Enron Employees Reveal the Depth of Financial Losses.
WASHINGTON--(BUSINESS WIRE)--Dec. 18, 2001
Attorney underscores the damage of the 401(k) lockdown
In a Senate hearing today, employees of Enron (NYSE: ENE) provided details of the personal toll the company's downfall has taken, outlining the financial devastation they claim was caused by illegal mismanagement and lockdown of Enron retirement plans.
Steve Berman, an attorney representing Enron workers, including some who testified at the Senate hearings, said "we are just beginning to understand the impact of the company's collapse on thousands of Enron workers across the country."
"In two short months, Enron snuffed out the future that thousands of workers built over a lifetime," Berman said. "Millions of dollars in retirement funds were erased in what we believe was an illegal and unconscionable lockdown of employee 401(k) accounts."
Berman noted that the stories from his clients are among the most heartbreaking he has heard. He provided several examples of Enron employees' plight in his written testimony to the committee.
"These people are not venture capitalists, or high-rolling investors. These were lunch-pail people who worked hard, day-in and day-out for their entire lives," Berman said.
The testimonies brought tearful examples of Enron employees left out in the cold since the bankruptcy. One retired oil and gas worker in California lost more than a million dollars from his Enron savings plan. Unable to return to work in the oil and gas industry, he now makes garbage bags 12 hours a day to support himself.
For some Enron employees, the situation is literally life-and-death. A Wisconsin woman battling stage IV breast cancer may not be able to afford future cancer treatments, which were funded by her savings, now largely wiped out by the stock collapse.
The lawsuits filed by Hagens Berman also contend that Enron repeatedly issued false information about the company's financial condition, which employees relied upon to their financial detriment. In an attempt to inflate Enron revenue, earnings and assets, the company failed to disclose hundreds of millions of dollars in debt while touting the financial strength of the company, according to the complaint.
The suit also cites Northern Trust, (Nasdaq: NTRS), the 401(k) plan trustee, along with Enron, claiming both companies illegally barred Enron employees from selling stock. On Oct. 17, Enron and Northern Trust locked down employee retirement funds, rendering participants powerless in selling shares of Enron stock.
At the Senate hearing, employees recounted how Enron management encouraged them to invest in the company, despite SEC records that show management selling off their investments in Enron. Charles Prestwood, a 63-year-old retired Enron employee who had $1.3 million of savings invested in Enron stock, described internal memos touting the company stock, and a breakfast where CEO Kenneth Lay "told us not to sell our Enron stock."
It is estimated that as many as 21,000 Enron employees may have lost a significant portion of their retirement funds as a result of Enron's breaching of fiduciary duty and lockdown of 401(k) accounts, according to complaints filed in U.S. District Court, Southern District of Texas.
Hagens Berman has filed two lawsuits on behalf of Enron employees, one for participants in the Enron Savings Plan, and another for participants in the Enron Employee Stock Ownership Plan. Enron employees who are interested in joining these class-action lawsuits can receive more information by calling 206-623-7292, or going to www.hagens-berman.com.
About Hagens Berman
Steve Berman is managing partner of Hagens Berman in Seattle. Recently cited as one of the nation's top 100 influential attorneys by The National Law Journal, Berman is a nationally recognized expert in class-action litigation. Berman represented Washington State, 12 other states and Puerto Rico in lawsuits against the tobacco industry that resulted in the largest settlement in the history of litigation. Berman also served as counsel in several other high-profile cases including the Washington Public Power Supply litigation, which resulted in a settlement exceeding $850 million, and the proposed $92.5 million settlement of The Boeing Company litigation. Other cases include litigation involving the Exxon Valdez oil spill; Louisiana Pacific Siding; Morrison Knudsen; Piper Jaffray; Nordstrom; Boston Chicken; and Noah's Bagels.
EDITOR'S NOTE: Copies of written testimony from the Senate hearings are available by contacting Mark Firmani at (206) 443-9357 or firstname.lastname@example.org
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|Date:||Dec 18, 2001|
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