- HOUSTON (Reuters) - A federal
grand jury on Thursday handed up a 78-count indictment accusing fired Enron
executive Andrew Fastow of engaging in fraud, money laundering, and other
crimes to enrich himself and create the "illusion of business skill
and success" at the ruined energy giant.
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- The indictment charges that Fastow, the former chief
financial officer, allegedly masterminded secret partnerships at Enron
Corp. that allowed him and others at Enron to manipulate the company's
financial results and enrich themselves at Enron's expense.
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- The revelation of Fastow's off-the-books partnerships
helped contribute to the Houston energy trading firm's multibillion-dollar
collapse last year.
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- The indictment closely mirrored a criminal complaint
filed earlier this month against Fastow, who surrendered and was subsequently
hauled into court in handcuffs on Oct. 2. Prosecutors had 30 days to secure
an indictment.
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- The indictment added a new charge that Fastow, 40, allegedly
obstructed justice by trying to persuade former protege Michael Kopper,
who is cooperating with prosecutors, to destroy computer records.
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- The order to Kopper, who pleaded guilty Aug. 21 and implicated
his former boss in a series of fraud and kickback schemes, came in August
and September 2001.
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- That period was around the time that former Chief Executive
Officer Jeffrey Skilling unexpectedly resigned, leading investors to begin
worrying that something was amiss at Enron.
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- Fastow's lead attorney John Keker gave notice that Fastow
planned to take the case to trial.
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- "These charges are full of sound and fury, but the
truth about Enron has yet to be told," Keker said in a statement.
"When the truth is told to a jury of 12 honest Americans, Andy Fastow
will be set free."
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- Fastow is due to be arraigned on Nov. 6 before a federal
magistrate judge in Houston. He is the highest-ranking official to be charged
in the U.S. Justice Department's continuing investigation of Enron's spectacular
collapse into bankruptcy late last year.
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- Chief prosecutor Andrew Weissman, speaking to reporters
after securing the indictment, conceded that he had not "done the
math" to calculate Fastow's potential prison exposure, but called
it "significant." Under federal sentencing guidelines, Fastow
would effectively face between 30 years to life in prison if convicted
on all counts.
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- LONG SERIES OF DEALS
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- The indictment lays out a series of complex financial
schemes, starting in early 1997, that defrauded Enron while allegedly allowing
Fastow to enrich himself, his family and associates.
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- The off-the-books deals were undertaken to make the company
appear more attractive to Wall Street investment analysts, credit rating
agencies and others by creating an "illusion of business skill and
success on the part of Fastow and other senior Enron management,"
it says.
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- Fastow's attorneys have seized on the fact that their
client engaged in the deals with the blessing of Enron's board and top
management as a key point in their defense strategy.
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- In one of the off-balance-sheet partnerships known as
Chewco, Fastow unlawfully received several hundred thousand dollars in
kickbacks from various payments made by Enron to it, through transfers
to Fastow's wife and other family members, the indictment alleges.
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- In another partnership known as RADR, Fastow allegedly
received kickbacks and payments in the form of annual $10,000 "gifts"
to members of his family, according to the indictment.
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- The indictment said transactions in a deal called LJM
allowed Fastow and others to personally earn millions in the form of management
fees and skimmed deal profits.
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