WASHINGTON – Three investment bankers formerly employed by the British bank National Westminster Bank Plc (Nat West) were each sentenced to 37 months in prison on a wire fraud charge arising from a secret investment transaction in which they participated with former executives at Enron Corporation, Assistant Attorney General Alice S. Fisher of the Criminal Division announced today.
Gary Steven Mulgrew, 46, Giles Robert Hugh Darby, 45, and David Bermingham, 45, all of Great Britain, pleaded guilty on Nov. 28, 2007, to one count of wire fraud. All three were sentenced today before Judge Ewing Werlein Jr. at U.S. District Court in Houston. In addition to the prison sentence, the three defendants were ordered to repay approximately $7.3 million to the Royal Bank of Scotland, the successor bank to Nat West, of which they must pay $1.25 million when they surrender to the Bureau of Prisons.
While they were employed at Nat West, the three defendants were tasked with selling one of Nat West’s investments. The three defendants, along with Andrew Fastow, Enron’s former chief financial officer, and Michael Kopper, Enron’s former managing director of global finance, secretly bought the investment from Nat West themselves. Fastow created an entity he called Southampton L.P. for the purpose of buying Nat West’s investment, and the three defendants advised their employer to sell the investment for $1 million. The three defendants invested a total of $250,000 in Southampton, which bought the investment at $1 million and resold it within weeks for $20 million. The three defendants received a total of $7.3 million, or $2.83 million each. Kopper, Fastow and others received a total of approximately $12.3 million for their part in the scheme. The three defendants concealed their participation in this scheme from Nat West through a series of financial transactions, including the use of options and off-shore entities.
“With today’s announcement, three more individuals have accepted responsibility for their role in the widespread fraud at Enron,” said Assistant Attorney General Fisher. “Through the tireless work of our prosecutors and investigators, the fraudulent investment scheme devised by these three defendants and their co-conspirators methodically became unraveled piece by piece. This case demonstrates the Department’s unwavering vigilance in addressing corporate fraud matters.”
“The failure of the Enron Corporation and the related fraud affected victims not only in the U.S. but around the world,” Andrew R. Bland III, Special Agent in Charge of the Houston office of the FBI said. “Crimes of this nature know no boundaries, and the conviction and sentencing of the Nat West bankers demonstrates the high level of commitment and resolve that the FBI and its law enforcement partners will continue to afford to the vigorous pursuit of justice regardless of where the perpetrators reside.”
Charges against the three former British bankers were initially brought in July 2002 by the Enron Task Force, a team of federal prosecutors and agents formed to investigate matters related to the collapse of Enron Corp. All remaining Enron Task Force cases are now being handled by the Fraud Section of the Criminal Division.
This case was prosecuted by Fraud Section Trial Attorneys Jonathan Lopez and Wes R. Porter.