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Justice Department Forgoes Enron Funds

The agency gives up its claim to $3.8 million in confiscated money ultimately intended for defrauded investors.

August 13, 2003|From Associated Press

Federal prosecutors have given up their claim to nearly $4 million surrendered by the first former Enron Corp. executive to plead guilty to crimes in the company's 2001 crash.

The sum is part of the $11.8 million that Michael Kopper, 38, of Houston relinquished to the government when he pleaded guilty in August 2002 to money laundering and conspiracy to commit wire fraud for his role in several partnerships that earned him and others millions of dollars while hiding debt and inflating profit at Enron.

About $8 million of the money returned is in an account overseen by the Securities and Exchange Commission to eventually be distributed to investors who were left with worthless stock when Enron imploded.

The other $3.8 million was to go to the Justice Department for the same purpose. But the money was in a Charles Schwab account in the name of LJM2 Capital Management, one of the partnerships linked to the Enron scandal. In March, LJM2 filed court documents arguing that the $3.8 million was the partnership's property.

The Justice Department didn't fight for the money, and U.S. District Judge Ewing Werlein in Houston last week vacated the agency's claim on it, the Houston Chronicle reported.

Kopper, once a top lieutenant to former Enron finance chief Andrew S. Fastow, quit Enron in July 2001 to run LJM2 Co-Investments LP, one of several Fastow-connected partnerships that conducted deals with Enron. Kopper also was managing director of LJM2 Capital Management.

Fastow faces nearly 100 counts in an indictment charging him with money laundering, fraud, insider trading, obstruction of justice and conspiracy. His wife, a former Enron assistant treasurer, is charged with conspiracy to commit wire fraud, money laundering conspiracy and filing false tax returns for allegedly helping run some of the schemes, and is slated to go to trial Jan. 27.

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