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Charges expand against ex-Enron top executives

Friday, May 2, 2003

HOUSTON -- The probe into the collapse of energy trading giant Enron Corp. broadened Thursday with 31 new charges against former chief financial officer Andrew Fastow and indictments of fraud and insider trading against his wife and nine other former executives.

Lea Fastow, 41, and six ex-Enron officials surrendered to federal authorities in Houston just after daybreak and were taken in handcuffs to court, where they entered innocent pleas and were released on bond. A seventh executive was to turn himself in later. Andrew Fastow and two others named Thursday had been charged in earlier indictments.

Fastow's wife is a former assistant treasurer at Enron, which imploded into bankruptcy in late 2001 amid a Byzantine series of questionable financial transactions. The collapse cost thousands of people their jobs and erased the investments of thousands more who owned its high-flying stock, which quickly became worthless.

"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," said Deputy Attorney General Larry Thompson, who heads the Justice Department's Corporate Fraud Task Force.

Five pleas

The indictments bring to 19 the number of individuals charged in the Enron case, with five of those already entering guilty pleas. Thompson said the probe was far from over.

Federal prosecutors, who filed a 78-count indictment against Andrew Fastow in October, filed a superseding indictment Thursday that includes charges of fraud, insider trading and falsification of accounting records. The superseding indictment also names two new defendants, former Enron treasurer Ben Glisan Jr. and former finance executive Dan Boyle.

Boyle's attorney, Bill Rosch, said prosecuting his client "is like prosecuting the piano player in a whorehouse."

The indictment against Lea Fastow includes six counts alleging conspiracy to commit wire fraud, money laundering, aiding and abetting and filing false tax returns.

"Lea Fastow is innocent," her lawyer, Nanci Clarence, told reporters. "Mrs. Fastow has done nothing wrong, and she had nothing to do with the fall of Enron. Mrs. Fastow is being charged in order to put pressure on her husband of 18 years, Andy Fastow.

"These tactics are unfair and unjust."

Another indictment added charges against former Enron Broadband Services executives Kevin Howard and Michael Krautz, as well as five new defendants: the unit's chairman and co-chief executive Kenneth Rice; former president and co-chief executive Joseph Hirko; former chief operating officer Kevin Hannon; and former senior vice presidents Scott Yeager and Rex Shelby. They are charged with fraud, money laundering, insider trading, keeping false books and records, submitting false tax forms, obstruction of justice and conspiracy.

The indictments allege the Enron Broadband executives sold large amounts of Enron stock while they knew their unit was failing, bringing themselves some $186 million in profits. The government is seeking forfeiture of more than $100 million of those profits.

Prosecutors contend that although Enron claimed the broadband unit earned millions in profits, it never generated any revenue. Enron abandoned the unit shortly before filing for bankruptcy in December 2001.

Attorneys for Rice and Yeager said their clients were innocent.

All eight newly charged defendants entered innocent pleas in court Thursday except Shelby, who had a family emergency and was being allowed to surrender Monday.

The seven left the courthouse after posting bond, set at $3 million each for Rice and Hirko, $1 million for Hannon and Yeager, $500,000 for Glisan and Lea Fastow, and $250,000 for Boyle.

At a separate hearing, a federal judge ordered Rice to forfeit a sapphire and diamond necklace and bracelet belonging to his wife.

Andrew Fastow is free on $5 million bond.

A status hearing in his case is scheduled for May 19. Howard and Krautz have been freed on $500,000 bond each.

Former Enron CEO Jeffrey Skilling has not been charged with any crime, and has said he did nothing improper at Enron.

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Associated Press writer Pam Easton contributed to this report.


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