MR. THOMPSON: Good morning. I'm here together with members of the Corporate Fraud Task Force: Michael Chertoff, who is the assistant attorney general in charge of our Criminal Division; Steve Cutler, who is the director of enforcement for the Securities and Exchange Commission. We also have Andrew Weissmann of the Enron task force; Joshua Hochberg, who is the chief of the Fraud Section of the Criminal Division; Alice Fisher, who is a senior official in the Criminal Division; Linda Thomsen, who is with the SEC; Bruce Gebhardt, who is the deputy director of the FBI.
And we're here this morning to formally announce the guilty plea in Houston of former Enron managing director Michael Kopper. This has been widely reported in the media.
This plea marks a significant milestone in the Enron investigation. We have secured the cooperation of an important witness. At the same time, today's plea allows us to collect an additional $12 million which will go toward the relief of defrauded investors.
Former Enron executive Kopper pled guilty to an information charging him with participation in a conspiracy against the company and its shareholders. Mr. Kopper has accepted responsibility for his role in these offenses and has agreed to forfeit $12 million to satisfy both this plea and a related SEC complaint, money that will be distributed by the SEC to injured investors.
Mr. Kopper has widely (sic) acknowledged his liability for his conduct -- has wisely acknowledged his liability for his conduct and is now cooperating with the government's investigations of this matter.
The criminal information describes a conspiracy beginning in 1997 and lasting through July 2001 by Kopper and co-conspirators inside and outside the Enron Corporation, including Enron's chief financial officer. The information alleges that the conspirators created an array of companies designed to disguise Enron's vulnerability to risk, risk and losses, and to benefit the conspirators at the expense of Enron's shareholders.
The three schemes charged in the information -- Radar, Chewco and South Hampton -- differed in their details, but they all had the common purpose to conceal the nature and extent of Enron's investments by placing them off of its own balance sheet. This made Enron appear more profitable to Wall Street and, in one instance, disguised Enron's regulatory violations.
This investigation is active and ongoing. It has already produced the guilty plea of Arthur Andersen partner David Duncan, and the trial conviction of the Arthur Andersen partnership for obstruction of justice. We've also ready charged three other co-conspirators for their participation in one of the schemes charged in today's information.
Ladies and gentlemen, I want to commend Assistant Attorney General Michael Chertoff of the Criminal Division; Fraud Section Chief Joshua Hochberg; and the head of our Enron task force, Leslie Caldwell; Assistant United States Attorney Tom Henusec (sp); and FBI Deputy Director Bruce Gebhardt, and the entire task force for their work on this matter today. And I also want to thank the SEC, another member of our Corporate Fraud Task Force, for its great cooperation and its successful efforts in this investigation, which led to the SEC's own civil action in this matter.
Now I will turn this over to Steve Cutler, who will have a few brief comments from the SEC, and then we'll try to answer any questions that you might have.
Steve?
MR. CUTLER: Thank you, Larry.
Morning.
Earlier today the Securities and Exchange Commission filed a settled civil lawsuit against Mr. Kopper charging him with fraud. In addition to the criminal sanctions he is facing, Mr. Kopper will enjoined permanently from violating the anti-fraud provisions of the federal securities laws, and he will be barred permanently from acting as an officer or a director of a public company. Also under the settlement, which is subject to approval by the United States District Court, he will disgorge and forfeit approximately $12 million representing his ill-gotten gains.
As the complaint makes clear, Mr. Kopper and others used complex structures, straw men, hidden payments and secret loans to create the appearance that certain entities were independent of Enron when they were not. As a result, Enron's financial statements did not properly reflect Enron's interest in these entities. And that, in turn, allowed the company to paint a distorted and misleading picture of itself for investors, Wall Street analysts and credit-rating agencies.
In addition, Mr. Kopper and others exploited the fiction that these entities were independent of Enrons to misappropriate millions of dollars in undisclosed fees and other illegal profits. As we all know too well, the collapse of Enron caused billions of dollars of losses to Enron shareholders. It also wrecked the retirement savings of many innocent Enron employees and retirees. And it has damaged public confidence in our financial markets and in our system of financial reporting.
The action against Mr. Kopper is an important chapter in the story of Enron's collapse, but much of the story remains untold. This case is but a first step, albeit a vital one, in our effort to hold responsible and to bring to justice those who participated in this massive betrayal of the investing public's trust. We anticipate that there will be other cases and that the information Mr. Kopper will provide will be of great assistance to the government as it proceeds. We will continue to work with the task force to make sure that all those responsible answer for their misdeeds.
Finally, I want to thank the Department of Justice, Deputy Attorney General Larry Thompson and the Enron Task Force and, in particular, its leadership: Mike Chertoff and Leslie Caldwell, both outstanding public servants. The cooperation and coordination between the commission and the task force has been extraordinary, and I expect it to continue to be so.
And I'd be remiss if I didn't thank my own outstanding team at the SEC for their dedication and superb work. They're led by my terrific deputy, Linda Thomsen, assistant director Charles Clark, chief accountant Charlie Niemeier, trial counsel Lou Mejilla (sp) and branch chiefs Alex Lippman (sp) and Doug Paul. Thank you.
MR. THOMPSON: I would also like to echo what Steve said and thank Leslie Caldwell -- again thank Leslie Caldwell, Mike Chertoff and Alice Fisher for their, really, constant attention to this matter and their support of me and keeping me apprised of the progress of this investigation. They did a terrific job.
Yes?
Q Larry, is the department recommending any punishment for this gentleman; I mean other than the forfeiture of the $12 million? What kind of prison time is he facing in return for the plea?
MR. THOMPSON: Well, it's a plea agreement. It's a plea to criminal charges. And with respect to the specific amount of time, I'll ask Mr. Chertoff to comment on that.
MR. CHERTOFF: Basically, under the plea agreement he faces a maximum jail term of 15 -- that's one-five -- years in prison. The judge will be apprised of his cooperation and will be able to take that into account in determining what the actual sentence will be. So it will be up to the judge at the end of the day.
Q You're not recommending particular --
MR. CHERTOFF: The agreement allows a recommendation of specific sentence after cooperation. Normally, we don't do that. Normally, we put all the facts and circumstances in front of the judge and the judge makes the final decision.
Q What's the guideline range?
MR. CHERTOFF: The guideline range is, I think. a little bit more than 10 years, but with the cooperation, you essentially are removed from the guidelines and the judge has discretion to sentence below that range.
Q Can you comment on the reports that you're trying to freeze $23 million in assets from former CFO Fastow?
MR. THOMPSON: I cannot comment on any such report. Matters such as that may be the subject of pending litigation and it would be inappropriate for me to make a comment.
Peter?
Q Do you anticipate that Mr. Kopper will serve some time in prison?
MR. THOMPSON: Again, as Mr. Chertoff said, this is a matter that will be between the prosecutors, Mr. Kopper's attorneys and the court. And I think to comment beyond that would be inappropriate.
Stephanie?
Q How did you arrive at the $12 million figure? And how much were you able to ascertain Kopper made as an Enron executive over his tenure there?
MR. THOMPSON: These were amounts that the task force determined through careful tracing of ill-gotten gains. And the task force investigators, the FBI investigators and our attorneys recommended this as the appropriate amount so that all of the ill-gotten gains could be returned to the Enron investors.
Yes, sir?
Q If Kopper personally admitted $12 million, how much do you think, cumulatively, other Enron executives also pocketed as a result of these schemes?
MR. THOMPSON: I can't comment on that.
Q How is the money being returned to injured parties?
MR. THOMPSON: I'm sorry, I --
Q How will the money -- how will the $12 million be disbursed to injured --
MR. THOMPSON: That will be handled by the SEC.
And, Steve, do you have any further comment with respect to that?
MR. CUTLER: Yeah, I mean, ultimately, that's to come. It hasn't been determined yet. I think at this point the money would be put in a court registry awaiting a plan of distribution, and that will happen sometime in the future.
MR. THOMPSON: Let me follow up with respect to the question before that. The information that was filed today in court in the Southern District of Texas does contain information with respect to other amounts of monies that the government is seeking to forfeit as it relates to this particular scheme, and I think the amount is something in the order of $23 million.
Q Total? Or in addition to this?
MR. THOMPSON: No, total. No, excuse me, it's in addition to the $12 million.
Yes, sir?
Q Do you know what Kopper's assets are? And if you do, can you give us an idea of what percentage $12 million is?
MR. THOMPSON: I don't know that.
(Aside) Do you?
(Returning) No, I don't know that.
Q So that didn't factor in at all in the negotiations?
MR. THOMPSON: Again, remember, we're talking about tracing and recovering for the Enron shareholders and investors ill-gotten gains. And that's the amount that our investigators and prosecutors have determined are the ill-gotten gains.
Yes, ma'am?
Q Yes, this is a question for Mr. Weissmann.
Mr. Weissmann, what lessons do you think you've learned from the Andersen trial, and how do you intend to use them in the Enron probe?
ANDREW WEISSMANN: Oh, I can't comment on that.
MR. THOMPSON: Yes, ma'am?
Q You said this is the first, the charges that are being brought. When do you expect more things to -- more to come out? And what can we expect --
MR. THOMPSON: I can't give you a specific progress report. The investigation -- I can assure you that the investigation is active and ongoing. And as I mentioned, Michael Chertoff and Alice Fisher and Leslie Caldwell keep me apprised of the status of the investigation, and I am pleased with the way the investigation is proceeding.
I think the American people would want the Department of Justice to conduct an investigation that is thorough and produces charges that are sustainable in a court of law.
Beverly?
Q Mr. Chertoff made a comment at the ABA a couple of weeks ago -- and this may be a question for him or for you -- to the effect that with all of these corporate fraud investigations nowadays, he's interested in not carrying on lengthy investigations that last years and bringing huge indictments with multiple charges that confuse and bore a jury.
In other words, it sounded like you want to go in for quick hits, get in and get out as fast as you can. I mean, is that a fair translation of the point here?
MR. THOMPSON: I will let Mr. Chertoff speak for himself. (Laughter.) However, from my perspective, I think it's important that we do what the president has asked us to do in the Corporate Fraud Task Force, and that's help to restore the confidence by investors in our markets. And some of the investigations will lend themselves to some quick charges, rather quick charges, if appropriate. We do not want to do anything in any of these investigations to affect the integrity of the investigation, but we also want to make certain that we're thorough in the investigation and that all the bad actors are identified and appropriate steps taken to bring them to justice.
So it's a balancing act. From my experience as a prosecutor and as a defense lawyer, many of these cases take years to develop. With respect to the Enron task force, this is the third conviction and our sixth charge in a very complicated matter that's only been going on for, I think, seven to eight months. So I'm pleased with the progress of this investigation. I know our FBI agents and our prosecutors are working very hard.
Now I'll let Mr. Chertoff speak for himself here.
MR. CHERTOFF: I don't want to bore the jury, that's for sure. I think what I said is essentially the same thing that the deputy said, which is, we want to move expeditiously but we want to be professional about it. We won't necessarily wait to write the history, you know, from beginning to end of these affairs. When we get to a point at which we have a case to bring that's a significant case, we bring the case, but we do so in a manner that is professional, and we make sure that we have a case that we can sustain in court.
Q Since you were kind enough to bring Mr. Gebhardt and his FBI Citizens' Academy book with you, I wonder if you or he could tell us this morning why you put out the all-points bulletin worldwide for a man named Saud al-Rasheed last night.
MR. THOMPSON: I'll let the deputy speak to that.
BRUCE GEBHARDT (FBI deputy director): First of all, let me -- since everybody else got a chance to thank their personnel on this Enron case, let me thank the FBI for working very hard on this case, long hours, although you did thank them, but they didn't -- they want to -- I want them to hear it from me.
We put out a bolla (ph) last night because we have an individual of interest to us that we would like to talk to. This information came from a search overseas. And it was a passsport photo, and it was in with a group of other photos, and we just thought we'd want to take a look at those and try to find that person. And if the law enforcement community can help us find the individual, then -- we have no indication that he's in the United States, but we thought it was prudent on our part to notify the law enforcement community that --
Q How significant is it? Do you think it's a break of some kind, or does it indicate that --
MR. GEBHARDT: Well, we're not sure yet. But we see a photograph, a passport photograph of an individual and he's with some other individuals that were of interest to us -- the hijackers. And we're not saying that he's connected to them, we're not saying anything like that. But we obviously have to be prudent and make sure that we notify everyone, and if he is in the United States, someone might be able to pick him up. And we definitely would like to interview him.
Q Were there photos of other people found with that material?
MR. GEBHARDT: I'm not going to really take away from the Enron conference here. But in regards to your specific question, that's why we did it.
STAFF: Okay, last question.
Q Could I just go back to Enron really quickly? When would you expect the judge to make a decision on the sentencing? Just a general time frame.
MR. THOMPSON: (To Mr. Chertoff) Mike, do you have a --
MR. CHERTOFF: Yeah --
MR. THOMPSON: It varies from district to district, and I wouldn't be familiar with the exact practice in the Southern District of Texas. But one of the things that's in the plea agreement is that it allows for -- it delays the sentencing until thegovernment has secured, in its determination, of course in its good faith determination, all of the appropriate cooperation from Mr. Kopper.
STAFF: Thank you.
END.