UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

Plaintiff Securities and Exchange Commission for its Complaint alleges as follows:

SUMMARY

1. Wesley H. Colwell, the former Chief Accounting Officer of Enron North America engaged in a wide ranging scheme to defraud in violation of the federal securities laws. Colwell, in coordination with other Enron employees, manipulated Enron's publicly reported earnings through a variety of devices designed to produce materially false and misleading financial results, including misuse of reserve accounts, concealment of losses, inflation of asset values, and deliberate use of improper accounting treatment for transactions.

2. The Commission requests that this Court order Colwell to pay disgorgement, prejudgment interest, and a civil penalty, enjoin Colwell from violating the federal securities laws cited herein, and prohibit him from acting as an officer or director of any issuer of securities that has a class of securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 ("Exchange Act").

JURISDICTION AND VENUE

3. The Court has jurisdiction over this action pursuant to Sections 21(d), 21(e), and 27 of the Exchange Act [15 U.S.C. §§ 78u(d) and (e) and 78aa].

4. Venue lies in this District pursuant to Section 27 of the Exchange Act [15 U.S.C. § 78aa] because certain acts or transactions constituting the violations occurred in this District.

5. In connection with the acts, practices, and courses of business alleged herein, Colwell, directly or indirectly, made use of the means and instruments of transportation and communication in interstate commerce, and of the mails and of the facilities of a national securities exchange.

6. Colwell, unless restrained and enjoined by this Court, will continue to engage in transactions, acts, practices, and courses of business as set forth in this Complaint or in similar illegal acts and practices.

DEFENDANT

7. Wesley H. Colwell, age 43, resides in Houston, Texas. Colwell joined Enron in late 1999, in March 2000 became CAO of Enron North America, and in November 2000 expanded his role to include reporting and accounting responsibility for Enron Wholesale Services. Colwell remained in this position through January 2002 when UBS Warburg Energy Services LLC purchased Enron Corp.'s trading business. During the relevant time period, Colwell was a licensed CPA.

ENTITIES INVOLVED

8. Enron Corp. is an Oregon corporation with its principal place of business in Houston, Texas. During the relevant time period, Enron's common stock was registered with theCommission pursuant to Section 12(b) of the Exchange Act and traded on the New York Stock Exchange. During the time that Colwell and others engaged in the fraudulent conduct alleged herein, Enron raised millions in the public debt and equity markets. Among other operations, Enron was the nation's largest natural gas and electric marketer. Enron rose to number seven on the Fortune 500 list of companies. By December 2, 2001, when it filed for bankruptcy, Enron's stock price had dropped in less than a year from more than $80 per share to less than $1.

9. Enron Energy Services (EES) was formed by Enron in late 1996 to provide energy products and services to industrial, commercial, and residential customers in both regulated and deregulated markets. EES' products included the delivery of electricity and natural gas, facilities management services, metering and billing functions, and risk and commodity management services. EES provided these products and services through comprehensive energy management agreements generally having a term of five to ten years. In Enron's segment disclosures, EES' results were reported separately as Retail Energy Services.

10. Enron Wholesale Services (Wholesale) was Enron's largest and fastest growing business segment in 2000 and 2001. Wholesale consisted of several business units, including Enron North America (ENA). ENA was the largest and most profitable business unit within Wholesale and included Enron's wholesale merchant energy business related to natural gas and power across North America, including trading, marketing and new asset development activities in that region. In its segment disclosures, ENA's results were reported within the Wholesale Services segment.

FACTUAL ALLEGATIONS

11. The fraudulent scheme carried out by Colwell and others at Enron involved, among other things, manipulating Enron's publicly reported earnings through a variety of devices designed to produce materially false and misleading financial results. This scheme included the misuse of reserve accounts, concealment of losses, inflation of asset values, and deliberate use of improper accounting treatment for transactions.

Enron, Colwell, and Others Improperly Used Reserves To Manage Earnings

12. As part of the scheme to defraud, Colwell and others deliberately manipulated Enron reserve accounts to smooth the volatility of the earnings of its wholesale energy trading business; to conceal losses of its retail energy business; and to enable Enron to announce that it had met or exceeded performance expectations.

13. In the third quarter of 2000, Enron -- through its wholesale energy trading operations in its ENA business unit -- began to experience an unexpected surge in earnings. At that time, the California energy markets were experiencing significant increases in energy prices and Enron's trading operations were well positioned to profit from the volatile markets.

When ENA generated trading profits in the third and fourth quarters of 2000 that greatly exceeded Enron's internal targets, Enron placed earnings into a previously established reserve known as "Schedule C," and manipulated the earnings for reporting purposes. In these quarters and others, Colwell and others improperly used amounts placed into Schedule C as necessary to fulfill internal targets and satisfy external earnings expectations.

14. Earnings improperly reserved and improperly released by Colwell and others significantly affected Enron's financial reporting and related public disclosures. By the end of2000, over $400 million in earnings were improperly withheld from Wholesale and Enron's reported earnings. When Enron later needed earnings in the third quarter of 2001, it released over $200 million from Schedule C into reported earnings. Colwell and others knew that Enron's use of Schedule C to manipulate reported earnings was improper and did not comply with applicable accounting standards.

Colwell And Others Hid Losses Of Enron's Retail Business

15. In another example of the scheme to defraud carried out by Colwell and others, Enron used reserve accounts in ENA to hide hundreds of millions of dollars of losses associated with EES, Enron's heavily touted retail energy business. By various means, Colwell and others concealed in ENA a significant portion of EES losses, which materially affected Wholesale's and EES's first and second quarter 2001 operating results.

16. These means included, among others, the transfer from EES to ENA of uncollectible receivables owed to EES by California utilities, avoiding the entry of a reserve on EES' books of hundreds of millions of dollars and allowing that reserve to be, in effect, funded by ENA earnings. In addition, Colwell and others concealed hundreds of millions of dollars of inflated EES contract values discovered during the first quarter of 2001 by moving EES' "risk management activities" into ENA. Instead of specifically disclosing the problems in EES that necessitated the change, Enron told investors the risk portfolio was moved to ENA for efficiency reasons. Colwell and others knew that these devices caused Enron to provide a false and highly misleading picture of its financial results. In the first quarter 2001, EES losses hidden in ENA exceeded $700 million. In the second quarter 2001, additional EES losses of over $300 million were hidden in ENA.

The Fraudulent Inflation Of Merchant Assets

17. In another example of the scheme to defraud carried out by Colwell and others, Enron fraudulently inflated the value of its largest private "merchant" asset, Mariner Energy, Inc., an oil and gas exploration company.

18. In the fourth quarter of 2000, Enron needed an additional $100 million of earnings to achieve budget targets that formed the basis of its earnings-per-share objective for that quarter. To meet this need, Enron's senior management directed Colwell and others to fraudulently increase the recorded value of Mariner by approximately $100 million. Colwell and others knew that Mariner's fourth quarter 2000 valuation was an amount arbitrarily selected to generate fictitious mark to market earnings sufficient to meet Enron's targets.

19. The reported fair values of Mariner in the fourth quarter of 2000 and in the first three quarters of 2001 were not recorded in accordance with applicable accounting principles. Colwell and others allowed the value of Mariner to be fraudulently inflated, thereby causing Enron's financial statements filed in its year 2000 Form 10-K and its Form 10-Qs for the first three quarters of 2001 to be materially false and misleading.

20. Following Enron's bankruptcy filing in December 2001, a detailed review of Mariner was conducted and it was determined that an approximate $257 million write-down was warranted. That amount was included in the proposed write-downs disclosed by Enron in its April 22, 2002 Form 8-K.

Management Improperly Avoids a Write-Down of its Houston Pipeline Asset.

21. In another example of the scheme to defraud carried out by Colwell and others, in the second quarter of 2001, Enron avoided an approximate $1.4 billion loss relating to thedisposition of an Enron subsidiary, Houston Pipeline Company (HPL).

22. During the summer of 2000, Enron wanted to dispose of HPL. Enron knew that its recorded value of HPL on its books far exceeded its market value and therefore a sale of HPL would have required Enron to record a significant loss. Because there was a mandate from Enron's senior management to not take a loss on the HPL disposition, and because the CEO of ENA had previously told Enron's Board of Directors that there would be no loss on the HPL sale, Enron structured a transaction with a third party such that certain assets would be leased rather than sold. Colwell and others knew that no business reason existed for including the lease in the structure of the deal other than to avoid a write-down. Upon entering into the HPL lease, Enron was required to subject the leased assets to an impairment test in accordance with relevant accounting standards. The impairment test required that an impairment loss be recognized if the expected undiscounted future cash flows resulting from the use and final disposition of the leased assets was less than the carrying amount of the assets.

23. Prior to the HPL transaction closing date, the lease agreement was amended to allow the counter-party to prepay the lease. This prepayment, which represented all of the expected future cash flows over the lease term, caused the leased assets to fail the impairment test. Colwell and others then improperly performed the impairment test using "deemed" cash flows as if Enron was to receive annual payments over the term of the lease. Using this method, the leased assets passed the impairment test. Those "deemed" cash flows, however, were never going to be received by Enron. As a result of the improper application of the impairment test, Enron avoided an approximate $1.4 billion loss in the second quarter of 2001 and its financial statements filed in its second quarter 2001 Form 10-Q were materially false and misleading. 24. HPL was included in the proposed write-downs disclosed by Enron in its April 22, 2002 Form 8-K. An analysis of the HPL transaction revealed that a write-down should have been booked in conjunction with the HPL deal. Enron concluded, among other things, that the accounting was improperly performed.

25. In carrying out the foregoing activity, as well as other transactions, acts, and practices, Colwell and others at Enron engaged in a scheme to defraud in violation of the federal securities laws.

CLAIMS FOR RELIEF

FIRST CLAIM

Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)]
and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]

26. Paragraphs 1 through 25 are realleged and incorporated by reference herein.

27. As set forth more fully above, Colwell, directly or indirectly, by use of the means or instrumentalities of interstate commerce, or by the use of the mails and of the facilities of a national securities exchange, in connection with the purchase or sale of securities: has employed devices, schemes, or artifices to defraud, has made untrue statements of material facts or omitted to state material facts necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or has engaged in acts, practices, or courses of business which operate or would operate as a fraud or deceit upon any person.

28. By reason of the foregoing, Colwell violated and aided and abetted violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)], and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5].

SECOND CLAIM

Violations of Section 13(a) of the Exchange Act [15 U.S.C. § 78m(a)]
and Rules 12b-20, 13a-1, & 13a-13 thereunder
[17 C.F.R. §§ 240.12b-20, 240.13a-1, 240.13a-13]

29. Paragraphs 1 through 28 are realleged and incorporated by reference herein.

30. By engaging in the conduct described above, Colwell knowingly and substantially caused Enron to file materially false and misleading annual reports on Form 10-K and materially false and misleading quarterly reports on Form 10-Q with the Commission.

31. By reason of the foregoing, Colwell aided and abetted violations by Enron of Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1, and 13a-13 thereunder.

THIRD CLAIM

Violations of Sections 13(b)(2)(A) and 13(b)(2)(B)
of the Exchange Act [15 U.S.C. §§ 78m(b)(2)(A),
78m(b)(2)(B)] and Rule 13b2-1 thereunder
[17 C.F.R. § 240.13b2-1]

32. Paragraphs 1 through 31 are realleged and incorporated by reference herein.

33. By engaging in the conduct described above, Colwell aided and abetted Enron's failures to make and keep books, records and accounts which, in reasonable detail, accurately and fairly reflected Enron's transactions and dispositions of its assets, in violation of Section 13(b)(2)(A) of the Exchange Act, and further aided and abetted failures to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that Enron's corporate transactions were executed in accordance with management's authorization and in a manner to permit the preparation of financial statements in conformity with generally accepted accounting principles in violation of Section 13(b)(2)(B) of the Exchange Act.

34. By engaging in the conduct described above, Colwell, directly or indirectly,falsified and caused to be falsified Enron's books, records, and accounts subject to Section 13(b)(2)(A) of the Exchange Act in violation of Rule 13b2-1 thereunder.

35. By reason of the foregoing, Colwell aided and abetted violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and violated Rule 13b2-1 thereunder.

FOURTH CLAIM

Violations of Section 13(b)(5) of the Exchange Act
[15 U.S.C. § 78m(b)(5)]

36. Paragraphs 1 through 35 are realleged and incorporated by reference herein.

37. By engaging in the conduct described above, Colwell knowingly circumvented or knowingly failed to implement a system of internal financial controls at Enron.

38. By reason of the foregoing, defendant Colwell violated and aided and abetted violations of Section 13(b)(5) of the Exchange Act.

JURY DEMAND

39. The Commission demands a jury in this matter.

PRAYER FOR RELIEF

WHEREFORE, the Commission respectfully requests that this Court:

(A) Grant a Permanent Injunction restraining and enjoining Colwell from violating the statutory provisions set forth herein; prohibiting him from acting as an officer or director of any issuer of securities that has a class of securities registered pursuant to Section 12 of the Exchange Act or that is required to file reports pursuant to Section 15(d) of such Act; and ordering him to pay disgorgement and civil penalties;

(B) Pursuant to Section 308 of the Sarbanes-Oxley Act of 2002, enter an orderproviding that the amount of civil penalties ordered against Colwell be added to and become part of a disgorgement fund for the benefit of the victims of the violations alleged herein; and

(C ) Grant such other and additional relief as this Court may deem just and proper.

Dated: October ___, 2003