Seven former Enron Corp. executives and the wife of the company’s disgraced former finance chief have joined the growing ranks of company insiders indicted on multiple counts of fraud, money laundering and other charges.
Lea Fastow, wife of former Enron chief financial officer Andrew Fastow, and Kenneth Rice, former head of the company’s broadband unit that fizzled in 2001, surrendered to federal authorities Thursday. Four other one-time colleagues accused of reaping millions of dollars while running sham deals and shady schemes also surrendered. The seventh will appear in court Monday.
Thirty-one more charges including conspiracy to falsify accounting records, insider trading and filing false tax returns were added to 78 counts already filed last year against Andrew Fastow. Two other former broadband executives first indicted in March on fraud, money laundering and lying to the FBI also face additional charges.
“Today’s indictments are a significant milestone in our determined efforts to expose and punish the vast array of criminal conduct related to the collapse of Enron Corporation,” said Deputy Attorney General Larry Thompson, who heads the Justice Department’s Corporate Fraud Task Force.
A member of the task force, Assistant U.S. Attorney Andrew Weissmann, said prosecutors are picking through the Enron rubble “piece by piece, scheme by scheme and lie by lie.”
Lea Fastow was a former assistant treasurer at Enron, which imploded into bankruptcy in late 2001 amid a series of questionable financial transactions. The collapse cost thousands their jobs and erased the investments of thousands more who owned its stock.
Prosecutors allege she helped her husband create sham partnerships to pocket kickbacks, once trying to use her father as an investor to give one of the partnerships the appearance of independence from Enron.
Her husband didn’t attend court, but hugged her before her attorney escorted her to surrender Thursday. He hugged her again outside the courthouse after she was freed on $500,000 bail on charges of conspiracy to commit wire fraud, money laundering conspiracy and filing false tax returns.
Andrew Fastow will face his additional charges at a previously scheduled May 19 hearing, Weissmann said. He denies the charges against him and is free on $5 million bond.
Lea Fastow’s attorney, Nanci Clarence, said her client was innocent and that she was being charged “to put pressure on her husband of 18 years.”
Also charged with securities fraud, conspiracy, money laundering, wire fraud and insider trading are: Joseph Hirko, Rice’s former co-chief executive of Enron Broadband; Kevin Hannon, the unit’s former chief operating officer; and former vice presidents Scott Yeager and Rex Shelby.
They were added as defendants to an expanded indictment against former broadband executives, Kevin Howard and Michael Krautz. Howard and Krautz were indicted March 26 for allegedly using accounting tricks to generate $111 million in fake earnings from the unit’s failed Internet movie-on-demand service.
The indictment alleges Rice, Hirko, Hannon, Yeager and Shelby sold more than a combined $185 million of Enron stock while they knew the broadband unit was failing and lied about its capabilities to analysts.
Enron’s stock rose sharply after executives, including then-Enron CEO Jeffrey Skilling, promoted the broadband venture. Shares reached a high of $90 in August 2000. The unit went bankrupt with Enron.
Skilling has not been charged with any crime, and he has said he did nothing improper at Enron. He quit the company in August 2001, more than three months before Enron failed, citing personal reasons.
Rice, Hirko, Hannon and Yeager entered innocent pleas in court Thursday. Shelby, who had a family emergency, was being allowed to surrender Monday.
Charged in the expanded indictment against Fastow were Ben F. Glisan Jr., Enron’s former treasurer, and Dan Boyle, a former finance executive. Glisan is charged with conspiracy and money laundering, while Boyle is charged with conspiracy to falsify records and conspiracy to commit wire fraud. He has pleaded innocent.
Glisan also pleaded innocent. His attorney declined comment. Bill Rosch, Boyle’s attorney, said prosecuting his client “is like prosecuting the piano player in a whorehouse.”