Acquittal by Richard Gabriel

Author:Richard Gabriel
Language: eng
Format: epub, mobi
Publisher: Penguin Publishing Group
Published: 2014-06-02T16:00:00+00:00

ENRON BROADBAND

Rex Shelby is the only son of an air force sergeant who was a veteran of the Berlin Airlift and earned a Silver Star, Bronze Star, and Purple Heart in World War II. He had a knack for electronics and hard work, which he passed on to his three daughters and his son.

While he excelled at sports, Shelby was a nerd at heart, working his way through college and receiving an engineering research assistantship at the Arnold Engineering Development Center (AEDC). Among other things, AEDC is where NASA kept fully operational replicas of various space vehicles so that it could simulate what was occurring during space missions to anticipate and solve potential problems.

He used his work at AEDC as the basis for his master’s thesis, involving the creation of a computer program that modeled the behavior of light from a “cylindrically symmetric radiating source.” Much of his work applied to the behavior of light in fiber-optic cable, although, at the time, he was more focused on cylindrically shaped plasma streams because of AEDC’s space program connections.

Shelby joined the U.S. Air Force, where he was stationed at Bolling Air Force Base in Washington, DC, and spent a large portion of his working time at the Pentagon. Even though the Pentagon wanted to retain him, he decided on a private sector path.

He joined Arthur Andersen, one of the “Big Five” accounting firms, which later would also become embroiled in the Enron accounting scandal, and worked for a short time in the firm’s consulting division, focusing almost exclusively on large information technology projects for Fortune 500 companies. He also briefly joined McKinsey & Company and helped to create their worldwide IT consulting practice.

Shelby always thought of himself as an entrepreneur, and despite his stints at the two large consulting firms, he decided to join Modulus Technologies in 1994, a small start-up in a windowless room in an old office building in Houston.

Modulus had a software technology called InterAgent that could be used by programmers to build software applications needed to operate over networks. Like all new technology ventures, the success of Modulus was a long shot. But, over the next five years, working pretty much seven days a week, the Modulus team of eight people grew the company from nothing to a business with a market value of tens of millions of dollars.

In 1998, Enron started a brand-new communications start-up venture called Enron Communications Inc. (ECI) with only a few dozen employees and a new approach to the communications business. It was launched as a spin-off from Portland General Electric, a utility company in Portland, Oregon, that had been recently acquired by Enron. Originally, Enron had planned to shut down ECI, but a successful fiber-optic network deal, called the “Western Build,” convinced Enron management to pursue building the broadband business. This deal, where Enron sold a small allocation of fiber-optic lines for the cost of the entire project, told Skilling that broadband had a real future.

So Enron, in effect, served as the

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