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ENRON CORP.; ENRON NORTHAMERICA CORP.; ENRON NATURALGAS MARKETING CORP.; ENRONBROADBAND SERVICES, INC.; ENRONENERGY SERVICES, INC.; EES SERVICEHOLDINGS, INC.; ENRONINTERNATIONAL, INC.; ENRONENERGY SERVICES OPERATIONS,INC.; ECT MERCHANT INVESTMENTSCORP.; ENRON POWER MARKETING,INC.; and ATLANTIC COMMERCIALFINANCE, INC.,v.Plaintiffs,CITIGROUP INC.; CITIBANK, N.A.;CITIGROUP GLOBAL MARKETS, INC.;CITICORP NORTH AMERICA, INC.;DELTA ENERGY CORPORATION;CITIGROUP FINANCIAL PRODUCTS,INC.; CXC LLC; CORPORATE ASSETFUNDING COMPANY, LLC;CORPORATE RECEIVABLESCORPORATION, LLC; CITIGROUPGLOBAL MARKETS LTD.; LONG LANEMASTER TRUST IV; J.P. MORGANCHASE & CO.; J.P. MORGAN CHASEBANK (FORMERLY CHASEMANHATTAN BANK); MAHONIALIMITED; MAHONIA NATURAL GASLIMITED; STONEVILLE AEGEANLIMITED; JP MORGAN SECURITIESINC.; BARCLAYS PLC; BARCLAYSBANK PLC; COLONNADE LIMITED;BARCLAYS CAPITAL SECURITIESLIMITED; BARCLAYS CAPITAL, INC.;BARCLAYS PHYSICAL TRADINGLIMITED (FORMERLY BARCLAYSMETALS (HOLDINGS) LIMITED);BARCLAYS METALS LIMITED;DEUTSCHE BANK AG; DEUTSCHEBANK TRUST COMPANY AMERICAS;DEUTSCHE BANK SECURITIES INC.;DEUTSCHE BANK LUXEMBOURG S.A.;::::::::::::::::::::::::::::::::::::::::::::::Adversary ProceedingNo. 03-09266 (AJG)604041v1/007457
DEUTSCHE BANK TRUST COMPANYDELAWARE; DEUTSCHE BANK TRUSTCORPORATION; BANKERS TRUSTINTERNATIONAL PLC; BTCOMMERCIAL CORP.; DB GREEN,INC.; DEUTSCHE LEASING NEW YORKCORP.; SENECA DELAWARE, INC.;DEUTSCHE BANK, S.A.; BT EVER, INC.;SENECA LEASING PARTNERS, L.P.;CANADIAN IMPERIAL BANK OFCOMMERCE; CIBC WORLD MARKETSCORP.; CIBC CAPITAL CORPORATION;CIBC WORLD MARKETS PLC; CIBC,INC.; MERRILL LYNCH & CO., INC.;MERRILL LYNCH, PIERCE, FENNER &SMITH INC.; MERRILL LYNCHCAPITAL SERVICES, INC.; CREDITSUISSE FIRST BOSTON, INC.; CREDITSUISSE FIRST BOSTON (USA), INC.;CREDIT SUISSE FIRST BOSTON LLC;CREDIT SUISSE FIRST BOSTONINTERNATIONAL; CREDIT SUISSEFIRST BOSTON (USA)INTERNATIONAL, INC.; CREDITSUISSE FIRST BOSTON; PERSHINGLLC; DLJ CAPITAL FUNDING, INC.; DLJFUND INVESTMENT PARTNERS III,L.P.; ERNB LTD.; MERCHANT CAPITAL,INC.; THE TORONTO-DOMINIONBANK; TORONTO DOMINION (TEXAS),INC.; TD SECURITIES (USA) LLC; THEROYAL BANK OF SCOTLAND PLC; THEROYAL BANK OF SCOTLANDINTERNATIONAL LIMITED; THEFINANCIAL TRADING COMPANYLIMITED; SIDERIVER INVESTMENTSLIMITED; NATIONAL WESTMINSTERBANK PLC; CAMPSIE LTD.; COUTTS(CAYMAN) LIMITED; ROYAL BANK OFCANADA; ROYAL BANK HOLDINGINC.; RBC DOMINION SECURITIESINC.; RBC DOMINION SECURITIESLIMITED; RBC HOLDINGS (USA) INC.;RBC CAPITAL MARKETSCORPORATION; SUNDANCEINDUSTRIAL PARTNERS L.P.; CAYMUS::::::::::::::::::::::::::::::::::::::::::::::604041v1/007457
Page 1: ENRON CORP., et al.Reorganized Debt
Page 5 and 6: TABLE OF CONTENTSPageI. NATURE OF T
Page 7 and 8: d. The Insiders engaged in a scheme
Page 9 and 10: (d) Barclays’ improper appropriat
Page 11 and 12: (a) LJM1 and the Rhythms Hedging tr
Page 13 and 14: COUNT 17COUNT 18(Avoidance of the C
Page 15 and 16: F. COUNTS 42 - 44 (Against Merrill
Page 17 and 18: COUNT 67(Recovery of the Challenged
Page 19 and 20: Steele ............................
Page 21 and 22: REORGANIZED DEBTORS’ FOURTH AMEND
Page 23 and 24: 3. A second large group of transact
Page 25 and 26: these partnerships secret from Enro
Page 27 and 28: approved the employment of Stephen
Page 29 and 30: managed by a new board of directors
Page 31 and 32: 17. Plaintiff and the affiliated en
Page 33 and 34: headquarters at 270 Park Avenue, 35
Page 35 and 36: Germany. Deutsche Bank AG does busi
Page 37 and 38: 55. Defendant Deutsche Bank, S.A. i
Page 39 and 40: 67. Defendant Merrill Lynch Capital
Page 41 and 42: successor, agent, co-conspirator, c
Page 43 and 44: 10. The RBC Defendants92. Defendant
Page 45 and 46: 107. Not Used.108. Defendant Sphinx
Page 47 and 48: 118. Defendant Enron Sterling Credi
Page 49 and 50: 126A. Each of FleetBoston Financial
Page 51 and 52: eports. In these reports and their
Page 53 and 54:
Fastow was fired in late 2001 and E
Page 55 and 56:
c. Fastow and Kopper orchestrated (
Page 57 and 58:
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
Page 63 and 64:
• Funds flow from operations, def
Page 65 and 66:
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
Page 87 and 88:
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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transaction. He also wondered where
Page 203 and 204:
550. Merrill Lynch knew that the 19
Page 205 and 206:
Insiders’ schemes, including its
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(2) LJM1 and LJM2.561. As discussed
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566. CSFB therefore knew the hedge
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proceeds resulting from those share
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(3) The Prepaid Oil Swaps.577. In D
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(4) FAS 140 transactions.(a)Nile583
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or some of the equity investment. C
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equity investment was not at risk.
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App. L. at 22-23 n.81). In his resp
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CSFB colleague two days before givi
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Dominion’s return on Enron-relate
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IV, App. G at 7 & n.23. In addition
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Payments went in a complete circle
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Dominion prepays - as cash flow fro
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619. Toronto Dominion also knew it
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that, as a limited partner in LJM1,
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etween 1997 and 2001, and, as of No
Page 239 and 240:
at 45. In addition to the direct an
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these restrictions, a 39% discount
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een held in LJM1, and RBS’s total
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substantially assisted the Insiders
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RBS compromised by letting the Insi
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easons.” RBS 3141116 (quoted in E
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manipulation” in Enron’s financ
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saw their experiences with Enron-re
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Exam. at 102-03. RBC knew the Insid
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thing. However, we cannot in the do
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earn higher fees, then selling the
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investment that was not at risk and
Page 263 and 264:
transactions in which Merrill Lynch
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TransferorObligorInitialTransferee
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716. On or within one year before t
Page 269 and 270:
717. The transfers identified in th
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TransferorObligorInitial Transferee
Page 273 and 274:
TransferorEnron orENAEnronEnronEnro
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TransferorEnron orENAEnron orENAEnr
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742. By reason of the foregoing fac
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Page 281 and 282:
TransferorEnron or ENAor ENGMEnron
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765. Upon information and belief, w
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Page 289 and 290:
Page 291 and 292:
Page 293 and 294:
Page 295 and 296:
Page 297 and 298:
789. Each of the Chase Preferential
Page 299 and 300:
Page 301 and 302:
Page 303 and 304:
796. Although certain of the Chase
Page 305 and 306:
Page 307 and 308:
Page 309 and 310:
Page 311 and 312:
Page 313 and 314:
Page 315 and 316:
Page 317 and 318:
transfers; were engaged in business
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823. The payments characterized as
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Page 323 and 324:
Page 325 and 326:
Page 327 and 328:
Page 329 and 330:
Page 331 and 332:
Page 333 and 334:
840. The Chase 548 Purported Margin
Page 335 and 336:
Page 337 and 338:
Page 339 and 340:
Page 341 and 342:
Page 343 and 344:
Page 345 and 346:
Page 347 and 348:
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
Page 353 and 354:
Code, those transfers are pled alte
Page 355 and 356:
Page 357 and 358:
902. The Barclays Preferential Tran
Page 359 and 360:
of the security interest that is th
Page 361 and 362:
Page 363 and 364:
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
Page 373 and 374:
Page 375 and 376:
the parties could, under certain co
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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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Page 429 and 430:
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
Page 447 and 448:
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
Page 529 and 530:
(b) that CSFB, Pyramid I and/or Sph
Page 531:
ENRON CORP., et al.,Reorganized Deb
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