...than Daniel Fastow in cuffs? http://foxnews.com/story/0,2933,64617,00.html HOUSTON — The former chief financial officer of Enron Corp. was charged Wednesday with securities, wire and mail fraud, money laundering and conspiring to inflate Enron's profits and enrich himself at the company's expense. Andrew Fastow, 40, surrendered Wednesday morning to agents at the FBI's headquarters in Houston and had a court date later Wednesday. The criminal complaint charges that Fastow and others created a scheme to defraud Enron and its shareholders through transactions with off-the-books partnerships that made the company look more profitable than it was. Fastow spent about 30 minutes inside the FBI office before two agents led him out in handcuffs. He was placed in the back of Ford sedan, which was believed to be headed for the courthouse in downtown Houston. Fastow is said to have devised the company's complex web of off-the-books partnerships used to hide some $1 billion in debt from shareholders and federal regulators. He is the most prominent company figure targeted so far by the Justice Department. In August, a once-trusted Fastow aide, Michael Kopper, pleaded guilty to money laundering and conspiracy to commit wire fraud. FNC Wednesday: Andrew Fastow is led out in handcuffs by two FBI agents. Kopper said in federal court in Houston that it was Fastow who provided loans for investments, received kickbacks or negotiated deals that benefited the partnerships rather than the big energy-trading company, now bankrupt. Fastow, who invoked the Fifth Amendment and refused to testify before Congress early this year, reaped an estimated $30 million from the partnerships. He emerged as a central figure in the Enron scandal after the Houston-based company, with ties to President Bush and members of his administration, collapsed into bankruptcy last December. Enron's stunning downfall, bringing the retirement savings of employees with it and wiping out the investments of pension funds and individuals nationwide, became the first in a series of big corporate accounting scandals that rattled investors' confidence and the stock market. In his plea, Kopper admitted to creating partnerships designed to enrich himself, Fastow and others at Enron at the expense of the company and its shareholders. Kopper's admissions focused on three partnership schemes that prosecutors allege Fastow designed to look like legitimate business deals. Kopper said friends, selected Enron employees and members of Fastow's family used loans from Fastow or Kopper to invest in the partnerships to make them appear independent of Enron. Enron's board of directors approved the partnerships as well as a waiver from conflict-of-interest rules for Fastow. The action against Fastow raises the question of what he might say about former Enron chief executive Jeffrey Skilling and former chairman Kenneth Lay if Fastow began cooperating with the government. While publicly silent, Fastow has maintained through his spokesman that he acted with the full knowledge of Enron's top executives, its directors and its longtime auditor, Arthur Andersen LLP. Andersen, one of the nation's biggest accounting firms, was convicted in June of obstruction of justice for shredding of Enron audit documents. Former Enron insiders say it was Fastow's aggressive and inventive approach to structuring deals that appealed to Skilling. Kopper said that he funneled some money from the partnerships back to Fastow and his family in addition to paying the investors. The day after Kopper entered his plea, a federal judge froze more than $23 million in bank and brokerage accounts held by Fastow and his wife, Lea, his family foundation, his brother Peter, several former Enron employees and two holding companies. The Justice Department alleged that the accounts contain money from illegal Enron deals largely organized by Fastow and Kopper. The prosecutors also are going after Fastow's newly built $2.6 million home in Houston's wealthiest neighborhood, River Oaks, where Skilling and Lay live.
It would help if the image would show up. And it's going to be hard to beat that "Brittney has crack" image.
God I hope they are gunning for Kenny boy next. I won't be happy unless he goes down too. And his wife with her "he wouldn't hurt a fly" spiel and complaining about having to sell one of thier many houses, I'd like to see her face the day he's in cuffs. He might not hurt a fly, but he sure wouldn't mind stealing from one.
bet you money that never happens...trying to show he had knowledge of all this will be VERY difficult...
Ken Lay too rich to go down . . . He kewl with Dubya too . . .. NEVER FRICKING HAPPEN!!! Rocket River Money cannot buy happiness. . but it can buy freedom
Oh of course it's all about money. Fastow isn't exactly poor...so explain that one. If I were the prosecutor I'd make the case that Fastow and Skilling orchestrated the whole thing and that they fed a bunch of misrepresentations and lies to Lay so he'd sign off on key documents. It's probably close to reality...is very provable...and leave 2 sources for restitution instead of just one.
i agree...the problem is, when you're the boss/CEO, how can you ever really know everything that is going on..particularly as they relate to financial reports??? you hire someone like Arthur Andersen and you say, "damn...we've hired a great accounting firm...they'll do it right." and then they don't...but i think holding CEOs accountable in a sort of strict liability way is absolutely ridiculous. Lay was a people person working the community...I doubt he ever knew the extent of what was going on...and I doubt even more that any prosecutor could prove he did beyond a reasonable doubt.
A good example...I used to work for a big company in the telecom sector. If my initials and my boss' initials were on a document...the head man would sign it. That is why head men have underlings. The CEO or VP or whatever you want to call him/her does not have the time to read every single document presented to them for signature. It's very easy to see how Lay could have been misled by Fastow and Skilling.
Well, I don't know all the particulars, but wasn't he emailing workers telling them to buy more stock as he was selling his? That seems questionable, though I don't know if it was true.
he's the freaking CEO! what's he gonna do??? say, "hey guys...i think our company sucks...sell now!" to his employees??? not at all... guys move stock all the time...he still owned a huge amount of enron shares when it tanked.
Precisely. If you own 1,000 shares of a company you'll probably hang onto it. If you own 100,000 shares you'll probably sell and buy frequently in order to take advantage of hiccups in the overall market. I don't think Lay was trying to get people to sink money in just so they could lose their ass. He had nothing to gain by doing so.
Senior executives sell stock on a regular basis, independent of what is going on at the company or in the market. Someone who held as many shares of Enron as Ken Lay did, SHOULD be on a regular program to diversify his holdings. Bill Gates does the *very same thing*, by regularly selling shares of Microsoft. Everything is announced, scheduled, and reported. As far as telling the employees to buy shares goes, OF COURSE he is optimistic about the company. He is their leader! He is doing the same thing as every CEO in the S&P 500 when he exudes confidence about business prospects. I grant you that there were huge conflicts of interest within Enron, but many of the things they are attacked for are simply not relevant. Trying to minimize the appearance debt (through synthetic leases or off-balance sheet financings), trying to raise profits (through stock option grants instead of cash bonuses, timely asset sales, and hedging), and paying top executives large salaries/bonuses are standard practice in HUNDREDS of companies. If Enron is wrong for doing this, then half of the S&P 500 is guilty of the same crime! Ridiculous. You've got a body of legislators who know next to nothing about business/finance and you've got a body of media members who just keep repeating buzzwords like "corporate scandal", "Enron-accounting", "special purpose entity" with only a superficial knowledge of the facts and a hugely biased agenda. These are the people that have stripped the confidence out of individual investors, not corporate managers.
This is what people don't seem to get. You don't just up and sell 500k shares of a stock when you're a high ranking official in a company. They have to announce their intentions to sell beforehand.
Rocket River If money can buy freedom, please explain Michael Milkin, Ivan Boesky, and Charles Keating.
Interesting how all the corporate thugs got away with their crimes during the Clinton administration and are being prosecuted under the Bush administration. Who did Clinton go after? Bill Gates....
It is a very underpublicized truth that these problems were in full swing while Clinton was in office. it is part of what caused the stock market to be so overvalued. But I don't think Clinton knew or had any reason to know what was going on. I fault the SEC. I dislike Clinton as much as anybody you'll meet...but this isn't his fault.
I would fault the auditors more than the SEC. There as nothing wrong with the rules that the SEC had in place, there was a problem with companies telling the truth and abiding by those rules. Had the "independent" auditors not been conflicted by high revenue consulting business and just overall client appeasement tactics, then they would have never allowed all the shenanigans that took place. Now if the companies weren't giving all the auditors all the information, or were giving them false information, that is another story (which may likely be true).
This whole thing isn't surprising. For years Andersen had played loose and fast with the rules IMO. This is because they and the other big firms had so much pull with FASB that they in essence MADE the rules. This was just the natural result when the practices escalated.
