Reuters Business Report - Former Enron Exec Kopper to Plead Guilty
Tuesday August 20, 5:30 pm Eastern Time
WASHINGTON (Reuters) - Former Enron Corp. (Other OTC:ENRNQ.PK - News) executive
Michael Kopper is expected to plead guilty on Wednesday to the first criminal charges in the
investigation into the failed energy giant and will surrender $12 million in "criminally derived" assets,
sources close to the investigation said on Tuesday.
These are the first criminal charges in the U.S.
government's investigation into Enron, which
was launched after the company collapsed last
fall amid controversy.
Although U.S. investigators have made several
high-profile arrests of top executives of other
companies accused of corporate wrongdoing,
they had yet to charge anyone connected to
Enron.
Kopper worked in the company's Enron
Global Finance division and was closely
connected to the failed energy giant's former
Chief Financial Officer Andrew Fastow.
He was considered Fastow's chief lieutenant in managing numerous off-balance-sheet partnerships
that eventually helped destroy Enron.
It was widely expected that someone close to Fastow would face charges before the former CFO --
or any of the company's other senior officials -- were charged. In so doing, prosecutors may attempt
to gain co-operation in subsequent cases against Enron's most senior executives.
Kopper will plead guilty in Houston on Wednesday morning to one count of conspiracy to commit
wire fraud and one count of conspiracy to commit money laundering, the sources said. As part of the
deal he will also surrender the $12 million.
Enron filed for bankruptcy on Dec. 2, wiping out thousands of jobs and billions of dollars in equity,
shaking investor confidence and triggering investigations by the Securities and Exchange
Commission, the U.S. Congress, and the Justice Department.
Kopper's attorneys could not immediately be reached for comment. A Justice Department
spokesman would not comment.
The Powers Report, an internal investigation by Enron directors, blamed Fastow for creating and
managing the partnerships, but made clear that Kopper was right beside him in negotiating the
complicated transactions that brought windfalls to both of them and other employees.
Kopper was believed to have earned more than $10 million from the secret partnerships, on whose
behalf he often negotiated when in discussions with Enron. Fastow did much the same, working both
sides of the deals until Enron decided he could no longer be the general partner of a key
off-balance-sheet partnership, LJM II.
In one partnership, known as "Chewco," Kopper earned $10 million from Enron for a $125,000
investment. He also was instrumental in a partnership named "Southampton Place," so named for the
swanky area of Houston where he and Fastow lived.
He sold his interest in LJM to Kopper in July 2001, which allowed Enron to avert -- temporarily --
the problem of having a top executive running an outside partnership rife with conflicts of interest.
Kopper left Enron at the same time to run LJM, which he since lost control of in legal battles.
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