Enron Corp. - University of California | Office of The President

& Elkins would give "true sale" opinions on and would create phony profits for Enron (at least $350
million) and allow Enron to conceal the true state of its indebtedness by improperly moving debt off
its balance sheet and onto the books of Chewco. In 98-01, Enron and Vinson & Elkins would create
numerous other secretly controlled partnerships and entities over the next few years and use them
to generate billions of dollars of additional phony profits for Enron and to conceal billions of dollars
of Enron debt by moving it off Enron's balance sheet.
808. Vinson & Elkins prepared the documentation for Chewco's financing and falsified
these documents so as to make it appear that Chewco was independent. For non-consolidation,
Chewco had to be funded by at least 3% equity from independent investors. With just one day left
in 97, Vinson & Elkins drafted a side agreement providing that Enron would provide the necessary
$6.6 million in cash to fund Chewco via clandestine reserve accounts for Big River Funding and
Little River Funding. The side agreement was dated 12/30/97. The Kopper/Enron side agreement
concocted by Vinson & Elkins made it clear that no outside equity was used to fund Chewco and
thus Chewco was not a viable SPE. Rather, Chewco was simply a manipulative device and artifice
to further a fraud and which served to falsely inflate Enron's financial statements.
809. Vinson & Elkins also took steps to avoid disclosure of the Chewco buyout of the
partner interest in JEDI and Enron's control of JEDI. Initially, Fastow was to have managerial
control of Chewco, but the participants realized that Fastow could not have that position without
having to disclose this interest in Enron's SEC filings. This would potentially expose the non-arm's
length of this transaction. So Vinson & Elkins and Fastow arranged for Kopper, Fastow's
subordinate, to be substituted as the manager of Chewco, and by this subterfuge conceal this from
Enron's shareholders.
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