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extent of RBC’s understanding of Enron’s financial condition and off-balance sheet liabilities. TheENA Examiner concluded that RBC “participated actively in structuring transactions with Enronthat were designed to disguise Enron’s exposure to debt.” See Report of Harrison J. Goldin, theCourt-Appointed Examiner in the Enron North America Corp. Bankruptcy Proceeding, RespectingHis Investigation of the Role of Certain Entities in Transactions Pertaining to Special PurposeEntities (Nov. 14, 2003) (“ENA Exam.”), at 93. With respect to Alberta, the ENA Examinerconcluded that RBC “was aware of the U.S. accounting standards applicable to Enron,” and thatdespite this knowledge, that RBC designed and financed the Alberta structure, which was“effectively a loan from RBC to Enron,” but was executed through a commodity swap structure that“served no apparent purpose other than to conceal the true nature of the financing.” ENA Exam.at 115, 117. The ENA Examiner concluded this evidence is “sufficient for a fact finder to concludethat RBC knowingly aided and abetted Enron officers in consummating transactions that weredesigned to provide Enron with off-balance sheet funds and to permit Enron officers to manipulateEnron’s publicly disclosed financial information in a materially misleading fashion.” ENA Exam.at 20.(1) RBC’s relationship with Enron.673. RBC had a longstanding relationship with Enron, dating back to at least 1995. In thesummer of 2000, RBC hired a team of approximately 25 bankers from NatWest’s structured financegroup, many of whom had participated in Enron-related structured finance deals while they wereat NatWest. (NatWest merged with RBS in 2000.) The arrival of this group marked a significantstep forward in RBC’s Enron relationship: The former NatWest bankers brought a detailedknowledge of Enron’s financial condition, close business relationships with Insiders including butnot limited to Fastow, and firsthand experience working on transactions with the Insiders thatmanipulated Enron’s financial statements. See ENA Exam. at 97-98. The former NatWest bankers604041v1/007457-232-
saw their experiences with Enron-related transactions at NatWest as a precedent for the work theysought to do at RBC. For example, in considering a FAS 140 transaction that RBC ultimately didnot participate in, John Bruen, one of the former NatWest bankers, wrote to his colleagues that RBCcould obtain “informal comfort” on its “ability to get full and timely repayment under the equitycertificates,” and alluded to the success of the verbal assurances at NatWest: “We have invested insimilar transactions while at Greenwich NatWest and have obtained full and timely repayment.”RBC NY 0083372 (quoted in ENA Exam. at 165).674. The former NatWest bankers promptly began leveraging their relationships with theInsiders in an attempt to elevate RBC to Tier 1 bank status. In fall 2000, RBC agreed to commit$10 million to an approximate $120 million debt facility for LJM2, even though RBC knew LJM2would assist in “balance sheet management,” RBC NY 0096789 (quoted in ENA Exam. at 105),because RBC saw LJM2 as “an entry ticket for more remunerative transactions which we are alreadyseeing coming to us.” RBC NY 0029257 (quoted in ENA Exam. at 104). Andrew Hews, an RBCexecutive who had come over with the NatWest group, wrote: “[T]his invitation came to us fromthe CFO of Enron and notwithstanding the lack of any formal link with Enron we regardparticipation as a ‘must’ in order to position the bank for other transactions which will undoubtedlybe generated by Enron in the near future.” RBC NY 0096793 (quoted in ENA Exam. at 104). Seealso Sworn Statement of Andrew Hews, Oct. 9, 2003, at 31 (cited in ENA Exam. at 98-99). Similarconsiderations motivated RBC’s participation in the E-Next transaction, which Andrew Hewsdescribed as “an extremely important deal to Enron and our profile with them,” RBC NY 0118376(quoted in ENA Exam. at 162), and which Hews predicted “will assist our endeavours to be awardedthe much more profitable lead arranger status on a number of potential deals.” RBC NY 0118374(quoted in ENA Exam. at 162).604041v1/007457-233-
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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
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Insiders intended to accomplish the
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497. As part of the transaction, BT
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(3) BT/Deutsche Bank limited its En
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disclosed, “Enron could not have
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511. CIBC knew that in every FAS 14
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understanding of the Insiders’ go
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523. Again, however, before CIBC ag
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able to manipulate and misstate Enr
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achieve accounting objectives, incl
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Complaint in SEC v. Merrill Lynch,
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539. From 1997 through 2001, Merril
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Page 205 and 206: Insiders’ schemes, including its
Page 207 and 208: (2) LJM1 and LJM2.561. As discussed
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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
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Page 221 and 222: App. L. at 22-23 n.81). In his resp
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Page 247 and 248: RBS compromised by letting the Insi
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Page 251: manipulation” in Enron’s financ
Page 255 and 256: Exam. at 102-03. RBC knew the Insid
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Page 267 and 268: 716. On or within one year before t
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Page 273 and 274: TransferorEnron orENAEnronEnronEnro
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796. Although certain of the Chase
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TransferorEnron or ENAor ENGMEnron
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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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