Federal prosecutors are expected to announce an indictment of former Enron chief financial officer Andrew Fastow as soon as next week, according to two legal sources close to the investigation.
A criminal indictment would be the first against one of the former top Enron executives who led the once-celebrated energy giant to its downfall.
As CFO from 1999 until last October, Fastow ran the questionable partnerships that hid more than $1 billion in losses and led to the company’s filing for bankruptcy protection in December.
One of the sources close to the investigation says the government has recently secured a sealed grand jury indictment with fraud charges and other allegations against Fastow and subordinates who enriched themselves through Enron’s partnership deals.
Former Enron executive Michael Kopper, Fastow’s one-time protÃƒÂ©gÃƒÂ© who last month pleaded guilty to fraud and cut a plea deal with the government, continues to help prosecutors. He has provided investigators with much more information than was disclosed in the Justice Department ( news – web sites)’s charges against Kopper, the source says.
The source says Kopper provided a road map of partnership schemes and that prosecutors have learned far more from Kopper than they made public in court when he entered his plea last month.
Kopper’s cooperation helped prosecutors pursue Fastow. Making a case against Fastow will bring them closer to prosecuting former CEO Jeffrey Skilling and former chairman Kenneth Lay.
An indictment of Fastow would also send a strong signal, six weeks before midterm elections, that a Republican administration that received generous campaign contributions from Lay is not playing favorites and is aggressively pursuing corporate crime.
Fastow’s attorney, John Keker of San Francisco, declined to comment. Leslie Caldwell, Enron Task Force chief, also declined to comment.
A legal source with personal knowledge of the matter says Fastow’s attorneys approached the task force several months ago in hopes of cutting a deal. They were rebuffed.
It’s unclear whether Fastow could still strike an agreement with prosecutors.
An indictment would mean ”all guns are blazing and all bets are off,” says securities lawyer Jacob Frenkel of Smith Gambrell & Russell.
The government’s yearlong probe of Enron has progressed steadily. In June, prosecutors won an obstruction of justice conviction against former Enron auditor Arthur Andersen. This month, they charged three British bankers of using Enron partnerships to defraud National Westminster Bank of $7 million.
In Fastow’s case, a federal magistrate in Houston has frozen his family’s assets as prosecutors seek to recover what they say are nearly $24 million in illegal profits.