Michael Kopper, who was a close aide to former Enron CFO Andrew Fastow, pled guilty to two counts of conspiracy in U.S. District Court in Houston on Wednesday. The court documents submitted on Wednesday by the Securities and Exchange Commission and the Justice Department never cited Fastow by name. But the SEC and DOJ did provide an alarming amount of detail about the alleged manipulation of the company's finances by the figure the documents simply call, "The Enron CFO."

As part of his plea bargain with the SEC, Kopper waived "all claims of attorney-client privilege and agrees to furnish to the [Justice] Department all documents and other material that may be relevant to the investigation."

Kopper, who had been managing director of Enron Global Finance until June 2001, pled guilty to one count of conspiracy to commit wire fraud. That charge carries a maximum prison term of five years and a maximum fine of $250,000. Kopper also pled guilty to a single count of conspiracy to use stolen property, a charge that has a maximum prison term of 10 years and a maximum fine of $500,000 (or twice the value of the stolen property).

In addition, Kopper forfeited the $12 million he pocketed from off-balance sheet deals at Enron.

Since he pled guilty to criminal offenses, Fastow's former aide can never again serve as an officer or director of a public company. The plea-bargain could also mean government lawyers now have a star witness in their apparent quest to prosecute other former senior executives at Enron -- including Fastow.

"This is the first in what we anticipate to be a series of actions brought as the result of the close cooperation between the SEC and the Justice Department's Enron Task Force," said SEC Enforcement Division Director Stephen Cutler. "... We anticipate that the cooperation Mr. Kopper has agreed to provide will be important in identifying fully the individuals and entities that contributed to the company's collapse."

As ominous as Cutler's pronouncement sounds, it pales in comparison to the particulars laid out in the SEC's complaint filed against Kopper on Wednesday.

"Kopper and others devised a scheme to defraud Enron's security holders by enriching themselves through the use of certain Enron SPEs," the SEC complaint claims. "Some of these SPEs were not eligible for off-balance-sheet treatment because the supposedly independent third party investors were controlled by the CFO, Kopper, and others, and because the third party 'investment' was not at risk, since Enron, the CFO, Kopper, or others provided the funds to be invested or guaranteed the investment against risk of loss. Thus, these SPEs should have been consolidated onto Enron's balance sheet."

The complaint then alleges that Kopper conspired with Fastow ("the Enron CFO") to manipulate the RADR, Chewco, JEDI II, and LJM Cayman off-balance partnerships so that the risk to Enron's financial health was hidden. In the case of RADR (which invested in wind farms), the SEC claims Fastow and Kopper convinced several of their personal friends -- including a friend of Fastow's wife, as well as Kopper's domestic partner -- to invest in the partnership. That allegedly enabled Fastow and Kopper to maintain control over the 3 percent of the partnership that should have been owned by independent third-party investors.

According to the SEC complaint, "the Enron CFO arranged to fund some of the friends' 'investments' by making an unsecured personal loan to Kopper, who in turn made unsecured loans to the friends, so that they could 'invest' in RADR. It was understood that the friends would repay Kopper with distributions from their RADR 'investments,' and Kopper would in turn repay Enron's CFO."

Between August 1997 and July 2000, RADR generated $2.7 million for the investors. In July 2000, the investors earned another $1.8 million when Enron repurchased the investor's interests in RADR.

The complaint also details how Kopper and Fastow allegedly doctored the financings of the other partnerships, too, including Chewco, which was formed in November 1997. The SEC claims Fastow initially sought to become Chewco's general partner, but substituted Kopper "when it became clear that Enron otherwise would have to disclose publicly the CFO's participation."

By pleading guilty to the charges, Kopper affirmed the SEC's version of the dealings at Enron's special purpose entities.

While news about Enron has been on the back-burner of late, Kopper's plea bargain could lead to a series of charges brought against other former executives at the now-disgraced Houston-energy trader. As recently as last week, members of Congress were complaining to Attorney General John Ashcroft that, despite a steady string of highly publicized arrests and indictments in other accounting scandals, no charges had been entered against any former Enron officials.

Indeed, neither Fastow, nor ex-Enron CEOs Jeffrey Skilling and Kenneth Lay, have been charged with any crime to date. But with Kopper apparently now cooperating with the Justice Department, government attorneys may have found the lynchpin for their cases against the former Enron executives.

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