Former Enron Executive Pleads Guilty
Kopper, who served as director of Enron’s Global Finance unit, pleaded guilty to single counts of conspiracy to commit wire fraud and conspiracy to launder money. The money laundering charge carries a 10-year maximum prison sentence, the charge of wire fraud five years. Kopper could also face heavy fines in addition to any potential jail time.
As part of a plea bargain, the 37-year-old Kopper agreed to cooperate with federal investigators and provide information that could aid the Justice Department’s eight-month investigation into the Enron collapse.
In exchange for his cooperation, prosecutors said they would recommend that Kopper receive a lighter sentence, The Houston Chronicle reported Wednesday.
Under the deal, the former executive will also forfeit $12 million, $8 million of which will go to the Securities and Exchange Commission. The SEC on Wednesday filed separate civil charges alleging Kopper violated securities laws.
While at Enron, Kopper served under Andrew Fastow, Enron’s former chief financial officer, helping to create and manage the energy giant’s off-balance-sheet partnerships. These partnerships, allegedly created by Enron executives, effectively cloaked the company’s mounting debts and financial losses. The eventual disclosure of these losses sparked Enron’s rapid financial disintegration, which ultimately forced the company to file for bankruptcy protection in December 2001.
The off-balance-sheet partnerships netted Kopper, Fastow, and their associates more than $50 million, according to congressional inquiries and investigative reports by Enron’s board of directors.
Kopper told U.S. District Judge Ewing Werlein Jr. that he and Fastow defrauded Enron and its shareholders of millions of dollars as a result of their unlawful involvement in the partnerships.
He said other Enron officials were unaware that he and Fastow used company money to create the partnerships with outside investors, or that the two finance executives received such huge profits from them.
“They did funnel that money back to me and I then proceeded to give some of that money to the Enron CFO [Fastow],” Kopper told the court. “We never informed Enron of the loans I made or the distributions we got.”
A seven-year veteran of the company, Kopper resigned in June 2001 — before Enron’s financial problems were made public — to become the primary managing director of several partnerships he and Fastow created, Enron documents said.
Fastow and Kopper appeared before a congressional committee earlier this year, but both declined to testify, invoking their Fifth Amendment protections against self-incrimination.
Kopper, who was released today on a $5 million bond, will not be detained while the government continues its investigation.
Werlein set Kopper’s sentencing date for April 4.