Two Enron executives received sharply reduced sentences Friday after cooperating with prosecutors to help convict the architects of the biggest scandal in U.S. corporate history.
Michael Kopper, once the top lieutenant to former Enron Chief Financial Officer Andrew Fastow, was sentenced to three years and one month in prison. An hour later, Mark Koenig, the company’s former investor relations chief, received an 18-month sentence.
The men were also fined $50,000 that will be sent to a fund for victims of Enron’s collapse, and each will be on probation for two years after they are released from prison.
Both men will remain free on bond until they have to report to prison, a process that usually takes four to six weeks.
Prosecutors had asked U.S. District Judge Ewing Werlein Jr. to cut the potential sentences because of their help. Kopper, 41, faced up to 15 years in prison after pleading guilty in 2002 to money laundering and conspiracy to commit wire fraud.
Koenig, 51, who helped present the company’s false financial reports to investors, pleaded guilty in August 2004 to one count of aiding and abetting securities fraud, which carries up to 10 years in prison.
“I want to apologize to all the people who have been harmed by the Enron affair,” Kopper said before he was sentenced. “Families and employees suffered not just monetary failure but reputational failure. I am very deeply sorry for having participated in causing that.”
Koenig also apologized.
“I didn’t make the right choices in my last year at Enron. I am profoundly sorry for that,” said Koenig, whose wife and sons attended the sentencing.
Kopper’s sentencing hearing was packed with family and friends, including his parents and his domestic partner.
Kopper’s attorney, David Howard, said his client’s charity and community work since his arrest is proof he is a changed man
“He is no longer that guy from Enron,” Howard said.
Werlein told Kopper that his sentence had to reflect the seriousness of his crimes.
“The sentence is not imposed for the good things you’ve done the past few years,” he said.
Kopper, 41, was the first former Enron executive to plead guilty to charges stemming from the company’s collapse. He led federal prosecutors to Fastow, who in turn led them to Enron founder Kenneth Lay and former Chief Executive Jeffrey Skilling.
Fastow just began serving six years in a federal prison in Louisiana, while Skilling will begin serving a sentence of more than 24 years next month at a low-security prison in Minnesota. Lay’s convictions for conspiracy, fraud and other charges were wiped out with his July death from heart disease.
Earlier this week, Richard Causey, the company’s former chief accounting officer, was sentenced to 5½ years for his role in the company’s collapse.
Prosecutor Kathryn Ruemmler told Werlein that Kopper merited a reduced sentence because of his critical help in the early stages of the government’s Enron investigation, but noted his serious crimes.
“Mr. Kopper did break the law. He did intentionally and he did so deceitfully,” she said.
Prosecutors said that from May 1997 through September 2001, Kopper took advantage of off-balance-sheet partnerships and accounting methods to funnel millions of dollars to himself, Fastow and others at the expense of the company and its shareholders.
In the year before Enron’s collapse, Kopper, who had a taste for Armani suits, earned $3.63 million in salary, bonuses, restricted stock and other payments. He had a $1.4 million marble and stucco four-bedroom house. He and his partner owned four BMWs.
Howard said Kopper now lives a modest lifestyle after surrendering nearly $12 million in ill-gotten gains as part of his plea agreement.
Koenig’s attorney, Philip Inglima, told Werlein his client has taken responsibility for what he did at Enron.
“He is not a man who has sought to victimize others but he realizes how his conduct” did that, Inglima said.
Ruemmler said Koenig warranted a substantial reduction in his sentence because his assistance resulted in the guilty pleas of other Enron executives and contributed to the successful prosecution of Lay and Skilling.
“He is fundamentally an honest person,” she said. “But he succumbed to the business pressures, to the requests of the company and he made some very, very grave errors.”
Werlein credited Koenig for taking responsibility for what he did.
“These sentences are all difficult. I do commend you for the substantial assistance you gave the government,” he said.
Koenig was the government’s first witness in Lay and Skilling’s trial earlier this year.
During his seven days on the stand, Koenig told jurors that Enron, bent on matching or beating Wall Street expectations, fudged its earnings figures with the knowledge of Skilling and Lay.
In his role, Koenig worked with both men, serving as the company’s main link to investors and analysts. He coordinated analyst presentations and oversaw the company’s earnings announcements.
Enron, once the nation’s seventh-largest company, crumbled into bankruptcy proceedings in December 2001 after years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable. The collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans.