Three ex-bank officers of the British bank National Westminster Bank Plc (Nat West) pleaded guilty in a Houston federal court last Wednesday to charges of wire fraud in connection with a secret investment with former executives of the defunct Enron Corp., the Justice Department said.
Gary Steven Mulgrew, Giles Robert Hugh Darby and David Bermingham, all of Great Britain, entered guilty pleas before U.S. District Judge Ewing Werlein Jr. to a single count of wire fraud. As part of a plea deal with the government, the defendants have each agreed to serve a 37-month prison term and repay approximately $7.3 million to the Royal Bank of Scotland, the successor bank to Nat West.
The former bank officers admitted to secretly investing with Andrew Fastow, Enron’s former CFO, and Michael Kopper, Enron’s former managing director of global finance, in Southampton LP, an entity that Fastow created for the purpose of purchasing an asset the three defendants were selling on behalf of Nat West.
The three defendants invested a total of $250,000 in Southampton to gain an ownership interest in the very same asset that they were charged with selling for Nat West. The trio concealed their scheme from Nat West through a series of financial transactions, including the use of options and offshore entities, the Justice Department said.
According to plea documents, in May 2000, within weeks of their investment, Bermingham, Darby and Mulgrew each received approximately $2.83 million — an estimated total of $7.3 million for all three. Kopper, Fastow and others received a total of approximately $12.3 for their part in the scheme, federal prosecutors said.
Kopper and Fastow were able to achieve these gains for the benefit of Bermingham, Darby and Mulgrew by purchasing the assets from Nat West for $1 million and then liquidating the assets to Enron for $20 million, they noted. The $19 million difference was then split among Fastow, Kopper, the three defendants and others.
Fastow was sentenced to six years in prison after pleading guilty to conspiracy to commit securities and wire fraud (see NGI, Oct. 2, 2006). Kopper was sentenced to three years and one month in prison after pleading guilty to conspiracy and money laundering (see NGI, Nov. 20, 2006).
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