FORMER ENRON CHIEF FINANCIAL OFFICER ANDREW S. FASTOW
INDICTED FOR FRAUD, MONEY LAUNDERING, CONSPIRACY

WASHINGTON, D.C. - Deputy Attorney General Larry Thompson today announced that former Enron Chief Financial Officer Andrew S. Fastow was indicted by a federal grand jury in Houston on 78 counts of wire fraud, money laundering and conspiracy, in connection with the Enron Corp.’s multibillion-dollar collapse.

According to the indictment returned today in U.S. District Court in Houston, Fastow and others devised a scheme to defraud Enron, its shareholders and others through transactions with certain “Special Purpose Entities,” or SPEs - structures set up to achieve the off-balance-sheet treatment that allowed Enron to make itself appear more attractive to Wall Street investment analysts, credit rating agencies and others. The indictment alleges that Fastow and others at Enron used SPEs fraudulently to both manipulate Enron’s financial results and enrich themselves at Enron’s expense. The indictment also alleges that Enron at least once enlisted a major financial institution to assist in its financial statement manipulation.

“The investigation into Fastow’s illegal activities continues,” said Deputy Attorney General Larry Thompson, the head of President Bush’s Corporate Fraud Task Force. “We will use every appropriate measure to recover the ill-gotten gains of these corporate schemers. Justice demands it.”

Today’s indictment alleges that starting in early 1997, Fastow and others devised a scheme to defraud Enron and its shareholders through a series of transactions with certain Enron SPEs. The transactions include:

LJM: The indictment alleges that in June 1999, relying on false representations by Fastow and others, Enron’s Board of Directors agreed to allow Fastow to create and serve as the managing partner of an SPE called LJM. Transactions entered into with LJM allowed Enron to manipulate its balance sheet by, among other things, moving poorly performing assets off the balance sheet and fraudulently manufacturing needed earnings. In addition, the LJM transactions allowed Fastow and others to personally earn huge sums of money in the form of management fees and skimmed deal profits.

SOUTHAMPTON: The indictment alleges that Fastow and others conspired to defraud Enron and National Westminster Bank by secretly investing in an Enron SPE, Southampton, and then siphoning off millions in income that rightfully belonged to others. Former Enron finance executive Michael J. Kopper has pleaded guilty in connection with this scheme, and three British bankers have been indicted on wire fraud charges in connection with their roles in the scheme.

CHEWCO: The indictment alleges that Fastow and others proposed the creation of an SPE known as Chewco to buy the limited partnership interest of the California Public Employees Retirement System in a venture known as the Joint Energy Development Investments, or JEDI. The indictment alleges that Fastow unlawfully received several hundred thousand dollars in kickbacks from various payments made by Enron to Chewco through transfers to Fastow’s wife and other family members.

RADR: The indictment alleges that in May 1997, Fastow created SPEs known as RADR to purchase a portion of Enron’s interest in certain wind farms in California through supposed independent third-party investors. According to the indictment, the investors were nominees whose “investments” were funded by Fastow, and Fastow received kickbacks and payments from RADR in the form of annual $10,000 “gifts” to members of Fastow’s family.

If convicted, FASTOW faces the following maximum penalties:

For each violation of 18 U.S.C. Section 371 (conspiracy): 5 years imprisonment and $250,000 fine;

For each violation of 18 U.S.C. Section 1343 (wire fraud): 5 years imprisonment and $250,000 fine;

For each violation of 18 U.S.C. Section 1957 (money laundering): 10 years imprisonment, fine of up to twice the amount laundered;

For each violation of 18 U.S.C. Section 1956 (money laundering): 20 years imprisonment, fine of up to twice the amount laundered.

Fastow previously was arraigned on a criminal complaint and released on a $5 million secured bond. A date for Fastow’s initial appearance on the Indictment will be set by the Court.

The Enron investigation is being led by the Enron Task Force, formed in January 2002 to investigate matters related to the collapse of Enron Corp. The task force consists of a team of federal prosecutors supervised by the Department’s Criminal Division and agents from the Federal Bureau of Investigation and the Internal Revenue Service’s Criminal Investigation Division.

In addition to the Fastow indictment, the Task Force has brought several criminal charges. On June 15, 2002, a federal jury in Houston convicted accounting firm Arthur Andersen LLP of obstruction of justice for destroying documents to keep them from the SEC, which had begun an investigation of Enron. In addition, former Arthur Andersen auditor David Duncan pleaded guilty to obstruction of justice in connection with his role in the destruction of Enron-related documents.

In August 2002, former Enron finance executive Michael J. Kopper pleaded guilty to conspiracy to commit wire fraud and money laundering, and is cooperating with the government. Also cooperating with the government is former Enron energy trader Timothy N. Belden, who pleaded guilty in October 2002 to conspiracy to commit fraud by manipulating energy prices in the California market. And in September 2002, a federal grand jury in Houston returned an indictment charging three former British bankers with wire fraud in the scheme involving Southampton.

In addition, the government has frozen and will seek the forfeiture of $37 million in ill-gotten Enron gains.

The Task Force investigation is active and ongoing.

###

02-627