A federal grand jury has 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.
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.
The revelation of Fastow's off-the-books partnerships helped contribute to the Houston energy trading firm's multibillion-dollar collapse last year.
The indictment closely mirrored a criminal complaint filed last month against Fastow, who surrendered and was subsequently hauled into court in handcuffs on October 2. Prosecutors had 30 days to secure an indictment.
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.
The order to Kopper, who pleaded guilty on August 21 and implicated his former boss in a series of fraud and kickback schemes, came in August and September last year.
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.
Fastow's lead attorney John Keker gave notice that Fastow planned to take the case to trial.
"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."
Fastow is due to be arraigned on November 6 before a federal magistrate judge in Houston. He is the highest-ranking official to be charged in the US Justice Department's continuing investigation of Enron's spectacular collapse into bankruptcy late last year.
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.
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.
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.
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 defence strategy.
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.
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.
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. (Reuters)