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First plea of guilty expected in Enron debacle
WASHINGTON -- A top lieutenant to Enron Corp.'s former chief financial officer will plead guilty to criminal charges, the first admission of guilt by an executive of the fallen energy-trading company, sources close to the investigation said Tuesday.
Michael Kopper, former managing director of Enron Global Finance, plans to enter guilty pleas Wednesday in Houston to single charges of conspiracy to commit wire fraud and money laundering, two sources said, speaking on condition of anonymity.
He will also turn over $12 million in illegally obtained assets, according to one of the sources.
Kopper, 37, was a top deputy to ex-chief financial officer Andrew Fastow. He became a focus of investigators because of his involvement in Enron-financed partnerships, accounting devices that allowed the company to shift debt and other liabilities off its books.
As part of the plea agreement, Kopper has agreed to cooperate with investigators, a potential watershed event in the investigation since he has knowledge of Enron's innermost workings and financial dealings.
Kopper's attorney did not immediately return calls seeking comment. A spokesperson for the Justice Department declined to comment.
The plea is the first outward sign of progress in the Enron investigation. Other major companies under investigation, including WorldCom and Arthur Andersen, all have seen executives charged.
Ken Johnson, spokesman for the House Energy and Commerce Committee, said Kopper is just the first of many executives who will be charged.
"Clearly this is just the first shoe to drop, based on the information our committee has in its possession," said Johnson, who works for committee chairman Rep. Billy Tauzin, R-La. "We have a wealth of information in our possession suggesting a number of people at Enron took part in fraudulent activities."
Kopper has not been charged. In a plea agreement, the government generally brings charges just before a guilty plea is entered in court.
One of the sources said the plea offers no guarantee that prosecutors will not seek prison time for Kopper.
When Houston-based Enron declared bankruptcy last December, it was the largest such filing in U.S. history. Millions of investors lost money and thousands of current and former Enron workers lost the great bulk of their retirement savings.
It also led to the unraveling of Arthur Andersen LLP, the auditing firm convicted of shredding documents to obstruct a Securities and Exchance Commission investigation of Enron's accounting practices.
Former Andersen auditor David B. Duncan is awaiting sentencing for obstruction of justice, and the firm itself has lost hundreds of clients and is shutting down its auditing practice at the end of this month.
Awkward for Bush
Enron's collapse put the Bush administration in an awkward position. President Bush has received more than $550,000 from Enron, its employees and their relatives during his political career -- the most from any source. He is also a friend of former chief executive Ken Lay.
Enron's partnerships were largely financed with Enron stock, even though they were supposed to be independent. An internal Enron investigation concluded that some of the partnerships, created by Fastow, were used to hide debt and inflate Enron's profits by more than $1 billion, misleading investors.