Message-ID: <32788029.1075844935593.JavaMail.evans@thyme> Date: Thu, 16 Mar 2000 11:00:00 -0800 (PST) From: walt.zimmerman@enron.com To: steve.duffy@enron.com Subject: Todoroff Prosecution--CONFIDENTIAL/SUBJECT TO ATTORNEY-CLIENT PRIVILEGE Cc: dana.gibbs@enron.com, lori.maddox@enron.com, susan.ralph@enron.com, michael.burke@enron.com, stanley.horton@enron.com, jdegeeter@velaw.com Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit Bcc: dana.gibbs@enron.com, lori.maddox@enron.com, susan.ralph@enron.com, michael.burke@enron.com, stanley.horton@enron.com, jdegeeter@velaw.com X-From: Walt Zimmerman X-To: Steve Duffy X-cc: Dana Gibbs, Lori Maddox, Susan Ralph, Michael Burke, Stanley Horton, jdegeeter@velaw.com X-bcc: X-Folder: \Stanley_Horton_1\Notes Folders\All documents X-Origin: HORTON-S X-FileName: shorton.nsf Steve, as Dana indicated in his response to your message, Louis Dreyfus is maintaining that their transactions with Todoroff are totally legitimate and binding upon EOTT. Vinson & Elkins is of the opinion that before we assert an argument to Louis Dreyfus regarding the validity of their contract, we need to hear the tapes of Todoroff's conversations with Louis Dreyfus. The "paper" that we have (including the notes from the Louis Dreyfus contract administrator) certainly indicates that Louis Dreyfus suspected or knew that something was not quite right about the December 1999 transaction with Todoroff, but it is not enough to make a very good case for challenging the validity/enforceability of that contract. We need more. John DeGeeter of Vinson & Elkins has spoken with Louis Dreyfus' general counsel. Louis Dreyfus' general counsel has told John that before he will consider providing EOTT with the tapes, he wants EOTT to set forth in writing the reason EOTT is requesting the tapes. Louis Dreyfus' general counsel has also indicated that he is not sure that Louis Dreyfus taped these conversations. Although a final decision has not been made, here's where I think we are headed with Louis Dreyfus. We will send their general counsel a letter next week indicating the irregularities with this contract (e.g. the prices quoted in the contract were far below market, and the contract administrator had questions about Todoroff's authorization and the "legality" of the deal). This proposed letter would then suggest that Louis Dreyfus provide us with their tape recordings of the conversations with Todoroff in order that we can immediately resolve our questions as to whether one of Louis Dreyfus' employees knowingly assisted Todoroff in his scheme to defraud EOTT. My guess is that a letter of that nature will at least cause Louis Dreyfus' lawyers to listen to the tapes. If the tapes do contain incriminating conversations, we might see a softening of their negotiating position. If the tapes do not contain anything incriminating, it would seem to be in Louis Dreyfus' best interest to provide us with the tapes to support their position that there was nothing irregular about the transaction. Steve Duffy 03/16/2000 01:47 PM To: Walt Zimmerman/Houston/Eott@Eott cc: Dana Gibbs/Houston/Eott@Eott, Lori Maddox/Houston/Eott@Eott, Susan Ralph/Houston/Eott@Eott, Michael Burke/Houston/Eott@Eott, Stanley Horton/Corp/Enron@Enron Subject: Re: Todoroff Prosecution--CONFIDENTIAL/SUBJECT TO ATTORNEY-CLIENT PRIVILEGE Thanks for the update, Walt. One option we were considering was a "share the pain" settlement with Dreyfus, whereby they would let us buy out of the remaining position at a steep discount (to acknowledge their contributory negligence in this matter). Has there been any additional headway in this area? I'm on vacation and haven't heard anything on this. Weren't we going to send a V&E litigator to visit Dreyfus' general counsel? If we commence legal proceedings against Dreyfus, things will become costly and contentious between us. Information will come slowly and grudgingly. We have copies of some of their internal notes which indicate that they knew---or should have known---that something wasn't quite right with Todoroff's situation. Before we start filing discovery motions, we should exhaust the possibility of meeting with their general counsel to see if a quick "business" settlement can be obtained. Please advise. Thanks. SWD WALT ZIMMERMAN 03/16/2000 11:47 AM To: Dana Gibbs/Houston/Eott@Eott, Lori Maddox/Houston/Eott@Eott, Susan Ralph/Houston/Eott@Eott cc: Michael Burke/Houston/Eott@Eott, Steve Duffy/Houston/Eott@Eott, Stanley Horton/Corp/Enron@Enron Subject: Todoroff Prosecution--CONFIDENTIAL/SUBJECT TO ATTORNEY-CLIENT PRIVILEGE Earlier this week, I spoke with Bill Moore (the chief prosecutor in the Harris County District Attorney's Special Crimes Unit) regarding the above-referenced matter. Mr. Moore acknowledged receiving the investigative materials that we submitted last week, and he indicated that his office is commencing its review of those materials. I emphasized to Mr. Moore the desire of EOTT's management to have this case aggressively prosecuted. Mr. Moore acknowledged that the aggressive prosecution of this matter would send a strong message to other traders who might consider dishonest acts, and he assured me that his office would vigorously pursue this matter. Based upon some statements made by Mr. Moore during our discussion, it was obvious that he recalled much of the presentation from our initial meeting. I will call Mr. Moore again tomorrow afternoon to get an update on the progress of this matter. We are also attempting to obtain from Louis Dreyfus tape recordings of Todoroff's conversations with them regarding the series of deals that we are describing as "The Second Transaction." If Louis Dreyfus does not voluntarily provide us with copies of those tapes (or if they assert that tapes do not exist), the next step will be to consider filing a lawsuit or seeking a bill of discovery in order to obtain the tapes. Based upon some notes we have received from a contract administrator at Louis Dreyfus, it appears that Louis Dreyfus also suspected or knew that something was amiss with The Second Transaction. Assuming that Todoroff's conversations with Louis Dreyfus were taped, the tapes should tell us whether Todoroff had a conspirator at Louis Dreyfus who assisted him in his scheme to defraud EOTT. If Louis Dreyfus does not voluntarily produce tape recordings of its conversations with Todoroff, we will need some guidance from Enron as to how aggressive we should be in attempting to obtain the tapes.