British Bankers Sentenced for Roles in Enron Investment Scam

Three former National Westminster Bank executives will serve 37-month prison terms for their roles in an investment fraud scheme in which they stole $7.3 million from the bank with the help of Enron Corp. executives.

Judge Ewing Werlein Jr. of the U.S. District Court for the Southern District of Texas sentenced Gary Steven Mulgrew, 46, Giles Robert Hugh Darby, 45, and David Bermingham, 45, all of Great Britain, on wire-fraud charges.

The judge also ordered them to pay $7.3 million in restitution to the bank, now called the Royal Bank of Scotland.

The three men pleaded guilty in November after prosecutors said they schemed with Enron CFO Andrew Fastow and Michael Kopper, managing director of global finance, to profit from one of NatWest's investments.

Prosecutors said the fraud scheme arose when the bank asked the three executives to sell an investment.

The defendants allegedly conspired with Fastow and Kopper to buy the investment themselves for less than it was worth and then sell it for a profit.

Mulgrew, Darby and Bermingham falsely told NatWest the investment was worth $1 million, according to the Department of Justice.

The bank then sold the investment for $1 million to Southampton L.P, a company Fastow created to handle the purchase. Mulgrew, Darby and Bermingham were Southampton investors, according to the charges.

Two weeks later the conspirators had Southampton sell the investment for $20 million, prosecutors say.

Fastow, Kopper and the bank defendants allegedly split the illicit proceeds, with Mulgrew, Darby and Bermingham sharing $7.3 million.

They allegedly hid the scheme from NatWest by conducting the sales transactions through offshore entities.

The charges stem from a July 2002 investigation by the Enron Task Force, a team of federal agents and prosecutors devoted to uncovering fraud connected to the company's collapse in 2001.

Kopper was sentenced to 37 months in prison Nov. 17, 2006, after pleading guilty to conspiracy.

Fastow is currently serving a 10-year sentence for Enron-related financial crimes.

To comment, ask questions or contribute articles, contact West.Andrews.Editor@Thomson.com.