Enron executive jailed for masterminding fraud
A former vice president of scandal-hit energy giant Enron was jailed for a year today for masterminding a massive fraud.
Marcus von Bock und Polach, 38, pocketed £385,000 by invoicing his bosses on behalf of a bogus company.
The lawyer claimed the firm, based in Germany, had carried out legal work on behalf of Enron, and rubber-stamped its invoices.
But a probe later revealed that the company had been created by Polach – and its registered address was his house in Hampstead, north London.
Judge Geoffrey Rivlin QC told Polach: “These offences were all planned and deliberate and were not the work of the moment. You were in a highly trusted position.”
Southwark Crown Court heard that Polach carried out the nine-month fraud as the US-based energy giant began to crumble in mid-2001.
Polach had joined subsidiary firm Enron Europe Ltd as a £150,000-a-year senior legal assistant in 1998.
He quickly rose through the ranks to become vice president, on a £250,000 salary.
Based in Germany, Polach used a company called GU he had set up a year earlier and began invoicing Enron for legal advice and translation.
A total of £385,000 was paid to the firm, which Polach then simply transferred to his own bank account in Spain, the court heard.
He was only caught when an eagle-eyed Enron director noticed that GU was charging for work carried out in countries that had no dealings with the energy firm.
A probe was launched and it was discovered that no-one other than Polach had heard of GU.
Calls to GU’s German number were connected directly to an answering machine, and e-mails on Polach’s computer revealed his instructions for transferring the cash.
Prosecutor Michael Holland said: “It was also noted that the UK address on some GU documents was in fact the defendant’s home address.
“Another address given for GU in the UK was in Finchley Road, north London. It was a PO box rented by this defendant in order to pursue this fraud.”
The court heard that Enron directors were further concerned when one of the e-mails on Polach’s computer indicated he had £800,000 to invest.
Civil proceedings were launched, and an order freezing Polach’s assets was issued in June last year.
An Enron representative then phoned Polach on holiday in Cyprus to tell him about the probe.
Mr Holland said Polach claimed GU was a legitimate company and had carried out work for Enron.
He said the firm might have been overpaid because he had authorised them to overcharge to settle an outstanding bill, adding: “I should not have done it.”
He also denied having £800,000 saved up, and said he had no assets even though just three weeks earlier the balance of the GU account was £200,000.
Police were informed, and Polach’s home in Hampstead and the PO box were raided.
He was arrested after returning to Britain on June 26 last year.
When interviewed by detectives, Polach admitted misappropriating the money by inventing GU and creating false invoices.
Mr Holland added: “In a nutshell, he used the fictitious company to bill his employers for work that had never been carried out.
“He created bogus invoices which triggered payments to Germany, which he then moved into an account which was in fact his own.”
Timothy Langdale QC, defending, said Polach committed the fraud while under intense pressure at work.
He said the defendant appeared on paper to have assets, but they were worthless following the Enron collapse.
“In interview, he immediately admitted his guilt. It is clear he was extremely upset and was in a terrible state. He was a completely broken man and was in something of a state of shock.
“It would be difficult to overstate the regret and remorse of what he feels for what he has done.
“This is a very sad case and a very sad day for this man and his wife.
“It cannot be said that he has done anything other than bring this shame down upon his own head.
“The consequences are irreparable. He will be struck off as a lawyer and will never be able to work again in the field in which he has been so successful. He is a ruined man.”
Mr Langdale added that Polach had since paid back the £385,000 after borrowing it from his wife.
Polach, of Aberdare Gardens, Hampstead, admitted 17 charges of false accounting between August 2001 and May 2002.
