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O.G.
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Justice Department Seeks Seizure Of $23 Million From Fastow, Others
Justice Department attorneys are seeking the seizure of $23 million in assets from Andrew Fastow and unnamed associates of the former Enron Corp. financial chief, including members of his family, according to people familiar with the matter.

The request was filed Wednesday morning with a U.S. district judge in Houston. The government contends the proceeds represent "assets derived from a scheme to unlawfully generate millions of dollars for themselves," according to a person familiar with the situation.

Prosecutors believe Mr. Fastow and others illegally gained millions of dollars that were generated from three Enron-related partnerships. Many details of two of those partnerships, called Southhampton and Chewco, are already known. But the third partnership, called RADR, hadn't yet publicly surfaced in connection with the government's investigation of Enron.

The seizure request came in connection with the filing of a criminal information as part of former Enron executive Michael Kopper's guilty plea Wednesday to felony counts of money laundering and conspiracy to commit wire fraud.

Mr. Kopper had served as a lieutenant to Mr. Fastow, whom Mr. Kopper implicated in court Wednesday morning. Mr. Kopper said his activities were conducted under the direction of the former chief financial officer, and in some cases in concert with Mr. Fastow. "In order to offer the transactions, I had to kick the money back to the CFO," Mr. Kopper said while entering his plea.

Mr. Kopper, who is cooperating with the government's Enron Task Force, could face up to 15 years in prison on his convictions. As part of the 37-year-old former executive's plea deal, he agreed to forfeit $12 million in illegally gotten proceeds. He could also face fines that could double the amount determined to have been fraudulently gained.

Mr. Kopper also settled with the Securities and Exchange Commission without admitting or denying civil fraud claims against him. Under the agreement he is permanently barred from serving as an officer and director of a public company.

Of the $12 million he will forfeit, $8 million is slated to go to the SEC and $4 million will go to the Justice Department.

"This is the first in what we anticipate to be a series of actions brought as the result of the close cooperation between the SEC and the Justice Department's Enron Task Force," said SEC enforcement director Stephen Cutler.

Mr. Kopper was arraigned on the criminal counts before U.S. District Judge Ewing Werlein Jr., who set bond at $5 million. Sentencing was set for April 4.

The guilty plea by Mr. Kopper -- a dramatic shift from February, when he exercised his right not to testify before Congress -- is the first of an Enron executive, and it could have a domino effect. Mr. Kopper is in a position to provide crucial information to federal criminal investigators who have been sorting through the company's wreckage since early this year.

Mr. Kopper was at the center of the three off-balance-sheet partnerships that federal investigators have been most interested in. The unraveling of those partnerships led to the firm's Dec. 2 filing for bankruptcy protection. In addition to his close relationship with Mr. Fastow, Mr. Kopper had dealings with former Enron President and Chief Executive Jeffrey Skilling, and could have information helpful to investigators concerning the role played by former Enron Chairman Kenneth Lay.

"He embodies the perfect cooperating witness because he is not viewed by the public as being one of the most culpable defendants, but at the same time he has a vast array of knowledge," said Robert Mintz, a former Justice Department prosecutor.

Mr. Kopper's plea is the most significant break for prosecutors since they secured their criminal obstruction-of-justice conviction against Enron's former auditor, Arthur Andersen LLP. In recent weeks, they've come under sharp criticism by members of Congress and others for being slow to indict former top Enron brass despite quick successes in bringing charges against former executives at WorldCom Inc., Adelphia Communications Corp. and ImClone Systems Inc.

"This is the type of building block that the prosecutors need to put this case together," said Christopher Bebel, a former federal prosecutor who practices securities law at Shepherd, Smith & Bebel in Houston. "If the government can find one or two additional people who will plead guilty and cooperate, the pace of the investigation will pick up dramatically. And of course, it also causes Fastow, Skilling and Lay to sweat even more."

People familiar with the investigation have said the government is focusing its attention on whether Messrs. Lay, Skilling and Fastow committed any crimes. Prosecutors have been working hard to line up key executives to testify against them. All three have said they did nothing wrong.

Enron's fall launched an era of intensified scrutiny of corporate wrongdoing that has tarred several top U.S. firms and roiled the stock markets. It also triggered the passage of sweeping federal requirements governing, for instance, the personal responsibility of chief executives for the truthfulness of their company's financial results, and the way corporate pension funds are managed.

The bankruptcy filing wiped out thousands of jobs and billions of dollars in equity and triggered investigations by the SEC, Congress and the Justice Department. Its downfall also helped trigger a collapse of electricity-trading markets and cast a shadow over other merchant energy companies, including Dynegy Inc. and Williams Cos.

Mr. Kopper's testimony could spark other subordinates of Enron's former top executives to cut deals while they still can, although so far no other plea bargains appear imminent.

Mr. Kopper joined Enron in 1994 from Canada's Toronto Dominion Bank and quickly won a reputation as a hard worker willing to put in long hours to complete complex financing deals, becoming by 1997 a key aide to Mr. Fastow. In November of that year, he was chosen by the CFO to head an off-balance-sheet venture called Chewco, that was used to keep more than $700 million in debt, related to various energy investments, off Enron's books.

To meet the aim of keeping Chewco separate from Enron, it was essential that outside investors put up 3% of its equity, the minimum required under accounting rules. Mr. Kopper raised this money by getting a loan from Barclays PLC, the British bank, for two paper vehicles he helped create. Known as Big River LLC and Little River LLC, they would act as the independent investors in Chewco. But there was a catch: Barclays would only lend the money, $11.5 million in total, if an Enron affiliate turned around and deposited more than half that amount into two accounts at Barclays, helping ensure repayment. The Enron affiliate complied.

The upshot of this was that Enron backed the loan and Little River and Big River never had enough of their own money at risk in Chewco to satisfy the 3% requirement. Yet for the next four years, Enron treated Chewco as if it did meet the 3% standard, allowing the company to tamp down its debt and bolster its earnings. Last year, when Enron decided to buy out Chewco, Mr. Kopper and his domestic partner, William Dodson, received $12.6 million from the company, a huge gain on the $125,000 they had originally provided to fund Little River and Big River. That amount is slightly more than Mr. Kopper has now agreed to disgorge. Mr. Dodson couldn't be reached for comment.

The payout was controversial within Enron. Former Treasurer Jeffrey McMahon told a special investigating committee of the company's board that he had suggested a $1 million payment to Messrs. Kopper and Dodson was fair, but he had been overruled by Mr. Fastow. Mr. McMahon said Mr. Fastow told him that "Skilling was OK with buying out Chewco at that price."

Around the same period that Enron bought out Mr. Kopper, he personally acquired Mr. Fastow's interest in two other off-balance-sheet partnerships, known as LJM Cayman LP and LJM 2 Co-Investment LP, for an estimated $16 million.

Among other partnerships Mr. Kopper helped structure was one called Southampton, named for the affluent Houston neighborhood where Messrs. Kopper and Fastow each owned homes. The partnership was part of LJM Cayman. In 2000, Mr. Kopper and a few select Enron employees were allowed to invest in Southampton. Within a few months, the partnership was dissolved after the partners were paid millions by Enron to unwind a previous agreement. According to an internal investigation by Enron's former board, Southampton investors "walked away with tens of millions of dollars that, in an arm's length context, Enron would have never given away."

Mr. Kopper's plea also comes about two months after federal prosecutors filed wire-fraud charges against three British bankers in connection with the same partnership. In that complaint, prosecutors alleged that Gary Mulgrew, Giles Darby and David Bermingham, former employees of National Westminster Bank PLC, defrauded National Westminster of $7.3 million by secretly investing in Southampton. The three have been unavailable for comment.

Mr. Kopper and Mr. Fastow's relationship went beyond the office. Most recently, when Mr. Fastow's parents moved from New Jersey to Houston, Messrs. Dodson and Kopper sold their home to Carl and Joan Fastow for $10 and got a mortgage of $850,000, which Mr. Fastow is listed as the guarantor of. The deal was done in January of this year, according to Harris County records. Messrs. Kopper and Dodson built a new home in the more-exclusive River Oaks neighborhood, not far from the newly built mansions owned by Messrs. Fastow and Skilling.
 

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Well, this goes against my grain, but I love Kopper for coming out and doing what he is doing. Here is a guy, that deserves to be robbed blind and put in jail, that is turning tattle tail weasle, and implicating many others. GREAT!!! The more people he burns, the better I feel about *only* taking 12 million from kopper, and letting him walk. They claim Kopper was intimately involved with every aspect of basically every crooked financial shenanigan Enron pulled. Everyone hates a tattle tail, but thank God there are some. Those Enron employees need more than 35 million to balance everyone's 401K's, but this is a very positive start. I know they got 12 million from Kopper already in his deal.

This is what America needs to see, and what Enron deserves to get (its employees anyways). Swift justice, and hefty payouts.

Kudos to the government. (maybe they will speed things up with worldcom and the others now too)
 

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Of the $12 million he will forfeit, $8 million is slated to go to the SEC and $4 million will go to the Justice Department.
This is what REAALLLY sucks.. These poor low man on the totem pole schlepps that have had their lifetime pension stolen from them get vindication how??? To see the SEC and Justice dept line thier pockets.

It's funny how these comittees keep on mentioning all of the hard worker's retirement $$'s that have been duped from them, and then allocate the recouped money to themselves, instead of the people who rightly deserve it. Heck, even the debtors that Enron has ruined deserve that money before the Gvmt does.:thumbdwn:
 

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LarryN said:


This is what REAALLLY sucks.. These poor low man on the totem pole schlepps that have had their lifetime pension stolen from them get vindication how??? To see the SEC and Justice dept line thier pockets.

It's funny how these comittees keep on mentioning all of the hard worker's retirement $$'s that have been duped from them, and then allocate the recouped money to themselves, instead of the people who rightly deserve it. Heck, even the debtors that Enron has ruined deserve that money before the Gvmt does.:thumbdwn:
This really bugged me at the begining, but I am assuming the rest of any seized moneis will go to the Enron employees. I know the SEC, and justice dept, need funding, and can accept this is all the other monies go towards enron.

But, your right this money should fix enron workers 401k before anything. Hopefully they have a systme figured out. I can only assume they do. They have claimed the entire time that they are doing this to fix the thousands of now-broke workers.
 

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LarryN said:


This is what REAALLLY sucks.. These poor low man on the totem pole schlepps that have had their lifetime pension stolen from them get vindication how??? To see the SEC and Justice dept line thier pockets.

It's funny how these comittees keep on mentioning all of the hard worker's retirement $$'s that have been duped from them, and then allocate the recouped money to themselves, instead of the people who rightly deserve it. Heck, even the debtors that Enron has ruined deserve that money before the Gvmt does.:thumbdwn:
when will money go back to the enron "working" employee's pension funds???
 

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thrillhill said:


when will money go back to the enron "working" employee's pension funds???
Too true. There's a huge list of people that deserve this more than the the government. What hypocrites..:tsk:
 

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O.G.
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Discussion Starter #8
dredmo said:
Well, this goes against my grain, but I love Kopper for coming out and doing what he is doing. Here is a guy, that deserves to be robbed blind and put in jail, that is turning tattle tail weasle, and implicating many others. GREAT!!! The more people he burns, the better I feel about *only* taking 12 million from kopper, and letting him walk.
He is still going to jail.... for up to 15 years! Cool eh?
 

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Spiderm0n said:


He is still going to jail.... for up to 15 years! Cool eh?
I thought I heard this morning he would walk. What you just said makes it much easier for me to swallow. I think that is a fair sentence for someone providing so many tributary arrests.

I think the ones not coming forward should be in jail for a minimum of 40 years. Plus recuse themselves from all monies earned illegally.
 

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thrillhill said:


when will money go back to the enron "working" employee's pension funds???
I really doubt the money would go to the former Enron workers and 401K plan. The banks would probably get it first to pay off the loan (or what can be paid off), then whatever money is owed to other companies and whatever money left (which would be nothing) to the former Enron workers.
 

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pintnight said:


I really doubt the money would go to the former Enron workers and 401K plan. The banks would probably get it first to pay off the loan (or what can be paid off), then whatever money is owed to other companies and whatever money left (which would be nothing) to the former Enron workers.
Ok, that's fine too. why's the fed and sec getting so much?
 

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Discussion Starter #12
LarryN said:

It's funny how these comittees keep on mentioning all of the hard worker's retirement $$'s that have been duped from them, and then allocate the recouped money to themselves, instead of the people who rightly deserve it. Heck, even the debtors that Enron has ruined deserve that money before the Gvmt does.:thumbdwn:
IMO, anyone who willingly puts 100% of their 401k money into their company's stock doesn't deserve a bailout. They get all the reward but none of the risk......bah
 

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Spiderm0n said:


IMO, anyone who willingly puts 100% of their 401k money into their company's stock doesn't deserve a bailout. They get all the reward but none of the risk......bah
I agree with half of that, and here is why.

With my company, you put in 800 pucks, they match 800 bucks. But they only match you with company stock. You have ZERO options to re invest thier match, unless you sell it after you receive it, then reinvest, and you can only do that 5 times in like 2 months or something.

If anyone is stupid enough to invest 100% of THIER invested monies into thier companies stock, you are right, but if (and I dont know) Enron had a no "out" option, meaning employees could not sell thier stock, which I believe they did, then I feel they should get compensated, since management was allowed to sell stock.

I dont know how thier 401K works, but ours is similar to a trap. You can have our money, but it is gonna be with our stock.
 

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Spiderm0n said:


He is still going to jail.... for up to 15 years! Cool eh?
The "Jails" that politicians and corp execs are minimum security "country clubs". If he goes he'll be out in 3 to 5 for good behavior.
 

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Discussion Starter #15
dredmo said:

If anyone is stupid enough to invest 100% of THIER invested monies into thier companies stock, you are right, but if (and I dont know) Enron had a no "out" option, meaning employees could not sell thier stock, which I believe they did, then I feel they should get compensated, since management was allowed to sell stock.
Since companies are under no obligation to provide a match (and employees are under no obligation to invest in their 401k)I have no problem with the company requiring its employees to keep the 'matched' money in the company stock. And if the company goes bankrupt, so be it.... no bailout.
 

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Spiderm0n said:


Since companies are under no obligation to provide a match (and employees are under no obligation to invest in their 401k)I have no problem with the company requiring its employees to keep the 'matched' money in the company stock. And if the company goes bankrupt, so be it.... no bailout.
I understand the principal behind it. If I were a company I would require the match be 100% stock no other choice. But, from what I understand, Enron, made it impossible for any employee to sell ANY stock out of thier 401K. While most people are not stupid enough to put all thier money in company stock, most people are not hurt as bad as Jessie Jackson claims them to be. But, I think something crooked was up when the managers put down the "you may not sell rule" then they bailed out.
 

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dredmo said:
But, I think something crooked was up when the managers put down the "you may not sell rule" then they bailed out.
True! They cashed out days before the new ruling as well. SOB's...

BTW, those matching contributions on a (supposedly) extremely healthly corporation are an magnet to people who are not really on top of personal financing. Most prople who retire do not have advisors, because they feel that it would just rob them of a percentage of their retirement benefits (in some cases they are correct), or just plain think they know what they are doing.
 

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LarryN said:


True! They cashed out days before the new ruling as well. SOB's...

BTW, those matching contributions on a (supposedly) extremely healthly corporation are an magnet to people who are not really on top of personal financing. Most prople who retire do not have advisors, because they feel that it would just rob them of a percentage of their retirement benefits (in some cases they are correct), or just plain think they know what they are doing.
Great points, but I have to ask. What is a prople? Is that like a prople people eater?:lmao: :thumbup:

Just messing with ya.
 

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dredmo said:


Great points, but I have to ask. What is a prople? Is that like a prople people eater?:lmao: :thumbup:

Just messing with ya.
Main Entry: pro·ple
Pronunciation: pr&-'pel
Function: conjunction junction nounverb
Inflected Form(s): pro·pled; pro·p·ling
Etymology: Middle English propellen, from Latin propellere, from pro- before + pellere -- more at FELT
Date: 15th century
: LarryN speak for people
 

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LarryN said:


Main Entry: pro·ple
Pronunciation: pr&-'pel
Function: conjunction junction nounverb
Inflected Form(s): pro·pled; pro·p·ling
Etymology: Middle English propellen, from Latin propellere, from pro- before + pellere -- more at FELT
Date: 15th century
: LarryN speak for people
:yikes:
 
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