- The Washington Times - Saturday, August 24, 2002

HOUSTON — The primary motive for creating Enron's complex web of partnerships was thought to be to hide the company's debt, keep salaries high and make its stock ever more valuable.
But revelations by investigators and insider Michael Kopper indicate that deals may have been structured more to let executives skim money than to dress up Enron's books.
"Some people still had a little bit of hope that maybe they were just skirting the law and weren't as arrogant and greedy as they really were," said Rod Jordan, 64, one of thousands laid off last year when Enron crashed. "That hope is gone now."
Kopper, the first former Enron executive to plead guilty to crimes related to the company's failure, admitted to creating partnerships designed to enrich himself, his former boss Andrew Fastow and others at Enron at the expense of the company and its shareholders.
He admitted to money laundering and conspiracy to commit wire fraud in three partnership schemes designed to look like legitimate business deals. He said friends, selected Enron workers and members of Mr. Fastow's family stepped up as investors and, using loans from Mr. Fastow or Kopper, put up money to make the partnerships appear independent of Enron.
The partnerships then did deals with Enron that generated millions of dollars. Kopper kept some profits and generated massive fees for handling the deals, he said. He also said he funneled money back to Mr. Fastow and his family, as well as to the investors.
A federal judge on Thursday froze an account controlled by family members of Mr. Fastow after a relative tried to withdraw millions of dollars.
U.S. Magistrate Judge Calvin Botley in Houston signed an order to freeze the account to prevent Mr. Fastow's brother Peter or other family members from moving the money, said sources familiar with the case. The government sought to protect the account while it attempts to seize assets it says are traceable to fraud that led to the energy company's collapse.
Kopper worked for Enron from 1994 to July of last year, when he quit to run one of Mr. Fastow's partnerships. Enron pushed Mr. Fastow out in October after acknowledging that he raked in more than $30 million from partnerships.
"There was an arrangement between myself and the Enron CFO whereby I did take some of the proceeds which I received from managing and running that partnership and passed them on to he and his family," Kopper said of a structure called Chewco created in 1997.
Sherron Watkins, the Enron executive who also worked for Mr. Fastow in Enron's finance division, tried to warn former Enron Chairman Kenneth L. Lay about accounting problems. She also asked for and was granted a reassignment to another department, fearful that a vengeful Mr. Fastow would try to have her fired.
She warned Mr. Lay in a seven-page memo released by Congress in January that centered on entities other than the three partnerships on which prosecutors are focusing.
While she was wary of Mr. Fastow, she had a good impression of Kopper.
"She thought he was extremely bright and smart," said her lawyer, Philip Hilder. "Not knowing what he was involved in, she was shocked and disappointed to learn the depth of his involvement regarding kickbacks."
Kopper, a 37-year-old former banker with degrees from Duke University and the London School of Economics, lived well on the millions he pocketed from those dealings in addition to $3.63 million in salary, bonuses, restricted stock and other payments in the year before Enron's collapse.
The native Long Islander and his domestic partner, William Dodson, live in a $1.4 million marble and stucco four-bedroom house. A police officer was stationed there yesterday to keep unwanted visitors off the property. Between them, the pair have four BMWs registered in their names, including a 1997 Z3 convertible Roadster and a 2002 X5 sport utility vehicle.
Kopper's house is barely a block away from the exclusive high-rise where Mr. Lay lives on the 33rd floor in a $7.1 million penthouse.

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