A British judge ruled Friday that three British bankers indicted in the U.S. on Enron-related fraud charges could be extradited to stand trial in Texas. Here is a prior post that reports on the background of this case leading up to the recent extradition hearing.
District Judge Nicholas Evans found that there was a “good and proper basis” for prosecuting David Bermingham, Giles Darby and Gary Mulgrew in the United States and ruled the case should be sent to Home Secretary David Blunkett for a decision on whether to extradite them. Under British law, Home Secretary Blunkett can only halt the extradition if the men might face the death penalty or are likely to face further charges once in the U.S.
Despite the Justice Department’s dubious handling of the Enron-related criminal investigation and prosecutions to date, the Justice Department is likely “only” to seek a prison sentence against each of the bankers that is tantamount to a life sentence, but not the death sentence. ;^)
The three former employees of National Westminster Bank (“Natwest”) were charged in the U.S. in 2002 with bilking the bank of $7.3 million in a Andrew Fastow-designed scheme. Prosecutors allege that Messrs. Mulgrew, Darby and Bermingham conspired with Mr. Fastow and Michael Kopper in 2000 to defraud Natwest of millions of dollars. They allegedly advised the bank to sell its interest in a subsidiary of LJM (one of Fastow’s off balance sheet partnerships) to another Fastow-created entity for $1 million when it was really worth much more. However, based on the way Fastow manipulated Enron and his partnerships, I do not know how the prosecution could know what the interest was really worth.
At any rate, the government says that Fastow arranged for Enron to pay $30 million to unwind the energy company’s transactions with the LJM subsidiary and that Natwest received only $1 million of that amount, while Fastow, Kopper, and the bankers divvied up $19 million between themselves. Of that, the bankers allegedly pocketed $7.3 million and, as a result, each of the bankers has been charged with seven counts of wire fraud.
The bankers’ case has been one of the first tests of the new fast-track British extradition procedures introduced in 2003 to deal primarily with terrorist cases. The Extradition Act lessens the burden of proof in some cases, allowing certain countries such as the U.S. to provide mere information rather than evidence that a crime has been committed.
Inasmuch as Kopper pleaded guilty to two counts of conspiracy in August 2002 and Fastow pleaded guilty to two counts of conspiracy in January of this year — and Kopper just finished being one of the prosecution’s main witnesses in the ongoing Nigerian Barge trial — the bankers can expect that both Kopper and Fastow will be witnesses against them in any U.S. trial.