TOPICS > Politics

Nine Former Enron Executives Face New Criminal Charges

BY Admin  May 1, 2003 at 4:00 PM EDT

The new indictment brought an additional 31 counts against Andrew Fastow, who was indicted on 78 counts of fraud, conspiracy, and money laundering on Oct. 31. Fastow, free on $5 million bond, will now face a total of 109 charges for his role in the now-bankrupt energy trading company. A hearing in his case is scheduled for May 19.

His wife, Lea Fastow, a former assistant treasurer at Enron, was also charged Thursday with conspiracy to commit wire fraud, conspiracy to launder money, and four counts of filing false income tax returns.

Early Thursday morning, Lea Fastow, 41, turned herself in at the Internal Revenue building in Houston.

The indictment, filed under seal earlier this week, also brought new charges against seven former Enron broadband executives, six of whom surrendered at FBI headquarters in Houston by 7:30 a.m. local time. Those named in the indictment were: Ken Rice and Joe Hirko, former co-chief executive officers of Enron Broadband Services (EBS); Kevin Hannon, former chief operating officer of EBS; and former EBS Senior Vice Presidents F. Scott Yeager and Rex Shelby. They are accused of securities fraud, wire fraud and money laundering.

Under a special arrangement with prosecutors, Shelby did not turn himself in Thursday morning with the others due to a family emergency, the Houston Chronicle reported.

Prosecutors allege that Lea Fastow had received $54,000 for managing a partnership created by her husband and his associates which allegedly provided her husband and his associates with huge gains and enabled Enron to mask company debt and inflate profits, the Houston Chronicle reported.

Lea Fastow was also accused of conspiring to illegally profit from Enron wind farms in California and, along with her husband, failing to report income to the IRS, according to reports in the Chronicle and the Associated Press.

The names of Lea Fastow and their family’s foundation also appear on several bank accounts frozen by federal prosecutors as part of their investigation into the partnerships.

U.S. Magistrate Marcia Crone received sealed indictments on Wednesday from Andrew Weissmann, the Enron Task Force prosecutor, who is handling the case against Andrew Fastow. The court proceedings were closed to the news media.

The Chronicle, citing anonymous sources, reported that Lea Fastow could be tried separately from her husband. Defense lawyers are expected to contest the charge as an attempt by prosecutors to get her to turn against her husband’s bosses, former Chief Executive Officer Jeffrey Skilling and former Chairman Kenneth Lay, the Chronicle reported. Neither Skilling nor Lay has been charged in the investigation.

The broadband executives were accused of conspiring to inflate the value of the company’s stock by lying to the news media and stock analysts about a fiber-optic venture with Blockbuster Inc., then selling their shares for millions in personal profit.

These latest indictments bring to 19 the number of people criminally charged in the Enron investigation. Six have already entered guilty pleas.

“Today’s indictments are a significant milestone in our determined efforts to expose and punish the vast array of criminal conduct related to the collapse of Enron Corporation,” Deputy Attorney General Larry Thompson, chief of the Justice Department’s Corporate Fraud Task Force, said Thursday.

“The indictments today do not end, by any means, our investigation,” he said.