Enron's Kopper pleads guilty to fraud charges

The former executive has identified his partner in crime as ex-chief financial officer Andrew Fastow

Former Enron executive Mr Michael Kopper admitted yesterday that he defrauded investors by illegally using three Enron off-balance-sheet partnerships to enrich himself.

The charges identify his partner in the illicit schemes as Andrew Fastow, the company's former chief financial officer and the man believed to be the target of the Justice Department's eight-month investigation.

Although federal prosecutors would not say whether they would use testimony provided by Mr Kopper, who signed a 15-page co-operation agreement, to go after Mr Fastow, Mr Larry Thompson, head of the Justice Department's corporate crime task force, said charges against other executives were likely.

"We anticipate that the co-operation Mr Kopper has agreed to provide will be important in identifying fully the individuals that contributed to the company's collapse," said Mr Stephen Cutler, head of enforcement for the Securities and Exchange Commission (SEC), which settled its charges against Mr Kopper simultaneously.

Mr Kopper (37) pleaded guilty to money laundering and fraud charges before US District Judge Ewing Werlein in Houston, Texas. The charges carry a maximum 15-year sentence but he is likely to receive a lesser term.

Mr Kopper agreed to forfeit $12 million (€12.2 million) in assets to federal authorities, the amount he made through his illegal actions in the partnerships called Chewco, Southampton and RADR. In addition, the criminal charges filed against Mr Kopper indicate federal investigators are seeking to seize an additional $23 million, assets believed to belong to Mr Fastow.

At the hour-long hearing, Mr Kopper, a former senior finance executive, repeatedly mentioned Mr Fastow's involvement, admitting that he paid Mr Fastow's wife, Lee, $54,000 as Chewco's administrative assistant. He said he had reviewed the case "dozens of times" and was aware of what he was pleading guilty to.

"Today, Michael Kopper has accepted personal responsibility in the Enron tragedy," Mr Kopper's lawyer, Mr David Howard, said after the hearing. "Michael hopes the action demonstrates his deep regret for his conduct."

Mr Mike Ramsey, an attorney for former Enron chief executive Mr Kenneth Lay, who attended the hearing, said Mr Kopper would not be able to implicate Mr Lay in any of his crimes.

"Mr Lay and Mr Kopper don't know each other," he said.

Mr Cutler said the $12 million turned over by Mr Kopper would go to a pool to be used to pay back investors defrauded by Mr Kopper's actions. The SEC has yet to determine how the fund will work. Mr Cutler suggested a judge would make the final decision.

Of the three partnerships Mr Kopper admitted using illegally, Southampton and Chewco have been publicly examined by Congress and Enron's internal investigators. According to investigators, Chewco contained hundreds of millions in debts that were kept off Enron's balance sheet through accounting rules governing "special purpose entities".

Mr Kopper was accused of receiving improper payments from Enron for his involvement in Chewco, in which he had invested $125,000. Mr Kopper "secretly shared" the payments with Mr Fastow "mainly through cheques payable to members of the chief financial officer's family". - (Financial Times Service)