Former Enron Corp. chiefs Kenneth Lay and Jeffrey Skilling were convicted Thursday of conspiracy to commit securities and wire fraud in one of the biggest business scandals in U.S. history, reported the Associated Press. Sentencing is set for September 11. Both men could spend the rest of their lives in prison.
The verdict put the blame for the demise of what was once the nation's seventh-largest company squarely on its top two executives. But many executives had already pleaded guilty and turned state's evidence in the case.
The first was gay Enron lieutenant Michael Kopper, who pleaded guilty on August 21, 2002, to federal conspiracy and money laundering charges related to Enron's fall. Kopper, who has been cooperating with prosecutors and has not yet been sentenced, worked for former Enron CFO Andrew Fastow, who later pleaded guilty and became the government's star witness in the case against Lay and Skilling.
Kopper admitted he ran or helped create several partnerships at Enron that earned him and others millions of dollars, including kickbacks he funneled to Fastow, while hiding debt and inflating profits. One of those partnerships involved Kopper's domestic partner, William Dodson.
In an Advocate investigation published in October 2002, it was revealed that Kopper and his fellow executives capitalized on Kopper's relationship with Dodson and its lack of legal recognition to illegally benefit Enron. Starting in 1997, Kopper managed a series of sham partnerships Enron created in order to hide much of the company's ballooning debt. Enron used one such partnership, Chewco Investments, to shuffle more than $700 million of debt off its books, and Kopper made Dodson a joint owner of Chewco. After the shell company was "sold" back to Enron, the couple netted more than $7 million from an initial investment in Chewco of $125,288.
Skilling prevented the company's straight executives from setting up similar arrangements with their spouses. According to some outside observers, Kopper was the exception because the lack of legal recognition for his life partner made it much more difficult for investigators to connect Dodson's work at Chewco to Kopper's work at Enron.
"Ironically, if [gay] people had legally recognized relationships or civil unions with all the effects of marriage, the relationship between [Chewco and Enron] would have been known faster," said Bob Witeck, CEO of Witeck-Combs Communications, a Washington, D.C.-based public relations and marketing consultancy. "If [Kopper] had done tiffs with a legally married spouse, it might have pointed the way to something that someone might have noticed faster."
As part of his plea bargain, Kopper agreed to give up $12 million in illegal profits. (The Advocate)
