- The Washington Times - Friday, November 1, 2002

ASSOCIATED PRESS
Former Enron Corp. Chief Financial Officer Andrew Fastow was indicted yesterday on 78 federal counts claiming he masterminded a scheme to artificially inflate the energy company's profits.
The indictment, returned by a grand jury in Houston and released in Washington by the Justice Department, is essentially a formal restatement of a criminal complaint brought earlier this month.
But the indictment is notable for the sheer number of charges, which include fraud, money laundering, conspiracy and one count of obstruction of justice not included in the original complaint. If convicted, Mr. Fastow faces hundreds of years in jail and millions of dollars in fines.
Mr. Fastow, 40, is free on $5 million bond and faces a Nov. 6 arraignment on the charges. He is the highest-ranking Enron official to be charged in the federal probe.
Deputy Attorney General Larry Thompson, head of the Bush administration's corporate fraud task force, said the indictment does not end the investigation of Mr. Fastow. He also said federal officials "will use every appropriate measure to recover the ill-gotten gains of these corporate schemers."
Enron, No. 7 on the Fortune 500 list two years ago, filed for bankruptcy last year after revealing a $618 million loss and eliminating $1.2 billion of shareholder equity.
Prosecutors say Mr. Fastow and others created a scheme to defraud Enron and its shareholders through transactions with off-the-books partnerships that made the company look more profitable than it was.
Mr. Fastow also enriched himself, prosecutors say, by an estimated $30 million by using the entities to get kickbacks through family members who were investors and by siphoning off income that should have gone to others.
Maximum penalties for each of the multiple charges against Mr. Fastow include 20 years for money laundering, 10 years for wire fraud and five years for conspiracy.
Mr. Fastow is the most prominent Enron figure targeted so far by the Justice Department. Prosecutors are expected to pressure him to find out what he might say about his former colleagues, including former Enron Chairman Kenneth L. Lay and former Chief Executive Jeffrey Skilling.
Mr. Fastow's attorneys have said his work had the full approval of top Enron executives and that Mr. Fastow did not believe he committed any crimes.
Federal prosecutors say that beginning in 1997, Mr. Fastow created a series of complex "special purpose entities" that kept poorly performing assets off Enron's balance sheets and falsely manufactured earnings, making the energy-trading giant appear more financially sound than it truly was.
Four of the partnerships were detailed in federal court papers:
LJM allowed Enron to manipulate its balance sheet in several ways and permitted Mr. Fastow and others to earn huge amounts of money through management fees and skimmed profits.
Southampton defrauded Enron and National Westminster Bank through a series of secret investments, with income then siphoned off by Mr. Fastow and others.
Chewco bought a limited partnership interest in the California Public Employees Retirement System for an investment scheme called Joint Energy Development Investments, or JEDI. Mr. Fastow reportedly received kickbacks from payments Enron made to Chewco through transfers to his wife and other family members.
RADR was supposed to purchase part of Enron's interest in California wind farms with independent investors. In fact, the indictment says, the investors were funded by Mr. Fastow, and he and members of his family received $10,000 in annual gifts from the partnership.

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