Ex-Enron Exec To Forfeit $12 MillionAug 21, 2002 | UPI
Michael Kopper, a former Enron Corp. executive who pled guilty to criminal charges in Houston Wednesday, will also forfeit $12 million under a separate civil agreement with the Securities and Exchange Commission, U.S. officials said.
In addition, the Justice Department is pursuing another $23 million in ill-gotten gains it says was generated by Kopper's actions but may not be in the former executive's possession.
Eventually, all of the money recovered will be returned in some fashion to injured Enron investors, said Steve Cutler, chief of the SEC's enforcement section.
Bankrupt Enron was at one time the country's most dynamic, and politically connected, energy companies, specializing in natural gas commodities and electricity trades.
Cutler appeared with Deputy Attorney General Larry Thompson in Washington Wednesday to officially announce Kopper's plea, which was taking place in Houston.
"This plea marks a significant milestone," Thompson told reporters. "We have secured the cooperation of an important witness" and recovered at least $12 million for investors.
Kopper was Enron's chief financial officer from 1994 through July 2001.
Like a number of other U.S. corporations in legal hot water, Enron is accused of trying to hide debts from investors through improper accounting.
In some of the cases, executives allegedly dumped their stock at high prices while small investors, many of them retirees, either were required or encouraged to hold onto their stock until the price collapsed.
In the Enron case, investigators for now are charging outright misappropriation instead of manipulated stock sales.
Kopper agreed to plead guilty to one count of conspiracy to commit wire fraud and one count to engage in monetary transactions in property derived from unlawful activity.
His plea leaves him vulnerable to up to 15 years in prison. U.S. sentencing guidelines suggest 10 years.
But U.S. officials said whether Kopper serves any time at all is up to the sentencing judge, who must evaluate Kopper's cooperation with investigators.
In the separate civil filing by the SEC, Kopper was accused of violating the anti-fraud provisions of the federal securities laws.
Through the actions of its then-executives, the Houston-based Enron "painted a distorted and misleading image of itself," Cutler said.
The SEC complaint alleged that Kopper and others, starting as early as 1997, used complex structures, "straw men," hidden payments and secret loans to create the appearance that certain off-book entities were independent of Enron.
In fact, the complaint alleged, the entities were funded and controlled by the executives.
This allowed Enron to move its interests into those entities and off its balance sheets, the complaint said, when they should have been consolidated into the company's financial statements.
Kopper and others used the entities to misappropriate millions of dollars in fees and other costs, the complaint alleged.
Eventually, the SEC will devise a plan to distribute any money recovered in the Enron investigation to injured investors, U.S. officials said.
Even if it turns out that the $23 million being pursued by the Justice Department is now in the hands of innocent people, it can still be claimed by the government because it was generated illegally by others, officials said.
"Under the law, the money is treated as 'tainted' and can be recovered in a separate civil procedure," a department official said later on background.
In addition to forfeiting the $12 million, Kopper has agreed never to serve again as an officer of a public corporation as part of his settlement with the SEC.