As part of his plea ag
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3. How The Scheme Workeda. Enron em
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could not trade with others in the
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• Funds flow from operations, def
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d. The Insiders engaged in a scheme
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178. Self-interested partnerships -
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specifically, when the relevant tra
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eported the repayment obligation as
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nature of these transactions and/or
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2governs the securitization of fina
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unless independent third parties ma
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211. An actual example: On December
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transactions. The Insiders took the
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LJM2. In doing so, the Insiders rec
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LJM2 (technically, LJM Co-Investmen
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235. From the beginning, Fastow kne
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244. The Southampton transaction ul
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249. By the end of December 1999, f
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threats of no future business or pr
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Fastow’s participation in the LJM
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262. Citigroup’s participation in
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Id. at B-1 (emphasis added).266. Wi
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period, Citigroup completed over 60
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one another and to cause one anothe
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Yosemite IV USD 5/24/01 $775.1 mill
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linked promissory notes to institut
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of which also involved Enron) and o
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and Andersen may have worked togeth
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monetizations became less attractiv
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(3) The minority interest transacti
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CITI-B00393281 (quoted in Exam. III
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issued Irrevocable Letter of Credit
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Citigroup’s own internal descript
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alance sheet. Through Sundance Indu
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[T]he Bacchus transaction was steep
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327. Before the Bacchus transaction
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tier 1 banks.” CITI-SPSI 0036296.
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prepays, two FAS 140s, and one tax
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(1) Chase’s relationship with Enr
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using a proprietary technology. It
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discussion on this about 6 weeks ag
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357. In its complaint against Chase
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it was “purchasing the Natural Ga
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his July 28, 2003 letter to Manhatt
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commodity to JP Morgan Chase) under
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378D. In late November 2001, JPMC d
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Garden State Paper Company, (ii)
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ankruptcy. By the late 1990s, Barcl
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398. The Insiders used Nikita to mo
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agreement but an instrument that wo
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408J. On or about December 7, 2000,
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For example, Colonnade had not been
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420. Upon information and belief, t
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429. On or about October 30, 2001,
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(c)Three million Four Hundred Fifty
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447. Each of the various individual
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that effectively provided Barclays
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464. The Nixon prepay allowed Enron
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All three (Deutsche Bank AG, Banker
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financial statements improperly rep
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customer to report the transaction
Page 179 and 180: Insiders intended to accomplish the
Page 181 and 182: 497. As part of the transaction, BT
Page 183 and 184: (3) BT/Deutsche Bank limited its En
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Page 193 and 194: able to manipulate and misstate Enr
Page 195 and 196: achieve accounting objectives, incl
Page 197 and 198: Complaint in SEC v. Merrill Lynch,
Page 199 and 200: 539. From 1997 through 2001, Merril
Page 201 and 202: transaction. He also wondered where
Page 203 and 204: 550. Merrill Lynch knew that the 19
Page 205 and 206: Insiders’ schemes, including its
Page 207 and 208: (2) LJM1 and LJM2.561. As discussed
Page 209 and 210: 566. CSFB therefore knew the hedge
Page 211 and 212: proceeds resulting from those share
Page 213 and 214: (3) The Prepaid Oil Swaps.577. In D
Page 215 and 216: (4) FAS 140 transactions.(a)Nile583
Page 217 and 218: or some of the equity investment. C
Page 219 and 220: equity investment was not at risk.
Page 221 and 222: App. L. at 22-23 n.81). In his resp
Page 223 and 224: CSFB colleague two days before givi
Page 225 and 226: Dominion’s return on Enron-relate
Page 227 and 228: IV, App. G at 7 & n.23. In addition
Page 229: Payments went in a complete circle
Page 233 and 234: 619. Toronto Dominion also knew it
Page 235 and 236: that, as a limited partner in LJM1,
Page 237 and 238: etween 1997 and 2001, and, as of No
Page 239 and 240: at 45. In addition to the direct an
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Page 243 and 244: een held in LJM1, and RBS’s total
Page 245 and 246: substantially assisted the Insiders
Page 247 and 248: RBS compromised by letting the Insi
Page 249 and 250: easons.” RBS 3141116 (quoted in E
Page 251 and 252: manipulation” in Enron’s financ
Page 253 and 254: saw their experiences with Enron-re
Page 255 and 256: Exam. at 102-03. RBC knew the Insid
Page 257 and 258: thing. However, we cannot in the do
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Page 261 and 262: investment that was not at risk and
Page 263 and 264: transactions in which Merrill Lynch
Page 265 and 266: TransferorObligorInitialTransferee
Page 267 and 268: 716. On or within one year before t
Page 269 and 270: 717. The transfers identified in th
Page 271 and 272: TransferorObligorInitial Transferee
Page 273 and 274: TransferorEnron orENAEnronEnronEnro
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Page 277 and 278: 742. By reason of the foregoing fac
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TransferorEnron or ENAor ENGMEnron
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765. Upon information and belief, w
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770. The transfers identified in th
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789. Each of the Chase Preferential
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796. Although certain of the Chase
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transfers; were engaged in business
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823. The payments characterized as
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840. The Chase 548 Purported Margin
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transactions (“Prepay Obligations
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COUNT 15(Avoidance of the Chase Pre
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871. Enron and/or ENA received less
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Code, those transfers are pled alte
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TransferorEnron orENAEnron orENAEnr
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902. The Barclays Preferential Tran
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of the security interest that is th
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TransferorEnron orENAEnron orENAEnr
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921. To the extent that any of the
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Barclays Bank on or about November
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COUNT 25(Avoidance of Unauthorized
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940L. By the Barclays Improper Appr
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949. Pursuant to section 553(b) of
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953. By reason of the foregoing fac
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the parties could, under certain co
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976. By reason of the foregoing fac
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y reference.COUNT 33(Avoidance of t
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996. Each of the BT/Deutsche Bank 5
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Transferor Obligor TransfereeEnron
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Transferor Obligor TransfereeEnron
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COUNT 36(Disallowance of Claims Und
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TransferorEnron orENA or ACFIObligo
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TransferorObligorInitialTransfereeo
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COUNT 40(Recovery of the CIBC 544 T
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elieved that they would incur, debt
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1068. The CSFB Preferential Transfe
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1082. Each of the CSFB 548 Transfer
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1095. Each of the CSFB 544 Transfer
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and (b) that CSFB, Pyramid I and/or
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H. COUNTS 50 - 54(Against Toronto D
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Transferor ObligorInitialTransferee
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COUNT 52(Avoidance of the Toronto D
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TransferorEnron or ENAEnron or ENAE
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1135. Upon and information and beli
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TransferorObligorInitialTransferee
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1167. The transfers identified in t
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J. COUNTS 60 - 64(Against RBC Defen
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1227. The Challenged Transaction Ob
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1232. The Challenged Transaction Ob
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1242. The Intentional Fraudulent Tr
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1250. The Intentional Fraudulent Co
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Plaintiff’s creditors and conferr
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1265. Plaintiff cannot at this time
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Transferor Defendant continued to h
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communications with investors the I
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1273. As a direct and proximate res
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information about the company’s c
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1287. Insider Causey did not disclo
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1299. Insider Fastow did not disclo
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1310. Insiders Fastow and McMahon d
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June 20011322. The Insiders did not
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Committee meeting on December 13, 1
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Chase IX Prepay1356. The Insiders d
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Chase XI Prepay1367. The Insiders d
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meetings in and around the time of
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transaction (including a meeting on
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despite the fact that the transacti
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the time of the transaction (includ
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1478. The Insiders did not disclose
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time of the transaction (including
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Committee meeting, at the August 1,
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1520. Insider McMahon did not discl
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1999, or the verbal insurances they
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(3) employing transactions with the
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(b)On or about September 17, 1999,
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(a)On or about November 24, 2000, S
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JP Morgan Chase1546. In connection
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1549. In connection with the Chase
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(a)On or about September 13, 2001,
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(a)On or about September 20, 2001,
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(e)In order to fraudulently meet Ar
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(b)On or about March 27, 1997, Thom
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(c)On or about December 29, 1998, R
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(a)On or about December 15, 1998, S
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1578. In connection with the Specte
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(o)On or about March 2, 2001, Rober
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(c)On or about December 8, 2000, Ja
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(a)On or about December 12, 1998, V
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(c)On or about December 13, 1999, D
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(f)On or about November 12, 1999, D
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(i)On or about March 1, 2001, Goss
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1596. Enron’s injuries as describ
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that were financially involved with
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(b) that CSFB, Pyramid I and/or Sph
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ENRON CORP., et al.,Reorganized Deb
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