Enron Probe Targets Bank Accounts
Thu Aug 22, 7:56 AM ET
By TED BRIDIS, Associated Press Writer
WASHINGTON (AP) - Justice Department ( news - web sites) officials prosecuting the Enron Corp. case are using aggressive tactics normally employed against drug dealers to seize bank accounts and go after a new mansion owned by the company's former chief financial officer.
As part of a plea agreement formalized Wednesday with Michael J. Kopper, a key Enron insider, the government sought to seize $22.1 million in bank accounts that prosecutors alleged contained money from illegal Enron deals largely organized by Kopper and Andrew S. Fastow, Enron's former financial officer.
The amount included nearly $12.8 million held by Fastow, his family or his family's foundation, plus $9.3 million more from other former Enron workers. In addition, Fastow's new, $2.6 million, five-bedroom home under construction in Houston also could be seized.
The collected funds would be used to repay investors defrauded by Enron, officials said. Details of that distribution were still being worked out, although the amount represents just a fraction of the amount lost by investors.
"The money would be put in a court registry awaiting a plan of distribution, and that will happen some time in the future," said Stephen Cutler, head of enforcement at the Securities and Exchange Commission ( news - web sites).
Fastow, who left Enron in October 2001, has not been indicted or charged with any crime. He has declined to testify before Congress.
A spokesman for Fastow, Gordon Andrew, said Fastow would "respond at the appropriate time and in the appropriate forum." Fastow's lawyer, David Boies, was in Africa until the end of the month and could not be reached for comment.
The unusual forfeiture request, filed in U.S. District Court in Houston, came as part of Wednesday's plea agreement with Kopper, once a trusted aide to Fastow. Kopper was at the crux of at least three partnerships — known as Radar, Chewco and Southampton — that conducted complicated business deals with Enron. The partnerships were portrayed to investors and federal regulators as outside entities but secretly had too-close ties to Enron.
Deputy U.S. Attorney General Larry Thompson, who announced Kopper's guilty plea in Washington, said those deals "made Enron appear more profitable to Wall Street and, in one instance, disguised Enron's regulatory violations."
Kopper pleaded guilty to one count of conspiracy to commit wire fraud and one money-laundering charge. U.S. officials said he faces up to 15 years in prison, although Kopper agreed to give up $12 million in illegal profits and cooperate in the government's continuing criminal probe of Enron's spectacular collapse.
Experts said Kopper's plea was significant because it signals the government's interest in understanding and prosecuting others who participated in those controversial deals, whose disclosures in late 2001 led to Enron's bankruptcy. Prosecutors in court papers tied Kopper's roles in those deals closely to Fastow and said Kopper distributed profits to Fastow, Fastow's wife and other family members.
"The action against Mr. Kopper is an important chapter in the story of Enron's collapse, but much of the story remains untold," Cutler said. "This case is but a first step, albeit a vital one, in our effort to hold responsible and to bring to justice those who participated in this massive betrayal of the investing public's trust."
Among those whose bank accounts the Justice Department also targeted were Fastow's son, Peter; Ben Glisan Jr., Enron's treasurer and another trusted aide to Fastow; Kristina M. Mordaunt, a former in-house Enron lawyer; Kathy Lynn, an Enron financial division vice president; and Anne Yeager, an Enron employee.
The government also sought Mordaunt's $321,600 home in Houston and a 2000 Lexus RX-300 sport utility vehicle registered to Mordaunt's husband, Robert Vance Ulsh Jr.
Glisan and Mordaunt each invested $5,800 in the Southampton partnership and earned $1 million in profits. Mordaunt's lawyer has said she did not know the transaction was illegal.
Although a federal judge must approve the forfeitures, the Justice Department's filing effectively freezes those bank accounts, preventing further withdrawals, until the government's request is ruled on, said Richard A. Kirby, a former senior litigation counsel at the SEC.
"They really are using all their powers," said Kirby, now a lawyer with Shapiro, Sher, Guinot & Sandler in Washington. |
