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Former Enron Executive to Take Witness Stand

September 27, 2004|From Associated Press

More than two years after becoming the first former Enron Corp. executive to plead guilty to crimes, Michael Kopper is about to make his debut on a witness stand.

Kopper, 39, was at the epicenter of financial schemes allegedly coordinated by his boss, former Enron finance chief Andrew S. Fastow. The schemes funneled millions of dollars into their pockets and eventually fueled the energy company's crash into bankruptcy in December 2001.

He is slated to begin testifying today for the prosecution in the conspiracy and fraud trial of four former Merrill Lynch & Co. executives and two former midlevel Enron executives. The Houston trial began last week.

In August 2002, Kopper, a London School of Economics graduate, pleaded guilty to two counts of conspiracy for his role in several Fastow-run partnerships that helped Enron hide debt and inflate profit. Prosecutors say one of those partnerships, LJM2, played a significant part in an alleged sham sale of equity in three electricity-producing barges to Merrill Lynch at the end of 1999 -- the deal at the heart of the trial.

The six defendants are accused of conspiring to push through the sale because Enron needed to appear to meet fourth-quarter earnings targets in 1999 and Merrill Lynch hoped to garner more investment banking business from its then-lucrative client.

The government contends the barge deal was a loan rather than a sale and Merrill's investment was never at risk because the transaction came with an unwritten promise that Enron would find another buyer for the equity or buy it back itself by the end of June 2000. The defendants contend Enron was never obligated to repurchase that interest and higher-ups at both companies signed off on the deal.

Kopper's plea and cooperation paved the way to Fastow, who became the government's highest-profile cooperating witness in the Enron investigation when he pleaded guilty to two counts of conspiracy in January.

Fastow isn't on the prosecution's witness list in the barge case. But Kopper, Fastow's former right-hand man, was managing director of LJM2 -- created to help Enron hide debt by buying assets from the energy company -- when the partnership bought Merrill's interest in the barges in June 2000.

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