Enron's former CFO Andrew Fastow
Andrew Fastow, former chief financial officer: Sold 561,423 shares for $30.4 million.
The Securities and Exchange Commission, which is investigating Enron and Andersen's auditing of its books, filed an action in federal court today seeking to compel Enron's former chief financial officer, Andrew Fastow, to comply with a subpoena the SEC issued to him on Oct. 31. Fastow was the lead architect of complex partnerships that allowed Enron to keep some $500 million in debt off its books and let executives profit from the arrangements. The SEC wants Fastow to produce documents and testify under oath as part of its inquiry.
Enron's swift descent into federal bankruptcy court left countless investors burned and thousands of employees out of work and with decimated retirement savings.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 17270 / December 13, 2001
Securities and Exchange Commission v. Andrew S. Fastow, Case No. 1:01MS00456 (ESH) (D.D.C. December 12, 2001)
SECURITIES AND EXCHANGE COMMISSION FILES
The Securities and Exchange Commission today announced that on December 12, 2001, it filed a subpoena enforcement action in U.S. District Court for the District of Columbia against Andrew S. Fastow, the former Chief Financial Office, of Enron Corp. Pursuant to a subpoena issued on October 31, 2001, Mr. Fastow was obligated to appear for testimony before the Commission staff at 9:30 a.m. on December 12, 2001. Mr. Fastow, instead, chose not to appear, and instead informed the Commission staff, through counsel, that he would not appear as required by the subpoena. Accordingly, the Commission filed its Application For An Order To Show Cause And For An Order Requiring Obedience To Subpoena, along with a supporting Memorandum and Declaration.
In its Application and supporting filings, the Commission alleges that on October 30, 2001, the Commission issued its Order Directing Private Investigation and Designating Officers to Take Testimony ("Formal Order") in this investigation. The Formal Order authorizes the staff to conduct an investigation into whether, among other things, Enron or certain persons and entities associated with Enron misstated or caused the misstatement of the financial condition and results of operations of Enron and disclosures related thereto, and whether such persons and entities violated the anti-fraud provisions of the federal securities laws in connection with the purchase or sale of Enron's securities. According to the Commission, as the former CFO of Enron, and a central figure in Enron's business affairs and its related party transactions with certain limited partnerships, Mr. Fastow is relevant to matters under investigation, and his testimony may provide evidence as to whether he or others violated the federal securities laws.
In its Application, the Commission alleges that on October 31, 2001, the Commission staff issued and served a subpoena to Mr. Fastow requiring him to produce certain documents by November 7, and to appear for testimony on November 14, 2001. On November 7, Mr. Fastow produced certain documents that he previously had given to the Enron Special Committee. Since then he has not produced any other documents requested by the subpoena. Moreover, in a series of meetings and telephone calls in the two weeks following issuance of the subpoena, Mr. Fastow's attorneys requested a postponement of Mr. Fastow's testimony. The Commission staff granted this request, and on November 18, counsel for Mr. Fastow agreed that he would appear for testimony on December 12 and 13. Thereafter, Mr. Fastow's counsel sought a further postponement of Mr. Fastow's testimony scheduled for December 12, so that he could provide an interview on the 12th to a federal criminal authority. The Commission staff granted this further postponement, with the understanding that the Commission staff would participate in this interview in lieu of Mr. Fastow's testimony obligation set for the same date and that his testimony before the Commission would be required on the 12th should the interview not take place. On December 6, the federal criminal authority cancelled Mr. Fastow's interview, and the following day, the Commission staff reminded Mr. Fastow's counsel that cancellation of the interview did not relieve Mr. Fastow of his obligation to appear for testimony on December 12. In fact, Mr. Fastow did not appear for testimony as required on the 12th.
Pursuant to its Application, the Commission is seeking an Order directing Mr. Fastow to show cause why the Court should not enter an Order requiring his appearance for testimony, and an Order requiring Mr. Fastow to comply fully with the subpoena for testimony and documents.
Mr. Andrew S.
c/o Mr. David B. Gerger, Esq.
Foreman, DeGeurin, Nugent & Gerger
909 Fannin, Suite 590
Houston, TX 77010
is to confirm the previous conversation held between Committee staff and your attorney,
Mr. David Gerger, in which we requested a staff interview with you.
know, the Committee on Energy and Commerce has initiated an investigation into the issues
surrounding Enron Corporations (Enron) collapse, as well as any potential
implications it may have on the U.S. electricity and natural gas markets. To assist us in this inquiry, we request that you
make yourself available for a Committee staff interview within the next two weeks, or no
later than December 21, 2001. If you are
unable to travel to Washington, D.C., Committee staff is willing to travel to Houston,
Texas, or another specified location.
preparation for this interview, and pursuant to Rules X and XI of the U.S. House of
Representatives, please provide the Committee with the following documents by December 14,
1. All records, in your possession or under your control, relating to LJM Cayman, L.P. (LJM1), LJM2 Co-Investment, L.P. (LJM2), Joint Energy Development Investments, L.P. (JEDI), Chewco Investments, L.P. (Chewco), or their subsidiaries or affiliates, or any other Special Purpose Entity that transacted with Enron in which you had any interest of any kind, financial or otherwise, including but not limited to, all of the transactions between Enron and these entities;
2. All records, in your possession or under your control, relating to any financial transactions between you and the following people: Jeffrey Skilling, Ben Glisan, Kristina Mordaunt, Kathy Lynn, Anne Yaeger, Michael Kopper and Rebecca Carter;
3. All records, in your possession or under your control, relating to any and all contacts, notifications or approvals of the LJM1, LJM2, JEDI and Chewco limited partnerships or their subsidiaries, and their transactions with Enron, including but not limited to, Enrons Board of Directors, Enrons Officers, Enrons Audit and Compliance Committee, and Andersen; and,
records, in your possession or under your control, relating to transactions you, in your
personal capacity, or entities with which you were affiliated, entered into with Enron.
that, for the purpose of responding to this request, the term Enron, as used
above, means Enron or any of its subsidiaries or affiliates, or related entities. The terms records and relating
should be interpreted in accordance with the attachment to this letter.
If you have
any questions, please contact Mr. Mark Paoletta, Chief Counsel for Oversight and
Investigations, at (202) 225-2927.
James C. Greenwood
Chairman, Subcommittee on Oversight and Investigations
The Honorable John D. Dingell, Ranking Member
The Honorable Peter Deutsch, Ranking Member
Subcommittee on Oversight and Investigations
on Energy and Commerce
2125 Rayburn House Office Building
Washington, DC 20515
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