US: Call It the Deal of a Lifetime

Most mornings these days, Michael J. Kopper wakes up early, slips on a pair of khakis and hops into his Nissan sport utility vehicle for the short commute from his duplex in a Houston suburb to his job at Legacy Community Health Services, a community clinic. The Prada suits gather lint in his closet, and the shiny BMW 530 has been sold.

Mr. Kopper's work is different now: At Enron, he was a financial sophisticate who manufactured a series of arcane partnerships that paid him millions and helped to sink the company, which filed for bankruptcy in 2001. At Legacy, which provides health care and counseling services to H.I.V. patients and other chronically ill people, Mr. Kopper is a salaried grant writer who solicits financial support for the clinic.

It has been a wrenching professional and personal reversal for Mr. Kopper, who three years ago became the first Enron executive to plead guilty to criminal charges and cut a deal with the government. Mr. Kopper was also the first high-ranking Enron employee to publicly admit to lying and stealing - in his case, more than $16 million - from the company.

Mr. Kopper's money-making schemes, hatched together with Andrew S. Fastow, the former chief financial officer, lie at the root of the mercenary culture that propelled Enron to unforeseen heights while also paving the way for its Icarus-like descent.

The partnerships were feats of financial alchemy that became a dumping ground for Enron's flagging assets and helped sustain the growing fabulism of the company's accounting as a wide-eyed investing world watched in wonder. The partnerships also transformed Mr. Kopper from a by-the-books child of the New York suburbs with an expertise in accounting into a high-stepping Texas deal maker with a hankering for fast cars and big houses.

Despite all of this, there is a possibility that Mr. Kopper, who just turned 41, could end up spending not one day in prison, because of the crucial role he has played in helping the government build its case against more senior executives, such as Mr. Fastow; Kenneth L. Lay, the former chairman; Jeffrey K. Skilling, the former chief executive; and Richard A. Causey, the former chief accounting officer. Mr. Lay and Mr. Skilling are scheduled to stand trial on fraud and conspiracy charges later this month.

Certainly, Mr. Kopper's circumstances have changed in the last three years. A year ago, he moved out of the $1.5 million dream house with its glass stairways and its contemporary Japanese motif that he had designed with his longtime partner, William D. Dodson. Mr. Kopper has recently pegged his net worth at around $100,000, and he now lives on the second story of a modest duplex for which he paid $380,000; he rents out the bottom floor to help meet his expenses.

Even so, Mr. Kopper manages to lead a bit of the good life. Despite spending hundreds of hours in conference rooms in Houston and Washington briefing government prosecutors on Enron's inner workings, Mr. Kopper, known as a compulsive jet-setter during his Enron days, has remained an enthusiastic traveler. He has visited Phoenix and played golf in Boca Raton, Fla., with his father, a former magazine publisher at Times Mirror, and has gone on ski vacations in Colorado.

Mr. Kopper and Mr. Dodson, who has not been charged, declined to comment for this article, although friends and former colleagues did.

Mr. Kopper's deal with the government and the chance that he might have a reduced term or serve no jail time at all - he has not yet been sentenced - have angered people who blame him and Mr. Fastow for destroying the life savings of many former Enron employees and sending to prison others who had just the briefest brush with the company.

"Of all the deals Kopper made, his best was the plea deal," said Richard J. Schaeffer, a defense lawyer who cross-examined him during the trial of the Enron and Merrill Lynch executives who were convicted of bolstering Enron's earnings by letting the company fraudulently appear to sell barges in Nigeria for a profit. "He was the magician behind these deals," Mr. Schaeffer added. "His sense of greed had overtaken him. He had this brilliant mind and dedicated it to this partnership of evil."

This public caricature of Mr. Kopper as a malevolent financial sorcerer seems at odds with his middle-class roots. Indeed, his road to the heart of the Enron scandal was unusual. Born in Brooklyn and reared in Woodmere on Long Island, Mr. Kopper was always driven by an extra spurt of ambition and yearning for the big time that for years seemed to lie just beyond his grasp, people who know him say. Writing in his yearbook at Lawrence High School in 1982, his aspiration seemed simple, if not a bit vague: "To be successful in all my endeavors."

HE first enrolled at tiny Muhlenberg College in Allentown, Pa., but transferred to Duke, where he earned a bachelor's degree in economics. He also earned a degree in accounting and finance from the London School of Economics, and then began working as a loan officer at Chemical Bank in New York.

But his appetite for deal-making lead him to Toronto Dominion Bank, where he cut his teeth as a financier, working on a number of project-finance deals with energy companies - including, in the early 1990's, Enron. It was then that he met Mr. Fastow. The two men hit it off immediately. Both were young, hard-working and ambitious numbers guys with an appetite for deals and a desire to strike it rich as soon as possible, people who know both men say. It did not take long for Mr. Kopper, an eager Nick Carraway susceptible to the lure of Mr. Fastow's Gatsby, to join his mentor in Houston in 1994.

Enron was developing a reputation as a freewheeling, innovative company, and its aggressive, meritocratic culture seemed the perfect fit for Mr. Kopper, who was looking to unleash his own pent-up professional and materialistic ambitions, former colleagues say. Once there, he became even closer to Mr. Fastow, going to temple with him and his wife, Leah, and socializing with them after work.

It was not until 1996 that Mr. Fastow and Mr. Kopper created their first off-balance-sheet partnership, which they called Alpine Investors. Mr. Kopper would make no money from this partnership, which was designed to buy underperforming power plants from Enron, but he would make money in 1997 with RADR, another off-the-books deal formed to buy wind farms that Enron wanted to sell.

Supposedly independent, RADR was financed with Enron money and controlled by Mr. Kopper and Mr. Fastow. They and some of their friends got payouts from the partnership, ultimately at Enron's expense. In that way, RADR was a template for more fraudulent schemes.

Mr. Kopper had begun dating Mr. Dodson, who worked in the finance department at Continental Airlines and also wanted to become an investor. But he was making only about $100,000 a year at Continental, so Mr. Kopper borrowed some money from Mr. Fastow - the amount has not been made public - and lent it to Mr. Dodson, according to Mr. Kopper's own testimony.

RADR was remarkably lucrative. In just four months, at virtually no risk, Mr. Kopper took in $40,000 from the deal. Mr. Fastow's $419,000 loan generated $62,850 in interest - an annualized return of 45 percent. It is not clear how much Mr. Dodson made. Enron's shareholders, meanwhile, footed the bill for the enterprise, which was designed to deceive them about the precarious state of Enron's balance sheet.

But it would be the next partnership, Chewco, also started in 1997, that would pay Mr. Kopper and Mr. Dodson an even more munificent return. "We made, after taxes, roughly $10.5 million," Mr. Kopper recounted to a defense lawyer during the trial in September 2004 on the separate Nigerian deal. (Mr. Kopper would collect more than $16 million from at least five partnerships that he and Mr. Fastow created over six years; with help from Mr. Dodson, he has paid $12 million back to the government, according to Creed C. Black Jr., Mr. Dodson's lawyer. Mr. Fastow collected more than $40 million, according to court documents.)

As the money rolled in, Mr. Kopper indulged his taste for sleek foreign cars and exotic vacations and cultivated a more risqué demeanor in and about the company. He wore expensive suits and shirts with zippers that seemed to creep lower and lower the more successful he became, his former colleagues at Enron remember. He told one colleague that he had a collection of 20 designer eyeglasses. Generally aloof with his colleagues, he made more of an effort to fit in, serving on an Enron diversity committee.

Of all the partnerships, it was perhaps Southampton, named after the opulent Houston suburb in which he lived, that came the closest to defining the corruptive, get-rich-quick and risk-free spirit of the off-balance-sheet entities at Enron. With three bankers from Greenwich NatWest, a British investment bank that did work for Enron, Mr. Kopper and Mr. Fastow created the partnership in 2000 to buy out the interests of Enron and NatWest in another entity, inserting themselves in the middle and deceiving both Enron and NatWest as to what they needed to pay.

ON the stand last year, Mr. Kopper described the essence of the deal in a flat, analytical style. "We stood between the two parties in order to skim money off of it," Mr. Kopper said, his face blank and voice devoid of emotion. How much did he make on the deal? "Four and a half million dollars," he said.

"That's a pretty good return on $25,000, isn't it?" a defense lawyer responded.

Yes, it was, Mr. Kopper said.

The lawyer asked how long it took to cobble together such a rich, efficient transaction. "Not that many hours," Mr. Kopper said. "Maybe 10 to 12 hours of work."

Honing in, the lawyer asked, "You wanted to make just a ton of money."

In a monotone, Mr. Kopper said simply, "Yes."

By 2001, Mr. Kopper had his ton of money and was starting work on a new house in a wealthy Houston suburb with Mr. Dodson. Mr. Kopper had also bought out Mr. Fastow for full control of yet another off-balance-sheet entity created at Enron, LJM2. No longer would he be just another accounting executive; as general partner of LJM2, he would preside over a fast-growing private equity fund with some of the best names in high finance as investors.

But Mr. Kopper's time in the sun would be short-lived. With Enron's collapse in December 2001, he quickly came under the scrutiny of prosecutors and regulators who immediately questioned the propriety and legality of the myriad funds. The pressure became intense. Always a slender man, he began to lose weight, and when he pleaded guilty in 2002, he said he was taking medication for stress and anxiety.

As a government witness, Mr. Kopper, by all accounts, has been a success. At the barge trial last year, he powerfully evoked the financial cravings of Mr. Fastow, calling him "very greedy" and recounting examples of him giggling with childlike glee as he closed various deals.

The government has not put Mr. Kopper on the list of witnesses it expects to call in the trial of Mr. Lay and Mr. Skilling, but the defense has. Lawyers involved in the case say that Mr. Kopper may not even be called, given his lack of direct interaction with Mr. Skilling and Mr. Lay. While the partnerships are expected to be a centerpiece of the trial, Mr. Fastow will be in a better position to discuss them and how they connect to Mr. Lay and Mr. Skilling.

Friends of Mr. Kopper say he rarely speaks of Enron matters these days. He has ignored the imprecations cast at him by Mr. Lay, who has said that Enron was destroyed by the rogue actions of Mr. Fastow and Mr. Kopper - a view expressed by many members of Houston's business elite.

Always a bit of an outsider, Mr. Kopper is now even more of one. He is precluded by his plea agreement from speaking with Mr. Fastow and spends most of his time with Mr. Dodson and a small circle of friends from Enron.

And while he declined to comment for this article, his departing words in his 1982 high school yearbook seem to hold true today. Quoting from the song "Summer, Highland Falls" by Billy Joel, he wrote:

"We are always what our situations hand us. It's either sadness or euphoria."

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