Enron figure will plead guilty to conspiracy

Kopper must surrender $12 million from schemes

August 21, 2002|By Laura Sullivan | Laura Sullivan,SUN NATIONAL STAFF

WASHINGTON - A former Enron executive will plead guilty today in Houston to criminal charges of conspiracy to commit wire fraud and money laundering, becoming the first senior company official to admit wrongdoing in the collapse of the energy-trading giant, an official familiar with the case confirmed last night.

Michael J. Kopper, 37, who was a top aide to Enron's chief financial officer and has wide knowledge of many of the corporation's financial arrangements that are under investigation, has struck an agreement with the government to cooperate in the inquiry, the official said.

In pleading guilty, Kopper could face 15 years in prison and will have to turn over $12 million in assets he acquired through dubious business transactions with Houston-based Enron.

Neither Kopper nor his lawyer could be reached for comment.

Government investigators are reviewing all of the corporation's business dealings piece by piece, especially those that hid millions of dollars in debt. Investors lost millions, and many current and former employees of the company lost much of their life savings.

Kopper, the former managing director of Enron Global Finance, was a partner in a number of auxiliary companies whose purpose seems to have been to shift debt and liabilities off of Enron's books and to enrich top executives.

In one arrangement, Kopper and Enron's former chief financial officer, Andrew S. Fastow, started a company called Southampton Place - named after a neighborhood where they both live - to "invest" money.

According to a report completed by the Enron board earlier this year, the two men and others allegedly turned several thousand dollars into millions, money that appears not to have grown out of legitimate investments but rather to have been siphoned from Enron.

Government investigators have been looking at a number of partners in similar arrangements, which by law cannot be controlled by Enron executives if they are to be considered unrelated to the Enron corporation.

Keeping the companies separate from Enron was the key to dumping much of the corporation's debt and misleading investors, officials say.

Kopper is the first Enron executive to agree to plead guilty and cooperate, even though one other partner has reportedly been talking to investigators. Kopper and his partner made more than $10 million in three years from a starting investment of $125,000, which Kopper will have to return.

Kopper was also involved in another partnership with Fastow called Chewco, named after Star Wars character Chewbacca, that is also under investigation.

The Senate Permanent Subcommittee on Investigations that had been investigating the Enron collapse for six months determined last month that Enron's board members were aware of its risky partnerships, accounting practices and hidden debt and could have stopped the practices if they had wanted.

Investigators are now trying to determine whether the board members were encouraging the behavior for their financial gain.

Enron became the largest U.S. company to file for bankruptcy when it did so in December. It has since been overtaken by the WorldCom bankruptcy.

Its accountant and auditor, Arthur Andersen LLP, which also consulted for the company on the side, was convicted by a federal jury in June of obstruction of justice.

The Associated Press contributed to this article.

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