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Ex-Enron executive Fastow indicted on 78 counts

James Vicini in Washington

Former Enron executive Andrew Fastow was indicted by a federal grand jury in Houston on 78 counts of fraud, money laundering, conspiracy and obstructing justice over the energy giant's multibillion-dollar collapse, the US Justice Department said on Thursday.

It said Fastow, the former chief financial officer, allegedly masterminded secret partnerships at Enron Corp that allowed him and others at Enron to manipulate the company's financial results and to enrich themselves at Enron's expense.

The alleged scheme, starting in early 1997, defrauded Enron, its shareholders and others, making the company appear more attractive to Wall Street investment analysts, credit rating agencies and others, according to the indictment.

"The investigation into Fastow's illegal activities continues," Deputy Attorney General Larry Thompson said in a statement. "We will use every appropriate measure to recover the ill-gotten gains of these corporate schemers. Justice demands it."

Fastow, 40, faces a potentially long term in prison if convicted. Each conspiracy and wire fraud charge carries a maximum of 5 years in prison, while the money laundering charges carry a maximum of either 10 years or 20 years in prison.

Fastow is the highest-ranking official to be charged in the Justice Department's continuing investigation of Enron's spectacular collapse into bankruptcy late last year.

The charges contained in the indictment were similar to those brought by the Justice Department in a criminal complaint filed on Oct. 2. One key additional charge accused Fastow of obstructing justice in August and September, 2001.

Accused of withholding records

The indictment alleges he attempted to persuade his former protege, Michael Kopper, to withhold records from government proceedings and investigations, and to "alter, destroy, mutilate and conceal objects, namely laptop and desktop computers and information contained therein."

Kopper pleaded guilty on Aug. 21 and implicated his former boss in a series of kickback and fraud schemes. Kopper is cooperating with prosecutors.

In Houston, John Keker, Fastow's lawyer, said in a statement, "These charges are full of sound and fury, but the truth about Enron has yet to be told. When the truth is told to a jury of 12 honest Americans, Andy Fastow will be set free."

After bringing the criminal complaint, prosecutors had 30 days to obtain a grand jury indictment, the next step in the legal process. The 30-day deadline ended on Thursday, sources familiar with the case said.

In one of the off-balance-sheet partnerships known as Chewco, Fastow unlawfully received several hundred thousand dollars in kickbacks from various payments made by Enron to it, through transfers to Fastow's wife and other family members, the indictment alleges.

In another partnership known as RADR, Fastow allegedly received kickbacks and payments in the form of annual $10,000 "gifts" to members of his family, according to the indictment.

The indictment said transactions in a deal called LJM allowed Fastow and others to personally earn huge amounts of money in the form of management fees and skimmed deal profits.

A date for Fastow's initial appearance in court on the charges in the indictment will be set, a department official said.

The official said the Justice Department's investigation, which began in January, was "active and ongoing."

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