The Telegraph
Since 1st March, 1999
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Enron creditors seek their pound of flesh

New York, Aug. 27: Creditors for Enron filed suit on Monday against a former finance executive of the company, seeking the $ 12 million he agreed to turn over to the government as part of a plea deal.

The former executive, Michael J. Kopper, pleaded guilty last week to conspiracy to commit wire fraud and money laundering, and agreed to turn over the money as part of his settlements with the justice department and the Securities and Exchange Commission.

But in papers filed with federal bankruptcy court in New York, creditors for Enron argued that the cash should be transferred back to the estate of the company, not to the government. Essentially, the creditors argue, the money was siphoned out of Enron, and should rightfully be returned. Part of that money is held by a partnership known as LJM2, which was also named in the suit.

“The $ 12 million that Kopper and LJM2 hold that he now seeks to turn over to the government should be possessed by Enron,” the court papers say. “Kopper would be unjustly enriched if he were permitted to turn over Enron’s property” to the government as part of his plea deal.

The creditors asked for the court to move quickly because Kopper would no longer have control of the money once he turned it over to the government.

Judge Arthur J. Gonzalez, who is presiding over the Enron bankruptcy, ordered Kopper to freeze those assets pending a hearing on the lawsuit scheduled for Wednesday, according to Luc A. Despins, a lawyer with Milbank, Tweed, Hadley & McCloy. He is serving as chief counsel to the creditors’ committee.

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