Biggest fish in Enron probe faces 140-year term if convicted

As Enron’s Chief Financial Officer, Fastow allegedly masterminded the creation of bogus entities to hide company’s losses. He was later released on $5 million bail.

Legal experts say the case against him was seen as the foundation for prosecution of top Enron executives including former founder and chairman and CEO Kenneth Lay, former chief executive Jeffrey K. Skilling, former executive Michael J. Kopper, former treasurer and later president and CEO Jeffrey McMahon and former chief accounting officer Richard A. Causey.

They were quoted by the Washington Post as saying that the government’s expanded allegations, based in part on testimony from Kopper, a former close associate of Fastow’s who pleaded guilty to fraud charges in August, also set a foundation for a potential case against Lay and Skilling.

‘‘Fastow and his co-conspirators systematically and thoroughly corrupted the business of one of the largest corporations in the world,’’ deputy attorney general Larry Thompson said.

In other case involving corporate fraud, a low level employee of Merrill Llynch & Co Douglas Faneuil told a court in New York that one of his colleagues gave him extra vacation and an airline ticket to mislead Securities and Exchange Commission and FBI investigators about what he knew.

An assistant to the Merrill Broker who handled the account of leading businesswoman Martha Stewart, Faneuil said he accepted payments to withhold information about why Stewart suddenly sold Imclone Systems Inc stock last year.

Prosecutors are now investigating whether she relied on inside information to sell her imclone holdings one day before the biotechnology firm said regulators had rejected its highly touted cancer drug and the stock plunged as a result.

In yet another case, Adelphia Communications founder John J. Rigas pleaded not guilty in a New York court to charges of conspiring to commit securities and bank fraud.

Five former Adelphia Communications Corp executives, including three members of the rigas family which controlled the cable television firm, pleaded not guilty on Wednesday to conspiracy charges that they looted the company of $252 million and hid more than two billion dollar in loans.