Michael Kopper is the first former Enron executive to fall in the federal government's criminal investigation into the collapse of the giant energy-trading firm. He probably won't be the last.

Kopper's plea agreement with prosecutors all but names Andrew Fastow, Enron's former chief financial officer, as co-conspirator. And the plea deal also implicates other lesser-known former Enron employees as taking part in a five-year scheme to use a series of private partnerships to defraud Enron and its shareholders of at least $30 million.

Even though Fastow and the other employees haven't been charged with a crime, prosecutors are moving to seize some of their assets, including Fastow's Houston home and some $20 million in various bank accounts controlled by Fastow and his family.

Ill-Gotten Gains

It's clear that Kopper, who many have referred to as Fastow's right-hand man, will be asked by prosecutors to help tighten the noose around his old boss. In pleading guilty to wire fraud and conspiracy charges, Kopper is cooperating with prosecutors, as well as forfeiting $13 million in ill-gotten gains.

"The (former) CFO of Enron is clearly in their sights," says an attorney familiar with some of the off-balance-sheet partnerships. "The way it's written makes that unmistakably clear."

The criminal case against Kopper, and apparently now Fastow, involves three partnerships the two men ran that were ostensibly used to buy and sell some failing assets and other liabilities that Enron wanted to keep off its corporate books. The partnerships in questions are called Chewco, Southampton and RADR.

For the time being, it appears prosecutors are not focusing on one of the better-known partnerships run by the two men: LJM2, a $394 million fund that drew investment money from some of the biggest Wall Street institutions, including Credit Suisse First Boston, Citigroup ( C), J.P. Morgan Chase ( JPM) and Merrill Lynch ( MER). There's no mention of LJM2 in the criminal information against Kopper.

Gravy Train

Prosecutors say that Kopper and Fastow used the three entities to personally enrich themselves, as well their family members and other Enron employees. In all, the complaint alleges that Kopper and Fastow generated nearly $30 million from the partnerships for themselves, their families, other Enron workers and three bankers from National Westminster Bank, now part of the Royal Bank of Scotland.

The three NatWest bankers were charged by prosecutors last month for their part in the alleged scheme involving the Southampton partnership. In that deal, prosecutors say NatWest was defrauded out of some $19 million. NatWest, before it was acquired, was one of Enron's primary bankers and had been an investor in some of Enron's early off-balance-sheet partnerships.

But it's not so clear how much higher up the Enron chain of command prosecutors intend to go, or whether they intend to pursue charges against other bankers that worked with Enron. It's also not known whether Kopper can offer sufficient evidence to bring indictments against the other former big fish at Enron: Kenneth Lay, the company's former chairman, and Jeffery Skilling, Enron's former chief executive.

There's no mention of Skilling or Lay's name in either the plea agreement or the civil fraud complaint filed by the Securities and Exchange Commission against Kopper. The only references to other people are to friends and family members of Kopper and Fastow, and the handful of low-level Enron employees who assisted the two men in managing the partnerships.

The only bankers mentioned are the three former NatWest employees.

Big Fish

Except for Fastow, the indictment of any of those low-level employees isn't likely to mollify the investing public's lust for some big executive at Enron to do serious time behind bars. In fact, shortly after Kopper entered his guilty plea in a Houston courtroom, Michael Ramsey, an attorney for Lay, held a press conference to say his client is not a target of the investigation.

Another lawyer familiar with the investigation says it's no accident that neither Skilling nor Lay were named in the court filings. The lawyer, who didn't want to be identified, says the last thing prosecutors want to do in a high-profile case like Enron is overplay their hand.

"Prosecutors don't want to be a victim of their own expectations," says the lawyer. "In the absence of clear impropriety, this is a case where the government doesn't want to disappoint the public and give itself a black eye."

In fact, the plea agreement reveals some of the difficulty prosecutors may face in bringing a broad and sweeping criminal indictment in the Enron affair. And it's an issue that remains one of the most nagging questions about Enron's collapse: was the company's off-balance sheet chicanery, which enabled Enron to remove billions of dollars in debt from its corporate books, legal under existing accounting rules?

In the court papers, prosecutors more than suggest that the myriad of so-called special purpose entities Enron created was part of a clever strategy to "improve its apparent financial results, or to circumvent regulatory requirements." But in pursuing its case against Kopper, prosecutors focused on just three partnerships in which they could find clear evidence of a scheme by him and Fastow to "secretly and unlawfully generate millions of dollars for themselves an others."

The question then is how many of the hundreds of off balance sheet vehicles created by Enron lent themselves to such blatant abuses? The answer to question may determine whether Enron ultimately goes down in history as just another corporate scandal, or one of the crimes of the century.

If you liked this article you might like

SEC Charges Ex-CIBC Broker

SEC Charges Ex-CIBC Broker

Durus Manager Gets Hard Time

Durus Manager Gets Hard Time

Shift for SAC's Cohen

Shift for SAC's Cohen

New Frontier Holder Selling

New Frontier Holder Selling

PIPE Deal Shines Up Sun

PIPE Deal Shines Up Sun