- The Washington Times - Wednesday, October 2, 2002

Federal prosecutors plan to bring criminal charges as early as today against Andrew Fastow, the suspected mastermind of the financial schemes that toppled Enron in a scandal that shook confidence in the stock market, a law enforcement source said yesterday.
Mr. Fastow, who was Enron's chief financial officer, is said to have devised the company's complex web of off-the-books partnerships used to hide some $1 billion in debt from shareholders and federal regulators. He is the most prominent company figure targeted so far by the Justice Department.
In August, a once-trusted Fastow aide, Michael Kopper, pleaded guilty to money laundering and conspiracy to commit wire fraud.
Mr. Kopper said in federal court in Houston that it was Mr. Fastow who provided loans for investments, received kickbacks or negotiated deals that benefited the partnerships rather than the big energy-trading company, now bankrupt.
The law enforcement source, speaking on the condition of anonymity, did not specify the nature of the anticipated charges against Mr. Fastow or whether they would take the form of a grand jury indictment or a Justice Department criminal complaint that would present some of the government's evidence against him.
Mr. Fastow's spokesman, Gordon Andrew, declined comment. The office of his attorney, John Keker, referred calls to Mr. Andrew.
Mr. Fastow, who invoked the Fifth Amendment and refused to testify before Congress early this year, reaped an estimated $30 million from the partnerships.
He emerged as a central figure in the Enron scandal after the Houston-based company, with ties to President Bush and members of his administration, collapsed in bankruptcy last December.
Enron's stunning downfall, bringing the retirement savings of employees with it and wiping out the investments of pension funds and individuals nationwide, became the first in a series of big corporate accounting scandals that rattled investors' confidence and the stock market.
In his plea, Mr. Kopper admitted to creating partnerships designed to enrich himself, Mr. Fastow and others at Enron at the expense of the company and its shareholders.
Mr. Kopper's admissions focused on three partnership schemes that prosecutors say Mr. Fastow designed to look like legitimate business deals.
Mr. Kopper said friends, selected Enron employees and members of Mr. Fastow's family used loans from Mr. Fastow or Mr. Kopper to invest in the partnerships to make them appear independent of Enron.
Enron's board of directors approved the partnerships as well as a waiver from conflict-of-interest rules for Mr. Fastow.
The expected action against Mr. Fastow raises the question of what he might say about former Enron Chief Executive Officer Jeffrey Skilling and former Chairman Kenneth Lay if Mr. Fastow began cooperating with the government.
While publicly silent, Mr. Fastow has maintained through his spokesman that he acted with the full knowledge of Enron's top executives, its directors and its auditor, Arthur Andersen LLP, one of the nation's biggest accounting firms.
convicted in June of obstruction of justice for the shredding of Enron audit documents.
Former Enron insiders say it was Mr. Fastow's aggressive and inventive approach to structuring deals that appealed to Mr. Skilling. In 1999, when CFO magazine gave Mr. Fastow its "Excellence Award for Capital Structure," Mr. Skilling told the publication: "Andy has the intelligence and the youthful exuberance to think in new ways."
Mr. Kopper said that he funneled some money from the partnerships back to Mr. Fastow and his family as well as paying the investors.
The day after Mr. Kopper entered his plea, a federal judge froze more than $23 million in bank and brokerage accounts held by Mr. Fastow and his wife, Lea, his family foundation, his brother Peter, several former Enron employees and two holding companies. The Justice Department claimed that the accounts contain money from illegal Enron deals largely organized by Mr. Fastow and Mr. Kopper.
The prosecutors also are going after Mr. Fastow's newly built $2.6 million home in Houston's wealthiest neighborhood, River Oaks, where Mr. Skilling and Mr. Lay live.

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