Enron Next Up On Indictments?

The legal flame may be getting a little closer to Andrew Fastow, the former chief financial officer of Enron.

USA Today quotes two sources close to the investigation of the disgraced energy company as saying that federal prosecutors are expected to announce a criminal indictment of Fastow as early as next week.

During Fastow's two years shepherding Enron's balance sheets, until October of last year, the company allegedly used numerous partnership deals to hide over a billion dollars in losses.

The losses eventually led to the collapse of the energy giant, the depletion of employee retirement funds, and the unemployment of thousands of men and women.

Fastow's duties included overseeing the partnership deals.

A source quoted by the newspaper says a grand jury has already returned a sealed indictment with fraud and other charges against Fastow and several subordinates accused of enriching themselves through the partnership deals.

The fact that the report does not mention any charges in the works for former chairman Ken Lay or former CEO Jeffrey Skilling is not necessarily good news for either of those ex-Enron top dogs.

Observers point out that prosecutors, in building a case against Fastow, could be bringing themselves one step closer to having enough evidence on hand to prosecute Fastow and Lay.

A source says a case against Fastow was put together based on information supplied by his one-time protege, former Enron executive Michael Kopper, who last month pleaded guilty to a fraud charge as part of a plea bargain requiring his cooperation with government investigators.

Fastow reportedly also tried to cut a deal, but found no takers.

Could he try again? That's not clear at this point, but the incentive's certainly there: all of his family's assets have been frozen, as prosecutors try to recover from Fastow and other executives what they contend are $24 million in illegal profits.

As part of Kopper's plea bargain, the government froze $22.1 million in bank accounts that prosecutors say contain money from illegal Enron deals largely organized by Kopper and Fastow.

Prosecutors say the frozen funds - which they hope to confiscate - would be used to partially repay investors defrauded by Enron.

The frozen assets include nearly $12.8 million held by Fastow, his family and his family's foundation, plus $9.3 million more from other former Enron workers. In addition, Fastow's new $2.6 million five-bedroom home under construction in Houston also could be seized.

The unusual forfeiture request, filed last month in U.S. District Court in Houston, came as part of the plea agreement with Kopper, who was once a trusted aide to Fastow. Kopper was at the crux of at least three partnerships - known as Radar, Chewco and Southampton - that conducted complicated business deals with Enron. The partnerships were portrayed to investors and federal regulators as outside entities but secretly had too-close ties to Enron.

Kopper pleaded guilty to one count of conspiracy to commit wire fraud and one money-laundering charge. U.S. officials said he faces up to 15 years in prison, although Kopper agreed to give up $12 million in illegal profits and cooperate in the government's continuing criminal probe of Enron's spectacular collapse.

Experts said Kopper's plea was significant because it signals the government's interest in understanding and prosecuting others who participated in those controversial deals, whose disclosures in late 2001 led to Enron's bankruptcy. Prosecutors in court papers tied Kopper's roles in those deals closely to Fastow and said Kopper distributed profits to Fastow, Fastow's wife and other family members.

Among those whose bank accounts the Justice Department also targeted were Fastow's son, Peter; Ben Glisan Jr., Enron's treasurer and another trusted aide to Fastow; Kristina M. Mordaunt, a former in-house Enron lawyer; Kathy Lynn, an Enron financial division vice president; and Anne Yeager, an Enron employee.