Hot Flashes : Enron, California, and Cocaine

When an unusually hot summer caused California residents to blast their air conditioners in 2000, the resulting demand for energy outstripped the state's supply and triggered the start of the infamous California energy crisis of 2000-2001.

The resulting hoopla that thrust the situation into the national forefront revolved around the debate over California's newly deregulated electricity market. In 1996, a bipartisan initiative was signed into law that would supposedly transform a government regulated energy grid into a shining example of free market economics.

It was claimed this would benefit consumers by stimulating competition, which would in turn lead to cheaper prices. It wasn't anticipated, however, that large energy companies, such as the now defunct Enron, would systematically and opportunistically manipulate the deregulated market to boost their profits.

The energy crisis and the resulting fall of Enron in late 2001 wove together, revealing a sordid tail of corruption and greed inside one of America's most prominent companies. Thrust into the midst of the scandal was Jason Leopold, then bureau chief of Dow Jones Newswires. Today Leopold is a respected indie-journalist who writes for publications like CounterPunch and Z magazine, but at the time of the energy crisis he was a power-hungry egotist who'd do anything to break a story. After years of hiding from his past, Leopold is coming clean in his memoir, News Junkie, hitting bookstores this spring.

Leopold's dirtiest deeds and darkest secrets - from his cocaine addiction to his felony conviction - are laid bare in this introspective journey, intertwined with an insider's account of the unfolding energy crisis.

His murky past is filled with tales of petty crime and elaborate schemes - like stealing thousands of CDs from the record label he worked for and selling them to music shops - undertaken to fuel his cocaine habit. Flashing back into his family life, Leopold details the regular beatings he received from his father and describes how these events fueled his angry outbursts and compulsive lying. Finally tiring of the bouts of paranoia, constant fear of rats in his undies, and the toll of his drug use on his wife, Leopold entered rehab in 1998.

Leopold may have succeeded in shaking his cocaine habit, but at his heart he still had the mentality of an addict. His new fix came in the form of news reporting, and he constantly fabricated his past in order to obtain work in journalism. A faked resume eventually landed him a job with the Los Angeles Times, which he consequently lost after an angry outburst. Nevertheless, the position gave him enough clout to secure employment at Dow Jones Newswires in 2000. He was assigned to the energy beat, becoming fiercely competitive. In order to be the first with a scoop, Leopold often lied to his sources, toying with their emotions and conning them into giving him sensitive information.

"Other journalists will whine about ethics, but that's a load of crap," writes Leopold. "If reporting a huge story required journalists to pimp their mothers, there would be a lot of elderly hookers on the street."

Ironically, when Leopold was tipped off to Enron's manipulation of the energy market, he failed to see it as newsworthy story, let alone the breakout opportunity of his career. Enron's tactics - involving the falsification of energy sales to fool the state into paying the company to unclog power lines which were never clogged in the first place - were reported by Leopold on May 3, 2000, in a 615 word story he failed to find significant. It would later turn out Leopold had written the first major story on a scam referred to within the company as "Death Star." It wasn't until October 16, 2001, when the Wall Street Journal revealed Enron's rampant corruption, that Leopold realized the company had been feeding him lies. He became obsessed with digging up more dirt on the now bankrupt corporation.

After interviewing former Enron employees, Leopold got wind of another scam involving the company's retail energy division, Enron Energy Services (EES). Although EES was barely making ends meat, Enron had set up an elaborate hoax to convince stock analysts it was successful.

After a month of investigations, Leopold discovered that in 1998 Enron execs had 75 secretaries go down to an empty EES trading floor and act like they were making deals. The secretaries obliged, pretending to make calls on phones that were never even plugged in, while the higher-ups in the company brought in one hundred Wall Street analysts to view the charade. Enron spent half a million dollars on the scam, installing flat screen monitors and an electronic ticker tape to give the impression of a bustling trading floor.

Leopold's personal crusade against Enron would eventually lead to his downfall as a mainstream journalist. After being told he could no longer report on the scandal, he resigned from Dow Jones at the end of March 2002, and embarked on a career as a freelance writer.

His investigations now targeted Thomas White, former vice chairman of EES, who was tapped by the Bush Administration to serve as Secretary of the Army. Leopold's sources and sixty pages of documents told him that White knew EES was a money-losing venture and had issued an email ordering it to be covered up. On August 29, 2002, Salon.com posted Leopold's story entitled, "Tom White Played Key Role in Covering up Enron Losses." But it wasn't until three weeks later, when Paul Krugman used the story as a basis for a column in The New York Times, that it received national attention. Then all hell broke loose.

The Financial Times accused Leopold of plagiarizing parts of his story, and although Leopold admitted he hadn't adequately sourced the Times, he was too concerned with getting the piece finished to correct his mistake. Things quickly spiraled out of control, and White's supposed email telling employees to hide losses at EES came under scrutiny. Even though Leopold's other documents backed up the rest of his story, the lone email was unable to be collaborated. Salon was forced to issue a retraction and remove Leopold's story from the internet. The New York Times branded him a plagiarist, effectively ending his career in journalism.

In April, 2003, one year after the Salon story had been posted, White resigned from his post as Secretary of the Army for reasons unknown. In early 2004, the Justice Department arrested former Enron executives Jeff Skilling and Ken Lay for a number of crimes, including concealing losses at EES. More evidence surfaced collaborating the Salon story, but it was too late for Leopold.

"The negative press on me was taking a toll." he wrote. "I couldn't land a reporting gig anywhere. It felt like my arms had been amputated."

Finally coming to grips with his past, and his addict-like behavior while working at Dow Jones, 2005 marked Leopold's rebirth as a journalist working for independent media. Unfortunately for some, his memoir and the change of heart it documents may be hard to swallow. The fallout from the Million Little Pieces debacle earlier this year has created a climate of skepticism regarding memoirs in general, and Leopold's history as a compulsive liar makes trust hard to come by. However, these types of doubts do nothing to detract from his accomplishments as a journalist or the suspense of this psychological thrill-ride.

Written By Jason Glover

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