Ex-Enron CFO Kin's Funds Said FrozenAug 24, 2002 | AP Prosecutors have drawn closer to Enron's former chief financial officer, freezing brokerage accounts belonging to his family members a day after a trusted aide pleaded guilty, a person familiar with the case said.
The accounts were frozen by a federal judge after Andrew Fastow's brother, Peter Fastow, tried to move several million dollars from one account to another as part of an unrelated civil case, according to the source, who spoke on condition of anonymity.
U.S. Magistrate Calvin Botley signed several warrants Thursday and sealed both the warrants and the sealing order, Botley's case manager Paul Yebernetsky said Friday. He declined to discuss the contents of the warrants.
Federal prosecutors met with Botley for a several hours Thursday night, but a Justice Department spokesman declined comment.
The Houston Chronicle reported that the scope of the order was broader than the planned seizures of assets revealed in federal court Wednesday, when former Enron executive and Fastow aide Michael Kopper pleaded guilty to fraud and money laundering.
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, Fastow and others at Enron at the expense of the company and its shareholders.
He also said friends, some Enron workers and members of Fastow's family stepped up as investors and, using loans from Fastow or Kopper, put up money to make the partnerships appear independent of Enron.
No one else named in the Kopper complaint, including Fastow, has been charged.
Lawyers for Fastow referred all calls to spokesman Gordon Andrew, who declined comment. Peter Fastow did not return telephone calls from The Associated Press.
Kopper told U.S. District Judge Ewing Werlein in court Wednesday that it was Fastow — whom he referred to only as "the Enron CFO" — who provided loans for investments, received kickbacks or negotiated deals that benefited the partnerships rather than Enron.
The criminal complaint filed in Kopper's case included a list of more than $23 million in bank and brokerage accounts held by Fastow and his wife, Lea, his family foundation, his brother Peter and several former Enron employees.
As part of his plea agreement, Kopper agreed to surrender $12 million he gained illegally through his accounting machinations to the Justice Department and the Securities and Exchange Commission.
Part of that $12 million is $4 million in a Charles Schwab account on the list of accounts prosecutors wanted to freeze. Kopper's attorney, David Howard, declined comment on the warrants signed Thursday, but noted they were moot in Kopper's case because he already agreed to surrender the money.
Kopper faces up to 15 years in prison when he is sentenced next April.
Fastow, his wife and his family's foundation face seizure of bank accounts of more than $14 million if prosecutors can show they are the product of money laundering when they were involved in the investments. Prosecutors also are seeking the forfeiture of Fastow's new five-bedroom stone house, worth more than $2 million.
Christopher Bebel, a former federal prosecutor who practices securities law at Shepherd Smith & Bebel in Houston, said the warrants may be sealed because prosecutors "don't want to show all their cards at this point."