Union-Owned Bank Seeks Freeze of Enron Exec Accounts

December 5, 2001 (PLANSPONSOR.com)- Charging that Houston energy trader Enron's economic problems represented a "grotesque fraud," Amalgamated Bank on Wednesday sought to freeze the bank accounts of Enron senior executives.

In a lawsuit filed in US District Court in Houston, the bank, owned by the Amalgamated Clothing and Textile Workers Union, said insiders gained about $1.1 billion from the sale of more than 17.3 million shares of stock over the past three years, according to Reuters. Enron’s market value peaked at almost $80 billion in August 2000, and is now worth less than $1 billion.

Amalgamated, which manages worker retirement funds, sought to freeze the Enron executives, accounts, alleging they reaped huge profits by artificially inflating the stock price of the once-mighty company.

Among the 29 accounts targeted to be frozen was that of board member Wendy Gramm, former chairman of the Commodity Futures Trading Commission and wife of Senator Phil Gramm (R-Texas).

Representing Amalgamated in the suit was the law firm of Milberg Weiss, which also represented the bank in a suit last year accusing top executives at Sprint and WorldCom of using their failed merger to reap hundreds of millions of dollars in early-vesting stock options.

The lawsuit was the latest of about 15 lawsuits filed against Enron, and marks an increase in the number of defendants and the amount of money they were accused of gaining. The other lawsuits accused the insiders of earning about $73 million.

In addition, a number of larger pension funds that invested in Enron, which filed for Chapter 11 bankruptcy protection on Sunday, are reportedly considering legal action, according to published reports.