Former Enron executive to plead guilty to money
laundering, conspiracy
"The plea is the first outward sign of progress in the Enron investigation. Other major
companies under investigation, including WorldCom, Arthur Andersen and Adelphia,
all have seen executives charged."
Tue Aug 20,10:07 PM ET
story.news.yahoo.com
By CHRISTOPHER NEWTON, Associated Press Writer
WASHINGTON - A top lieutenant to Enron Corp.'s former chief financial officer
will plead guilty to criminal charges, the first admission of guilt by an executive
of the fallen energy-trading company, sources close to the investigation said.
Michael Kopper, former managing director of Enron Global Finance, plans to
enter guilty pleas Wednesday in Houston to single charges of conspiracy to
commit wire fraud and money laundering, two sources said Tuesday, speaking
on condition of anonymity.
He will also turn over dlrs 12 million in illegally obtained assets, according to
one of the sources.
Kopper, 37, was a top deputy to ex-chief financial officer Andrew Fastow. He
became a focus of investigators because of his involvement in Enron-financed
partnerships, accounting devices that allowed the company to shift debt and
other liabilities off its books.
As part of the plea agreement, Kopper has agreed to cooperate with
investigators, a potential watershed event in the investigation since he has
knowledge of Enron's innermost workings and financial dealings.
Kopper's attorney did not immediately return calls seeking comment. A
spokesperson for the Justice Department ( news - web sites) declined to
comment.
The plea is the first outward sign of progress in the Enron investigation. Other
major companies under investigation, including WorldCom, Arthur Andersen
and Adelphia, all have seen executives charged.
Ken Johnson, spokesman for the House Energy and Commerce Committee,
said Kopper is just the first of many executives who will be charged.
"Clearly this is just the first shoe to drop, based on the information our
committee has in its possession," said Johnson, who works for committee
chairman Rep. Billy Tauzin, R-La. "We have a wealth of information in our
possession suggesting a number of people at Enron took part in fraudulent
activities."
Kopper has not been charged. In a plea agreement, the government generally
brings charges just before a guilty plea is entered in court.
One of the sources said the plea offers no guarantee that prosecutors will not
seek prison time for Kopper.
When Houston-based Enron declared bankruptcy last December, it was the
largest such filing in U.S. history. Millions of investors lost money and
thousands of current and former Enron workers lost the great bulk of their
retirement savings.
It also led to the unraveling of Arthur Andersen LLP, the auditing firm convicted
of shredding documents to obstruct a Securities and Exchance Commission
investigation of Enron's accounting practices.
Former Andersen auditor David B. Duncan is awaiting sentencing for
obstruction of justice, and the firm itself has lost hundreds of clients and is
shutting down its auditing practice at the end of this month.
Enron's collapse put the Bush administration in an awkward position. President
George W. Bush ( news - web sites) has received more than dlrs 550,000 from
Enron, its employees and their relatives during his political career - the most
from any source. He is also a friend of former chief executive Ken Lay.
Attorney General John Ashcroft ( news - web sites) also received significant
campaign contributions from the company over the course of his career.
Ashcroft has stepped aside from the investigation.
Enron's partnerships were largely financed with Enron stock, even though they
were supposed to be independent. An internal Enron investigation concluded
that some of the partnerships, created by Fastow, were used to hide debt and
inflate Enron's profits by more than dlrs 1 billion, misleading investors.
Government investigators are looking into whether Enron managers, from former
chairman Kenneth Lay on down, knew that the network of partnerships was
being used to conceal huge debts.
Kopper had run a partnership called Chewco, named for the "Star Wars"
character Chewbacca, until he left Enron in 2001 to run another Fastow-created
entity called LJM2.
An investigation by Enron's board determined Kopper and his domestic partner
used Enron partnerships to turn a dlrs 125,000 personal investment into dlrs
10.5 million in less than three years.
Arthur Andersen officials said they learned early last November that Kopper's
partner owned part of the 3 percent of Chewco that should have been held
wholly by investors unrelated to Enron to allow the company under accounting
rules to keep the partnership off its books.
In February, Kopper invoked his constitutional right under the Fifth Amendment
and refused to testify about the downfall of Enron before the House Energy and
Commerce investigations subcommittee.
Kopper is a native of Long Island, N.Y., and a 1986 graduate of Duke University.
He later attended the London School of Economics and arrived at Enron in
1994.
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