culture, politics, commentary, criticism

Tuesday, September 28, 2004
Fastow giggled. The folks who managed Enron, the #1 contributor to Bush-Cheney 2000, were even more sickeningly evil than you thought (Mary Flood and Tom Fowler,
Houston Chronicle):
Former Enron executive Michael Kopper spent much of Monday telling a jury about how he and others systematically looted Enron, concocting scheme after scheme to line their pockets with millions of dollars stolen from shareholders.

Kopper, 39, calmly and thoughtfully explained that in 1997 he and ex-Chief Financial Officer Andrew Fastow started to divert funds to themselves, family and friends by breaking laws, breaking internal rules, lying, manipulating and standing in the middle of deals.

Though 14 people have pleaded guilty to crimes in connection with Enron's demise, this is the first time any one of them has publicly discussed the rampant greed and multimillion-dollar plundering in their own words.


The barge case is based on the government's contention that Enron pretended to sell three electricity-generating barges to Merrill Lynch just so it could claim the earnings from the sale to boost its bottom line and meet Wall Street expectations. Prosecutors contend that the sale was a sham because of an oral promise that Enron would take the bankers out of the deal within six months.

Kopper said Fastow wanted his off-the-books partnership, LJM2, to take the barges off Merrill Lynch's hands. Kopper said it wasn't done like a normal deal, as there was a set 15 percent return and a $350,000 fee LJM2 was guaranteed. Kopper said he felt the partnership had no risk because of Fastow's promises they too would be bought out, as they soon were.

Kopper, who has pleaded guilty in 2002 to two counts of conspiracy, admitted he and his partner William Dodson stole about $16.5 million from Enron between 1997 and 2001.

He said he helped loot about $45 million for Fastow and his family as well. And other friends got anywhere from $60,000 to $1 million, some after investing, others just because Fastow and Kopper wanted to pay them something.

Answering questions from prosecutors or defense attorneys, Kopper remained even and responsive. He agreed his mentor Fastow is brilliant and "very greedy." He noted Fastow sometimes lied to Kopper, once even about Kopper's share of the booty.

In late 2001, when it was clear authorities were looking at Enron, Kopper said he spoke to Fastow about their exposure and then destroyed both his home computer and his laptop by putting them in dumpsters.


The former executive has clearly done well financially even while a cooperating witness. He forfeited $8 million to the government as well as his disputed rights to another $4 million. His domestic partner William Dodson did not have to forfeit any of the $9 million pre-tax that he benefited from the frauds.

Kopper said he now has a job at a health clinic, is living in a house worth up to $2 million owned by his partner Dodson, just bought a new home worth $380,000, has a 401(k) worth about $300,000, $100,000 in other assets and could possibly get back some of the $500,000 he has on account with his lawyers.

On cross-examination by defense attorney Richard Schaeffer, Kopper described how he and Fastow were able to turn relatively small personal investments into larger payoffs through their inside knowledge of Enron.

Through a partnership they formed called Southampton they were able to get a British Bank, NatWest, to sell its share in an Enron-related partnership for much less than it was worth. Kopper said he and Fastow knew how much the bank was willing to pay and how much Enron would pay for the stake in the partnership.

"We stood between the two parties in order to be able to skim money off of them," Kopper said. He said the group stole $19 million from Enron in this deal alone.

In February 2000, he and Fastow each invested $25,000 into the partnership and got a return of $4.5 million each just a few months later. A number of other former Enron employees invested as little as $5,000 in Swap Sub and received up to $500,000 in return.

"This is what you did when you went to work every day, is you thought up schemes to steal money from people?" asked Schaeffer, attorney for Merrill defendant Daniel Bayly.

"Yes, that's part of what I did," Kopper replied.

The defendants in the barge case, who have pleaded innocent, are: Bayly, former chairman of investment banking for Merrill Lynch; Brown, former head of Merrill Lynch's asset lease and finance group; Robert Furst, former Enron relationship manager for Merrill Lynch; William Fuhs, former Merrill Lynch vice president who answered to Brown; Dan Boyle, a former Enron finance executive on Fastow's staff; and Kahanek, a former in-house Enron accountant.

Prosecutors wanted Kopper to solidify their contention the sale was a sham and verify how Enron arranged for LJM2 to get Merrill Lynch out as promised.


Kopper mentioned Skilling when he noted that Fastow considered LJM2 taking the barges in 1999, when Merrill Lynch did the deal instead. At that time Fastow said "if LJM could do this deal he would look like a hero to Jeff Skilling," Kopper recalled.

Kopper said Fastow giggled in May or June 2000 when he wanted Kopper to use LJM2 to now buy the barges from Merrill Lynch.

Kopper said the Fastow-controlled partnerships LJM and LJM2 were typically used to help Enron meet financial goals like managing cash flow, debt and earnings.

He said the barges being handed off was all about falsely bolstering Enron's bottom line. "Given that Enron was measured by its earnings, year-end became an important time," Kopper said.
How many Enron ex-employees get to live in a $2 million house owned by a "domestic partner," bought with funds stolen from other ex-employees? The answer is one.

Why do we still obsess about Enron? Because of its symbolic power — Enron perfectly represents the pyramid scheme of Republican power politics, sucking all money upward, leaving nothing but victims in its wake. These are the same people who want to privatize your retirement income to provide more fodder for the Fastows and Skilling and Lays, who will be happy to take your investments, falsify everything in sight, giggling all the while, and immediately shut the door behind them as they waltz into Cheney's office to make energy policy.

The fraudulence is infinite.

Here are a couple of our more recent rants about Enron: John Forney's sentence, and Why is Ken Lay smiling?

Greatest Hits · Alternatives to First Command Financial Planning · First Command, last resort, Part 3 · Part 2 · Part 1 · Stealing $50K from a widow: Wells Real Estate · Leo Wells, REITs and divine wealth · Sex-crazed Red State teenagers · What I hate: a manifesto · Spawn of Darleen Druyun · All-American high school sex party · Why is Ken Lay smiling? · Poppy's Enron birthday party · The Saudi money laundry and the president's uncle · The sentence of Enron's John Forney · The holiness of Neil Bush's marriage · The Silence of Cheney: a poem · South Park Christians · Capitalist against Bush: Warren Buffett · Fastow childen vs. Enron children · Give your prescription money to your old boss · Neil Bush, hard-working matchmaker · Republicans against fetuses and pregnant women · Emboldened Ken Lay · Faith-based jails · Please die for me so I can skip your funeral · A brief illustrated history of the Republican Party · Nancy Victory · Soldiers become accountants · Beware the Merrill Lynch mob · Darleen Druyun's $5.7 billion surprise · First responder funding · Hoovering the country · First Command fifty percent load · Ken Lay and the Atkins diet · Halliburton WMD · Leave no CEO behind · August in Crawford · Elaine Pagels · Profitable slave labor at Halliburton · Tom Hanks + Mujahideen · Sharon & Neilsie Bush · One weekend a month, or eternity · Is the US pumping Iraqi oil to Kuwait? · Cheney's war · Seth Glickenhaus: Capitalist against Bush · Martha's blow job · Mark Belnick: Tyco Catholic nut · Cheney's deferred Halliburton compensation · Jeb sucks sugar cane · Poindexter & LifeLog · American Family Association panic · Riley Bechtel and the crony economy · The Book of Sharon (Bush) · The Art of Enron · Plunder convention · Waiting in Kuwait: Jay Garner · What's an Army private worth? · Barbara Bodine, Queen of Baghdad · Sneaky bastards at Halliburton · Golf course and barbecue military strategy · Enron at large · Recent astroturf · Cracker Chic 2 · No business like war business · Big Brother · Martha Stewart vs. Thomas White · Roger Kimball, disappointed Republican poetry fan · Cheney, Lay, Afghanistan · Terry Lynn Barton, crimes of burning · Feasting at the Cheney trough · Who would Jesus indict? · Return of the Carlyle Group · Duct tape is for little people · GOP and bad medicine · Sears Tower vs Mt Rushmore · Scared Christians · Crooked playing field · John O'Neill: The man who knew · Back to the top

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