UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

Plaintiff Securities and Exchange Commission (the "Commission") for its Complaint alleges as follows:

SUMMARY

1. The defendant, Ben F. Glisan, Jr., a former senior executive of Enron, helped Enron fraudulently inflate its earnings and operating cash flows, conceal the true extent of its debt, and manipulate its financial results to the detriment of Enron shareholders. Glisan engaged in this fraudulent scheme in violation of the federal securities laws as an active and substantial participant in (a) sham "prepay" transactions used by Enron to inflate operating cash flows by hundreds of millions that were in fact disguised loans; (b) the fraudulent "sale"of an interest in Nigerian barges to Merrill Lynch; and (c) the "Raptor" sham hedges that permitted Enron to report over $1 billion in bogus earnings on its books.

2. The Commission requests that this Court enjoin Glisan from violating the federal securities laws cited herein, and prohibit him from acting as an officer or director of any issuer of securities that has a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 ("Exchange Act").

JURISDICTION AND VENUE

3. The Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. '' 78u(d) and (e) and 78aa] and Sections 20(b), 20(d)(1) and 22(a) of the Securities Act of 1933 ("Securities Act") [15 U.S.C. '' 77t(b), 77t(d)(1) and 77v(a)].

4. Venue lies in this District pursuant to Section 27 of the Exchange Act [15 U.S.C. ' 78aa] and Section 22 of the Securities Act [15 U.S.C. ' 77v(a)] because certain acts or transactions constituting the violations occurred in this District.

5. In connection with the acts, practices, and courses of business alleged herein, Glisan, directly or indirectly, made use of the means and instruments of transportation and communication in interstate commerce, and of the mails and of the facilities of a national securities exchange.

6. Glisan, unless restrained and enjoined by this Court, will continue to engage in transactions, acts, practices, and courses of business as set forth in this Complaint or in similar illegal acts and practices.

DEFENDANT

7. Ben F. Glisan, Jr. resides in Houston, Texas. Glisan was employed by Enron Corp. from 1996 until his termination for cause in November 2001. Glisan, a former accountant with Arthur Andersen, held the positions of Vice President, Managing Director, and treasurer during his employment with Enron. Glisan was also a member of Enron's executive and management committees.

ENTITIES AND OTHER PERSONS INVOLVED

8. Enron Corp. is an Oregon corporation with its principal place of business in Houston, Texas. During the relevant time period, the common stock of Enron was registered with the Commission pursuant to Section 12(b) of the Exchange Act and traded on the New York Stock Exchange. During the time that Glisan engaged in the fraudulent conduct alleged herein, Enron raised millions in the public debt and equity markets. Among other operations, Enron was the nation's largest natural gas and electric marketer with reported annual revenue of more than $150 billion. Enron rose to number seven on the Fortune 500 list of companies. By December 2, 2001, when it filed for bankruptcy, Enron's stock price had dropped in less than a year from more than $80 per share to less than $1.

FACTUAL ALLEGATIONS

Enron's Use of Off-Balance-Sheet Special Purpose Entities

9. Since at least the early 1990's, Enron engaged in transactions with other entities that were designed to improve Enron's balance sheet. Enron's treatment of the entities for financial statement purposes was subject to accounting rules that governed whether the assets and liabilities of the entity should be consolidated onto Enron's balance sheet, or treated as an investment by Enron in a separate entity not under Enron's control. With respect to certain entities, Enron management preferred the latter result - known as "off-balance-sheet" - because it enabled Enron to present itself more attractively as measured by criteria favored by Wall Street investment analysts, credit rating agencies, and others.

10. Enron engaged in myriad transactions that were structured to achieve off-balance-sheet treatment. Many of those transactions were structured using special purpose entities ("SPEs"). Under applicable accounting rules, an SPE could receive off-balance-sheet treatment only if independent third-party investors made a substantive capital investment, generally at least three percent of the SPE's assets, and the third-party investment were genuinely at risk, among other things. If the third-party were not truly independent, or its investment were not truly at risk, those transactions using the SPEs were improper for off-balance-sheet treatment.

11. Some of these SPEs were not eligible for off-balance-sheet treatment because the SPE and the supposedly independent third-party investors were controlled by others, the outside equity requirement was not met, and the third-party "investment" was not truly at risk. Thus, these SPEs should have been consolidated onto Enron's balance sheet.

12. In October 1999, Andrew S. Fastow, the former Chief Financial Officer of Enron Corp., proposed formation of an SPE called LJM2 Co-Investment, L.P. Enron entered into transactions with LJM2 and other SPEs that served to defraud Enron's shareholders and others. The LJM2 transactions enabled Enron, Fastow, Glisan, and others, among other things, to manipulate Enron's financial results. LJM2 was used to facilitate the fraud carried out by Glisan and others with respect to the Nigerian Barges and Raptor transactions described below.

Nigerian Barges

13. In 1999, Enron engaged in a fraudulent "sale" of assets to permit Enron to record approximately $12 million of earnings and $28 million in operating cash flows in the fourth quarter of 1999. The fraud is the subject of pending actions brought by the SEC in this district, SEC v. Fastow, H-02-3666 and SEC v. Merrill Lynch, et al., H-03-0946. Glisan played an active role in the fraud by preserving the favorable accounting treatment for Enron resulting from the fraudulent "sale" of assets.

14. The "sale" related to several electricity-generating power barges owned by Enron. In December 1999, an Enron subsidiary entered into an agreement with certain Nigerian government entities for a three-phase energy project related in part to certain of Enron's power barges. These barges were expected to produce future revenues from an agreement for the supply of electricity to the Nigerian government.

15. After several failed attempts to sell a portion of the project, in December 1999, Enron contacted Merrill Lynch and pressured it to purchase a $28 million interest in the project, with 75% financed by Enron, so that Enron could book a gain at year end. Such a sale would allow Enron to record approximately $12 million of earnings in the fourth quarter of 1999, so that Enron could meet earnings goals, and also to record $28 million in funds flow.

16. In spite of dissension within Merrill Lynch, including an internal document expressing concern that it could be viewed as aiding and abetting Enron's fraudulent manipulation of its income statement, Merrill Lynch ultimately agreed to invest in the project. Merrill Lynch invested $7 million, and Enron financed the remainder of the deal with a $21 million loan that was non-recourse to Merrill Lynch. Merrill Lynch never paid any interest on the loan. Merrill Lynch had no real interest in investing in barge power projects in Nigeria but wanted to accommodate Enron, an important client and source of millions in fees to Merrill Lynch. Merrill Lynch conducted no due diligence on the barge project and did not actively monitor its investment.

17. To induce Merrill Lynch to enter into the transaction, Fastow guaranteed Merrill Lynch that it would not lose money and would be taken out of the deal within six months. Merrill Lynch was to receive an up front fee of $250,000 plus 15% per annum for the period Merrill Lynch held the investment, or an approximately 22.5% return. Enron falsely recorded the transaction with Merrill Lynch as a sale and improperly recorded approximately $12 million of fictitious earnings and $28 million in operating cash flows in the fourth quarter of 1999.

18. Six months later, consistent with the guarantee given by Fastow to Merrill Lynch, Fastow arranged for Merrill Lynch to be bought out of its interest in the barges. Glisan and others took an active role in making sure that Merrill Lynch was taken out of the deal on time. Glisan was aware of the Fastow guarantee and that Merrill Lynch's decision to participate in the barge transaction was based on the guarantee. Glisan was also aware that Merrill Lynch had to be out of the deal before June 30, 2000. Glisan warned Enron's business unit that if a buyer did not materialize by June 30, 2000 that Enron would need a "backstop" and advised the business unit that there were "ramifications" if Enron purchased the interest back from Merrill Lynch directly. Glisan also warned Enron's corporate finance and business units that Enron was "obligated to get Merrill out of the deal on or before June 30."

19. Fastow directed LJM2 to buy Merrill Lynch's interest and on June 29, 2000, the day before the date Fastow had agreed to "take out" Merrill Lynch, LJM2 bought Merrill Lynch's interest for $7,525,000. Glisan was aware of the LJM2-Merrill Lynch transaction. The price was not the product of negotiation. Rather, the price reflected a $525,000 premium over Merrill Lynch's original investment to account for the rate of return promised to Merrill Lynch. LJM2 made the purchase to fulfill Fastow's guarantee. Due to Glisan's active participation in the take out, Enron did not have to repurchase the asset nor reverse the asset sale to Merrill Lynch, and Enron retained the benefit of the favorable accounting treatment from that sale.

Raptors

20. Enron and LJM2 engaged in complex financial transactions with structures called the Raptors. Enron, Fastow, Glisan, and others used the Raptors, in part, to manipulate Enron's financial statements. Specifically, Enron, Fastow, Glisan, and others used the Raptors as off balance sheet vehicles that they knew in fact did not qualify for such treatment.

21. By 1999, a large percentage of Enron's quarterly earnings were tied to unrealized gains in certain assets. Many of these assets were extremely volatile. If these assets decreased in value from one quarter to the next, Enron would be forced to reverse the associated earnings. To protect against potential decreases in earnings, Enron sought to "hedge" against the decline in value of the relevant assets.

22. For example, Enron invested in other companies, including start-up ventures that later did initial public offerings ("IPO") of their shares. At the time of an IPO, Enron often owned millions of shares of the newly public company. Following the IPO, Enron was at risk for market price fluctuations in the shares. The value of such stock was required to be recorded in Enron's financial statements at the end of each quarter. Because Enron was restricted by "lock up" agreements from selling its shares until some future date, it sought to reduce the impact on its financial results of a possible dramatic decline in the share price.

23. The Raptors were designed to protect Enron's financial statements from decreases in the value of certain Enron investments. Enron sought to use the Raptors to lock in the value of Enron's investments in stock, without actually selling its investments. Glisan and others were instrumental in proposing and creating the Raptors for this purpose.

24. Raptor I was created in April 2000 through an off-balance-sheet SPE called Talon LLC ("Talon"). Talon was designed to generate accounting gains which would offset Enron's potential mark to market losses on certain investments, which in fact turned out to be significant. Talon would enter into transactions with an Enron subsidiary that would lock in the value of Enron's stock portfolio. If the price of Enron's stock portfolio increased, Talon would be entitled to the upside gain, and if the stock portfolio declined, Talon would be obligated to pay the Enron subsidiary the amount of the loss.

25. Talon was funded mainly by Enron through a promissory note and Enron's own stock. The remainder of Talon's funding, $30 million, was from LJM2, representing the purported three percent outside equity required for Talon to be off Enron's balance sheet.

26. As Glisan knew, the transaction violated existing accounting principles in that its form was misleading and was accounted in a manner inconsistent with its economic substance. As Glisan also knew, Talon was not properly off-balance-sheet. Glisan and others arranged for Enron to pay $41 million to LJM2 before Talon would engage in the hedging transactions for which it was created. Enron and Talon entered into a "put," that is, a transaction that purportedly served to hedge Enron against a decline in its own stock value. Although there was no true business purpose, the "put" option was purchased by Enron for $41 million. The put was designed by Glisan and others as an ostensible reason to make a distribution of $41 million to LJM2, economically providing a return of and return on capital. Since the put failed to have a true business purpose, Talon failed to meet the minimum equity test as required by applicable accounting rules. As a result of this failure, LJM2 lacked substantive control of Talon. This failure, in turn, led to the substantive control of Talon by Enron.

Prepay Transactions

27 . Enron, Glisan, and others participated in Enron's manipulation of its reported financial results through a series of complex structured-finance transactions, called "prepays," over a period of several years preceding Enron's bankruptcy. These transactions were used by Enron to report loans from financial institutions as cash from operating activities. Indeed, the structural complexity of these transactions had no business purpose aside from masking the fact that, in substance, they were loans to Enron.

28. The fraudulent prepay transactions include those detailed in SEC v. J.P. Morgan Chase, H-03-2877 (S.D. Tex.) and In the Matter of Citigroup, Inc., A.P. File No. 3-11192 (SEC July 28, 2003). Glisan and others participated in the prepay transactions described therein after he became Enron=s treasurer in the Spring of 2000.

29. As a result of the conduct of Glisan and others described above, Enron materially overstated its reported net cash flow from operating activities, materially understated its reported net cash flow from financing activities, and misrepresented the amount it borrowed.

CLAIMS FOR RELIEF

FIRST CLAIM

Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)]
and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]

30. Paragraphs 1 through 29 are realleged and incorporated by reference herein.

31. As set forth more fully above, Glisan, directly or indirectly, by use of the means or instrumentalities of interstate commerce, or by the use of the mails and of the facilities of a

national securities exchange, in connection with the purchase or sale of securities: has employed devices, schemes, or artifices to defraud, has made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or has engaged in acts, practices, or courses of business which operate or would operate as a fraud or deceit upon any person.

32. By reason of the foregoing, Glisan violated and aided and abetted violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].

SECOND CLAIM

Violations of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)] and
Rules 12b-20, 13a-1, & 13a-13 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-13]

33. Paragraphs 1 through 32 are realleged and incorporated by reference herein.

34. By engaging in the conduct described above, Glisan knowingly and substantially caused Enron to file materially false and misleading annual reports on Form 10-K and materially false and misleading quarterly reports on Form 10-Q with the Commission.

35. By reason of the foregoing, Glisan aided and abetted violations by Enron of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder.

THIRD CLAIM

Violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act
[15 U.S.C. §§ 78m(b)(2)(A), 78m(b)(2)(B)]
and Rule 13b2-1 thereunder [17 C.F.R. § 240.13b2-1]

36. Paragraphs 1 through 35 are realleged and incorporated by reference herein.

37. By engaging in the conduct described above, Glisan aided and abetted Enron's

failures to make and keep books, records and accounts which, in reasonable detail, accurately and fairly reflected Enron's transactions and dispositions of its assets, in violation of Section 13(b)(2)(A) of the Exchange Act, and further aided and abetted failures to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that Enron's corporate transactions were executed in accordance with management's authorization and in a manner to permit the preparation of financial statements in conformity with generally accepted accounting principles in violation of Section 13(b)(2)(B) of the Exchange Act.

38. By engaging in the conduct described above, Glisan, directly or indirectly, falsified and caused to be falsified Enron's books, records, and accounts subject to Section 13(b)(2)(A) of the Exchange Act in violation of Rule 13b2-1 thereunder.

39. By reason of the foregoing, Glisan aided and abetted violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and violated Rule 13b2-1 thereunder.

FOURTH CLAIM

Violations of Section 13(b)(5) of the Exchange Act [15 U.S.C. § 78m(b)(5)]

40. Paragraphs 1 through 39 are realleged and incorporated by reference herein.

41. By engaging in the conduct described above, Glisan knowingly circumvented or knowingly failed to implement a system of internal financial controls at Enron.

42. By reason of the foregoing, defendant Glisan violated and aided and abetted violations of Section 13(b)(5) of the Exchange Act.

FIFTH CLAIM

Violations of the Exchange Act Rule 13b2-2 thereunder [17 C.F.R. § 240.13b2-2]

43. Paragraphs 1 through 42 are realleged and incorporated by reference herein.

44. By engaging in the conduct described above, Glisan, directly or indirectly, made or caused to be made false and misleading statements or omitted or caused others to omit to state material facts necessary in order to make statements made, in light of the circumstances under which such statements were made, not misleading to Enron's independent accountants and Enron's auditors in connection with audits and examinations of Enron's required financial statements and in connection with the preparation and filing of documents and reports required to be filed with the Commission, in violation of Exchange Act Rule 13b2-2.

45. By reason of the foregoing, defendant Glisan violated and aided and abetted violations of the Exchange Act Rule 13b2-2.

JURY DEMAND

46. The Commission demands a jury in this matter.

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that this Court:

Grant an injunction restraining and enjoining Glisan from violating the statutory provisions set forth herein, and prohibiting him from acting as an officer or director of any issuer of securities that has a class of securities registered pursuant to Section 12 of the Exchange Act

or that is required to file reports pursuant to Section 15(d) of such Act.

Of Counsel
Kurt Gresenz