Prosecutors are set to unveil criminal charges today against former Enron Corp. chief financial officer Andrew S. Fastow today, sources close to the investigation said.
Fastow, who surrendered to federal law enforcement authorities early this morning in Houston, is to be charged with fraud stemming from his alleged role in masterminding secretive partnerships that hid millions in debt for the Houston energy trader and made him and his friends rich.
Fastow, 40, spent about 30 minutes at the FBI office before two agents led him out in handcuffs. He was driven away in a Ford sedan, which was believed to be headed for the courthouse in downtown Houston.
He would become the highest-ranking Enron officer to face criminal charges for his alleged role in the company’s collapse into bankruptcy last year. A Justice Department spokesman declined to comment yesterday, as did a representative for Fastow.
Fastow was forced out of Enron last October after his role in the company’s off-balance-sheet partnerships became public. Enron’s board later told Congress that Fastow reaped $45 million from just two of the scores of partnerships.
Prosecutors plan to file the charges in a criminal complaint, a document that allows them to lay out evidence against a potential defendant before he or she is indicted. The government then would have 30 days to win a grand-jury indictment.
The complaint is expected to detail the evidence prosecutors have gleaned about Fastow from his former right-hand man, Michael J. Kopper, and others. Kopper pleaded guilty to wire fraud and money laundering in August and said he kicked back money to Fastow and his relatives.
The government’s Enron Task Force already has moved to freeze some $23 million in allegedly tainted funds belonging to Fastow, his family foundation and several of his associates. Prosecutors also have signaled their intention to seize Fastow’s newly built home in the ritzy River Oaks section of Houston.
Fastow still could agree to cooperate with prosecutors and provide evidence against top Enron executives in exchange for leniency from a sentencing judge. His spokesman has maintained that Fastow created the partnerships after seeking advice from top lawyers and accountants.
The Securities and Exchange Commission will file a separate lawsuit today alleging that Fastow broke securities laws, a law enforcement source said.
Also yesterday, a bankruptcy judge gave permission for Enron’s unsecured creditors to sue Fastow, Kopper and other former executives for fraud, negligence and other claims in a Texas state court. Attorneys for the creditors told the judge they were worried that some former Enron officers would try to “dissipate” their assets before they could be sued.