Enron Ex-CFO Faces New Charges
The U.S. widened its investigation into Enron Corp., adding 31 charges Thursday against ex-Chief Financial Officer Andrew Fastow and accusing his wife, former Enron Treasurer Ben Glisan and eight other former executives of taking part in a fraud that destroyed the company.
The indictments bring the total to 18 in the government’s probe of one of the biggest corporate scandals in U.S. history, one that wiped out $68 billion in the energy trader’s market value. Former chief executives Kenneth L. Lay and Jeffrey Skilling haven’t been charged.
Fastow’s wife, Lea Weingarten Fastow, who also worked at Enron as it rose to become the seventh-largest company in the U.S., was accused of fraud, taking part in a money laundering conspiracy and filing false income tax returns.
Her husband, who was indicted in October and has pleaded innocent, was again named in the latest indictments that charge him with masterminding an accounting fraud that cost investors billions of dollars.
Fastow, 41, the highest-ranking Enron executive to be charged, was accused of 109 counts in the new indictment, up from 78 previous charges.
His lawyers have said he was acting on orders from Lay, Skilling and Enron’s board.
Lea Fastow, also 41, was accused of conspiring with her husband to enrich their family by defrauding Enron and avoiding income taxes on their ill-gotten gains.
The charges against her are without merit, her lawyers said. They are “a transparent effort to put pressure” on Andrew Fastow, said one of the attorneys, Andrew Jefferson.
She and Glisan were freed on $500,000 bond after pleading not guilty to all charges.
Lea Fastow’s bond was posted by her brother-in-law, Peter Fastow, an Annapolis, Md., attorney. Her trial was slated to begin July 8.
Also charged are Kenneth Rice and Joseph Hirko, former chief executives of Enron Broadband Services, and former Enron finance executives Dan Boyle, Kevin Hannon, Rex Shelby and Scott Yeager. Two others, Kevin Howard and Michael Krautz, were re-indicted.
All the defendants except Shelby have surrendered. Shelby and prosecutors agreed that he would turn himself in next week.
The Securities and Exchange Commission also filed a lawsuit against Rice, Hirko and other former Enron Broadband executives, accusing them of fraud and of reaping more than $150 million in unlawful profits. Rice’s and Hirko’s bonds were set at $3 million apiece and Hannon’s and Yeager’s at $1 million.
Hirko was dismissed from a civil complaint against the company earlier this week. U.S. District Judge Melinda Harmon said Hirko wasn’t head of the broadband unit when the alleged fraud took place.
The suit, filed in federal court in Houston, said seven former executives engaged in a scheme to drive up Enron’s shares by using fraudulent accounting methods so they could sell stock for more than $154 million. The government is trying to confiscate more than $100 million of the profits.