Winning the guilty plea of an important former Enron Corp insider, the Justice Department set sights on its biggest target yet in the massive fraud investigation: Enron's former chief financial officer.
As part of its plea agreement with Michael J. Kopper Wednesday, the government sought to seize US$22.1 million in bank accounts that prosecutors alleged contain money from illegal Enron deals largely organized by Kopper and Andrew S. Fastow, Enron's former financial officer.
Experts described the move as an unusually aggressive legal strategy typically employed against drug dealers.
The amount includes nearly US$12.8 million held by Fastow, his family or his family's foundation, plus US$9.3 million from other former Enron workers. Fastow's new, US$2.6 million, five-bedroom home under construction in Houston could also be seized. Fastow, who left Enron in October 2001, has not been indicted or charged with any crime. He has declined to testify before Congress.
The Justice Department listed in court papers bank accounts totaling US$20.5 million for Fastow, his family and its foundation, but officials said US$7.69 million was contained within a duplicate account when two of the financial institutions merged.
A spokesman for Fastow, Gordon Andrew, said Fastow will ``respond at the appropriate time and in the appropriate forum.''
The forfeiture request, filed in US District Court in Houston, came as part of a plea agreement formalized Wednesday 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 US regulators as outside entities but secretly had too-close ties to Enron.
Deputy US 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. US officials said he faces up to 15 years in prison, though Kopper agreed to give up US$12 million in illegal profits and cooperate in the government's continuing criminal probe of Enron's spectacular collapse.
Kopper's US$12 million, plus the millions of dollars from bank accounts owned by others, 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, who is head of enforcement at the Securities and Exchange Commission.
Experts said Kopper's plea was significant because it signals the government's interest in prosecuting others who participated in those controversial deals, whose disclosures last year 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.
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