U.S. Charges Ex-Enron CFO with Fraud

Oct. 2, 2002
By MARK BABINECK, Associated Press Writer

HOUSTON (AP) - The former chief financial officer of Enron Corp. was charged Wednesday with securities, wire and mail fraud, money laundering and conspiring to inflate Enron's profits and enrich himself at the company's expense.

Andrew Fastow, 40, surrendered Wednesday morning to FBI agents and had a court date later Wednesday.

The criminal complaint charges that Fastow and others created a scheme to defraud Enron and its shareholders through transactions with off-the-books partnerships that made the company look more profitable than it was.

With the exception of Michael Kopper, a once-trusted Fastow aide who has pleaded guilty to conspiracy charges, the complaint does not identify the others who allegedly participated in the scheme that led to Enron's bankruptcy.

Fastow, 40, arrived at the FBI's headquarters in Houston in anticipation of an initial court appearance on charges related to partnerships credited with fueling Enron's swift descent into bankruptcy last year.

He was accompanied by his attorney, John Keker. After Fastow turned himself in, Keker quickly left.

Fastow spent about 30 minutes inside the FBI office before two agents led him out in handcuffs.

Fastow is said to have devised the company's complex web of off-the-books partnerships used to hide some $1 billion in debt from shareholders and federal regulators. He is the most prominent company figure targeted so far by the Justice Department.

"Today's complaint demonstrates the effectiveness of a swift, coordinated law enforcement response to even the most sophisticated financial crimes," Deputy Attorney General Larry Thompson told a Washington news conference. "Our strategy is straight-forward. We aim to put the bad guys in prison and take away their money."

In one instance, prosecutors say that according to Kopper, Fastow demanded from a partnership kickbacks of $10,000 a year to members of his family.

"Fastow and his co-conspirators systematically and thoroughly corrupted the business of one of the largest corporations in the world," Thompson said.

Enron filed for bankruptcy late last year, wiping out the retirement savings of employees — and the investments of pension funds and individuals nationwide. Enron was the first in a series of big corporate scandals that have rattled investors' confidence and the stock market.

Also Wednesday, the Securities and Exchange Commission filed a related civil lawsuit against Fastow alleging that he defrauded investors and violated securities laws. The SEC is seeking unspecified civil money penalties against Fastow and repayment of his allegedly ill-gotten gains.

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