Top executive in Enron pleaded guilty Wednesday
HOUSTON (Aug. 21) - A former top executive in Enron Corp.'s finance division pleaded guilty Wednesday to money laundering and wire fraud, becoming the first to be convicted in the aftermath of the former energy behemoth's implosion last year.
Michael Kopper, 37, was managing director of Enron Global Finance under former chief financial officer Andrew Fastow. He quit the company months before its collapse to run one of several partnerships created by Fastow that have been blamed for the company's failure.
As part of his agreement to cooperate with the government, he agreed to surrender $12 million in illegally obtained assets.
In his written pleading, Kopper said his activities were conducted under the direction of Fastow and in some cases in concert with Fastow. He said that in at least two of the transactions he kicked back money to Fastow.
He also addressed the judge in court, outlining his actions in a low monotone. In response to a question, he said he had sought counseling in the past year for stress-related anxiety and took medication to help him sleep.
Kopper's cooperation represents a potential watershed in the investigation, given his knowledge of Enron's innermost workings. It also is a drastic shift from February when he invoked his Fifth Amendment right not to testify before Congress.
''Michael has admitted that he has misused his position at Enron to enrich himself and others, and in so doing, violated his duties as an Enron employee,'' David Howard, Kopper's attorney, said in a statement. Kopper stood beside Howard and made no comment.
Kopper remains free after posting $5 million bond set by U.S. District Judge Ewing Werlein Jr.
Sentencing was set for April 4, leaving prosecutors eight months to determine how helpful his testimony is before deciding what sentence to seek. Kopper could be sentenced to up to 15 years in prison and fined up to double the amount determined to have been fraudulently gained. That could amount to millions of dollars.
The government also said Wednesday it is seeking the return of about $23 million in illegally obtained money from other people, including about $12.8 million in accounts held by Fastow and his family.
Investigators are looking into whether Enron managers, from former chairman Kenneth Lay and former chief executive Jeff Skilling on down, knew the network of partnerships - largely backed by Enron stock - was being used to hide debt and inflate profits.
Former federal prosecutors say Kopper, as a one-time top lieutenant to Fastow, will be able to lead investigators through the complex web of accounting and financial transactions that prompted Enron's dizzying crash, leaving the company bankrupt, thousands of workers jobless and millions of investors with nearly worthless stock.
''He embodies the perfect cooperating witness because he is not viewed by the public as being one of the most culpable defendants, but at the same time he has a vast array of knowledge and can point the government in the right direction,'' said Robert Mintz, a former Justice Department prosecutor.
Fastow was ousted in October, days after Enron admitted a $618 million third-quarter loss and wrote down $1.2 billion in shareholder equity, exposing years of inflated profits and hidden debt.
When Enron filed for bankruptcy in 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 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 Exchange Commission investigation of Enron's accounting practices.
Since then, executives of Andersen and other major companies, including WorldCom and Adelphia, have been accused of improper accounting.
Fastow ran partnerships that allowed Enron to shift debt from its books. He also negotiated deals with Enron on the partnerships' behalf.
Kopper became a focus of investigators because of his involvement in Enron-financed partnerships. An investigation by Enron's board determined Kopper and his domestic partner used Enron partnerships to turn a $125,000 personal investment into $10.5 million in less than three years.
Kopper had not been charged. In a plea agreement, the government generally brings charges just before a guilty plea is entered in court.
Kopper ran a partnership called Chewco, named for the ''Star Wars'' character of Chewbacca, until he left Enron in 2001 to run another Fastow-created entity called LJM2.
Ken Johnson, spokesman for the House Energy and Commerce Committee, said Kopper likely is 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,'' Johnson said. ''We have a wealth of information in our possession suggesting a number of people at Enron took part in fraudulent activities.''
AP-NY-08-21-02 1506EDT
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