In settling Enron fraud deals, 2 big banks to pay millions

NEW YORK (AP) -- Banking titans J.P. Morgan Chase and Citigroup are paying nearly $300 million for their roles in the Enron scandal, settling charges they helped the energy trader commit its massive fraud.
The Securities and Exchange Commission says the banks -- two of the largest in the nation -- helped Enron create complex financial transactions designed to beef up reported cash flow and hide debt.
The SEC contends the banks knew Enron was intentionally trying to make its financial picture seem rosy when the company was actually riddled with debt.
Under deals announced Monday, J.P. Morgan will pay $135 million to the SEC and Citigroup will pay $101 million. All of that money will eventually be used to pay back the victims of Enron's spectacular fraud, the SEC said.
"If you know or have reason to know that you are helping a company mislead its investors, you are in violation of the federal securities laws," SEC enforcement chief Stephen Cutler said.
Also Monday, the court-appointed examiner in Enron's bankruptcy said he found evidence that four other banks that did finance deals with Enron knew of the company's financial machinations. Still, all allowed the deals to proceed, Atlanta attorney Neal Batson said in his third report to the U.S. Bankruptcy Court in Manhattan.
The report also said the banks -- which Enron owes at least $5 billion -- could lose their place among the sizable collection of creditors to be repaid because of their role in the financial schemes.