Andrew S. Fastow, the chief architect of complex financial schemes blamed for fueling Enron Corp's swift collapse last year, has been indicted on 78 counts of fraud, money laundering, conspiracy and other charges.
The indictment handed down Thursday by a grand jury in Houston alleges that Fastow was at the center of multiple schemes that produced phantom profits and let him skim off millions of dollars for himself, his family and friends. If convicted, he could be sentenced to hundreds of years in jail and millions of dollars in fines.
PHOTO: REUTERS
Neither Fastow, the highest-ranking former official of the failed energy giant charged so far in the Justice Department's probe, nor his lawyers were present when the indictment was presented in federal court. His arraignment was scheduled for Wednesday. Fastow, 40, is free on US$5 million bond.
The indictment mirrored a criminal complaint filed Oct. 2, except for a new charge of obstruction of justice.
"These charges are full of sound and fury, but the truth about Enron has yet to be told," said Fastow's attorney, John W. Keker. "When that truth is told, to a jury of 12 honest Americans, Andy Fastow will be set free."
Prosecutors are expected to pressure Fastow to learn what he might say about the actions of his colleagues, including former Enron chairman Kenneth Lay and former chief executive Jeffrey Skilling. Neither has been charged,
Asked if the indictment could induce Fastow to cooperate with prosecutors, Assistant US Attorney Andrew Weissmann said, "These are significant charges that carry significant jail time."
Fastow's attorneys have said top Enron executives approved his work and that Fastow did not believe he committed any crimes.
Deputy Attorney General Larry Thompson, head of the Bush administration's corporate fraud task force, said the investigation into Fastow will continue, noting that federal officials "will use every appropriate measure to recover the ill-gotten gains of these corporate schemers."
Enron, No. 7 on the Fortune 500 list two years ago, filed for bankruptcy Dec. 2 after revealing a US$618 million loss and eliminating US$1.2 billion of shareholder equity.
Enron's collapse was the first in a series of corporate scandals that sent investors fleeing from a volatile stock market. Former Enron employees lost most of their retirement savings along with their jobs.
The indictment alleges that Fastow and others created schemes to defraud Enron and its shareholders through transactions with off-the-books partnerships that made the company look more profitable than it was.
Prosecutors also allege Fastow gained an estimated US$30 million from kickbacks funneled through Michael Kopper, his former aide, and investors or family members. Investigators say Fastow also siphoned off income from the partnerships.
Maximum penalties are 20 years for money laundering, 10 years for wire fraud and five years for conspiracy in addition to fines.
Kopper provided much of the information used by prosecutors to build their case against Fastow. He pleaded guilty to money laundering and wire fraud in August for creating and participating in some of the schemes. Kopper faces up to 15 years in prison at his scheduled April 4 sentencing.
The new obstruction of justice charge against Fastow says that in August and September 2001 he "did knowingly, intentionally and corruptly persuade and attempt to persuade" Kopper to withhold records and documents from investigations and "alter, destroy, mutilate and conceal" laptop and desktop computers and information they contained.
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