Monday PM September 28th, 2009

Former Enron broadband executive sentenced to 16 months in prison…Crew continue clean-up oil spill from vessel collision in Houston Ship Channel…Texas ranks 49th in federal stimulus funding per resident…

The former chief executive of the failed Internet division of Enron has been sentenced to 16 months in prison. A federal judge sentenced Joseph Hirko in Houston. Hirko also has agreed to pay $8.7 million in restitution as part of a plea deal with federal prosecutors. Hirko agreed to plead guilty to a count of wire fraud just weeks before he was to go on trial for a second time last fall. Prosecutors say Hirko falsely promoted Enron’s broadband division to analysts to help pump up the company’s stock price. Hirko admitted that he knew the broadband operating system couldn’t do what it had been promoted to do. Enron collapsed into bankruptcy in December 2001 after years of accounting tricks could no longer hide billions of dollars in debt nor make failing ventures appear profitable.

Texas financier R. Allen Stanford has been returned to a lockup after being hospitalized for treatment of a concussion following a jail fight. Court-appointed attorney Kent Schaffer told the Associated Press that his client was injured in a fight on Thursday with another inmate at the Joe Corley detention facility in Conroe. Schaffer says Stanford had “`a concussion, two black eyes, a broken nose.” Schaffer says Stanford was returned to the lockup Sunday afternoon. Stanford is being held on charges of running a $7 billion ponzi scheme. He has denied the allegations. Stanford is charged with bilking investors of the now-defunct Stanford Financial Group. Schaffer says a status hearing is October 14th.

A newspaper report says Stanford will be moved from the Conroe-area jail to the downtown Houston Federal Detention Center so he can better prepare for trial. A court order was issued this morning.

Crews have been working to clean an oil spill in a secluded northern part of the Houston ship channel after a collision between two vessels. Coast Guard Chief Petty Officer Mark Mackowiak said a three-mile stretch of the ship channel was closed until this afternoon. About 10,500 gallons spilled late Friday after the 458-foot tank vessel chemical supplier was struck by a barge close to Brady’s Island near the Interstate 610 bridge. The motor vessel received a two-foot by four-foot gash in one of its fuel tanks. No injuries were reported. The Coast Guard spokesman said about 4,200 gallons had been removed so far by today. Mackowiak says the spill had “very minimal impact to the overall port operations.”

Texas ranks 49th in federal stimulus funding per resident. Economist Barton Smith says lawmakers have been distributing money on a state-by-state basis. But Texas was viewed, at the time of the passage of the stimulus package, as a state with less need. Smith has been preparing his fall symposium on the Houston economy.


“And we’ve been collecting all sorts of data. Ed, on how much has been spent, how much is left to be spent. You’re chasing a moving target and it’s very, very hard.”

Ed: “We are still benefitting from certain things, certain grants like there’s renewed interest in high-speed rail in the state. Those things might not have come about, or at least so quickly, had this all not happened, I suppose.”

“Right. That is an excellent point, as well. You know, whether or not that actually happens—I still have some doubts. Once it’s seriously thought out, a lot of wiser minds are going to say that this is not the best way to spend federal money.”

A newspaper analysis of federal grants and contracts shows Texas has been approved for about $12.9 billion in stimulus grants and contracts. That’s about $533 per person, according to the Recovery Accountability and Transparency Board.

The average price of regular gasoline in the United States has dropped nearly seven cents over a two-week period to $2.52. That’s according to the national Lundberg survey of fuel prices released Sunday. Analyst Trilby Lundberg says the average price for a gallon of mid-grade on the survey day of September 25th was $2.65. Premium was at $2.77. St. Louis had the lowest average price among cities surveyed, at $2.16 a gallon for regular. Anchorage was the highest at $3.29. In California, a gallon of regular cost an average of $3.09. Stockton had the state’s least expensive gas at $3.06 a gallon. San Francisco remained the steepest at $3.15.

Homeowners who heat with oil were feeling sticker shock just over a year ago as prices soared close to $5 a gallon, but they’re breathing easier now. Heating oil prices are barely half what they were in summer 2008. Neil Gamson of the Energy Information Administration says heating oil inventories are above average and hurricane activity hasn’t disrupted oil production in the Gulf of Mexico. The Energy Information Administration projects the average cost of heating oil will go up to $2.71 per gallon this winter. The EIA says about seven per cent of U.S. households are heated primarily by oil. The EIA says heating costs from natural gas, electric heat and propane are all expected to drop. About 103 million households combined are heated by those sources.

Big job losses and a spike in early retirement claims from laid-off seniors will force social security to pay out more in benefits than it collects in taxes the next two years. That’s the first time it’s happened since the 1980s. The deficits–$10 billion in 2010 and $9 billion in 2011–won’t affect payments to retirees because social security has accumulated surpluses from previous years totaling $2.5 trillion. But they will add to the overall federal deficit. Applications for retirement benefits are 23 per cent higher than last year, while disability claims have risen by about 20 per cent. Social security officials had expected applications to increase from the growing number of baby boomers reaching retirement, but they didn’t expect the increase to be so large. Nearly 2.2 million people applied for social security retirement benefits from start of the budget year in October through July, compared with just under 1.8 million in the same period last year.

A Mitchell telecommunications firm has merged with a company headquartered in Texas. Martin Group Marketing Coordinator Courtney Deinert says the merger with Houston-based CHR Solutions will not result in any office closings or layoffs. The merged company is called CHR Solutions and has about 400 employees in eight states. The South Ddakota locations are in Mitchell, Rapid City and Sioux Falls. James Taylor, chairman and chief executive officer of CHR Solutions, will hold those titles with the merged company. Martin Group President and CEO Jim Odom will be president of the software solutions business unit. Martin Group was founded in 1971 and grew into a nationwide provider of software, business and engineering services for telecommunications firms. CHR Solutions provides consulting and information technology services to the telecommunications, energy and finance markets.

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