- The Washington Times - Friday, June 28, 2002

The Justice Department charged three former British bankers yesterday with wire fraud in a $7.3 million scheme involving Enron Corp.

Gary Steven Mulgrew, 40, Giles Robert Hugh Darby, 40, and David John Bermingham, 39, all former employees of National Westminster Bank, were charged in a criminal complaint filed in U.S. District Court in Houston.

Deputy Attorney General Larry Thompson said the complaint, filed by the Justice Department's Enron Task Force, charges that through a series of financial transactions, the former bank officers secretly invested in an Enron special-purpose entity, Southampton LP, and were able to siphon off $7.3 million in income that belonged to their employer.

"The Department of Justice is committed to the vigorous investigation and prosecution of criminals who prey on the liberties of our financial system," Mr. Thompson said in a statement. "As these charges demonstrate, our investigation into the collapse of Enron Corp. is active and ongoing."

Mr. Thompson said all three former bank officers worked in the structured-finance group of Greenwich Nat West, a division of the bank's offices in Greenwich, Conn., and London.

According to the complaint, Nat West, a bank with offices in Houston and London, should have received the benefit of the $7.3 million based on its own investment.

Nat West was considered a "Tier 1" bank by Enron, which meant it was among a small group of banks that did the most business with Enron and was given preferential treatment by the company in pending transactions.

The complaint said Mr. Mulgrew, Mr. Darby and Mr. Bermingham recommended that an interest in an Enron-related partnership held by Nat West should be sold for $1 million at a time when they were planning with Enron executives to purchase that interest for themselves for $250,000.

It said the three bankers liquidated the interest purchase weeks later for more than $7.3 million.

According to the complaint, the three bankers knew the details of Nat West's interest because they helped structure it, were aware that the investment had a minimal value of between $7 million and $9 million in February 2000 and represented to Nat West that $1 million was a fair price.

The complaint said they secretly negotiated their own purchase of Nat West's interest while still employed there and set up a series of offshore entities with Enron executives to carry out their scheme while they were employees of Nat West who had fiduciary duties to the company and were subject to its compliance policies.

The $7.3 million received by Mr. Mulgrew, Mr. Darby and Mr. Bermingham from the Southampton transaction, the complaint said, belonged to Nat West, had it not sold its interest for $1 million on the defendants' recommendation.

"This complaint shows that we intend to address the conduct not only of Enron but also of those who capitalized on Enron's willingness to enter into accounting-driven transactions that lacked business purpose and served instead merely to enrich those involved," said Leslie R. Caldwell, Enron Task Force chief.

The Justice Department's Enron Task Force, formed in January to investigate matters related to the collapse of the former energy giant, consists of a team of federal prosecutors supervised by the department's criminal division and agents from the FBI and the Internal Revenue Service's Criminal Investigations Division.

The investigation that led to yesterday's complaint was coordinated with Britain's Financial Services Authority, Britain's Serious Fraud Office and the Securities and Exchange Commission.

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