Fastows set new plea accord

Husband, wife reportedly to admit guilt today

Hang-up over her term resolved

Unclear if ex-Enron CFO will implicate higher-ups

January 14, 2004|By HOUSTON CHRONICLE

HOUSTON - Enron's former chief financial officer and his wife will plead guilty today to criminal charges related to the widespread fraud at the energy trading giant, sources said yesterday.

Andrew S. Fastow would become the highest-ranking former executive to plead guilty in the federal government's two-year criminal investigation into Enron's collapse.

The pleas, expected today at the Houston federal courthouse, will end a week of drama after the couple's agreement with prosecutors seemed secure, only to founder Wednesday.

The former chief financial officer is expected to plead guilty in return for a 10-year prison term. His likely cooperation with prosecutors could start other dominoes falling - and either clear or condemn former Enron chief executive Jeffrey K. Skilling and Chairman Kenneth L. Lay.

Andrew Fastow is set to enter his guilty plea in front of U.S. District Judge Kenneth M. Hoyt. Later, his wife, Lea, a former assistant treasurer at Enron, is to plead guilty before a second federal judge, David Hittner.

"It is no surprise. It was inevitable the deals would go through because they are too good to pass up for the Fastows and too valuable to the government," said Philip Hilder, a former prosecutor who represents several witnesses in the Enron criminal cases.

Andrew Fastow faces 98 charges of fraud, money laundering and tax violations. He is accused of enriching himself in elaborate side deals at the expense of the company and its shareholders.

His wife faces six charges, four of them for filing false tax returns. She is accused of helping her husband make a partnership appear independent of Enron so the company would continue receiving tax benefits for wind farms after it bought a utility.

The former CFO's addition to the prosecutorial witness stable might precipitate plea bargains from those already accused and could help the government accelerate its investigation.

Andrew Fastow's cooperation is expected to quickly lead to the arrest of Richard A. Causey, Enron's former chief accounting officer, who was mentioned by job title in the original complaint against the former CFO. Causey was set to surrender to the FBI last Thursday and may now wind up doing so this week.

Andrew Fastow also is likely to provide information to prosecutors about former corporate kingpins Skilling and Lay. Both have repeatedly proclaimed their innocence, and their lawyers said last week that they would welcome Andrew Fastow's testimony, particularly if he exonerates the two men. Neither has been charged.

The plea bargains for the Fastows, who said they wanted to be sure their two children are not left parentless, have been in limbo for nearly a week.

Hittner threw a wrench into the deals last week when he said he was reluctant to sign off - without an exhaustive pre-sentence investigation - on a five-month prison term for Lea Fastow. That sentence would also carry five months of house arrest after the prison term.

Instead, Hittner will accept a guilty plea and postpone Lea Fastow's sentencing for 60 days while the probation department prepares a report on her background and the details of her offenses.

Her attorneys told the judge that the one tax offense to which she will plead guilty has a sentence range of 10 months to 16 months in prison. A plea of five months in prison and five months under house arrest at her own home would fall in that range under the sentencing guidelines.

Should Hittner's sentence be higher and unacceptable to Lea Fastow, she could withdraw her guilty plea and get a new trial date, currently set for Feb. 10.

Andrew Fastow could easily remain free on bond after he changes his plea. Six other Enron witnesses who have pleaded guilty to charges and are cooperating with the government have remained free on bond while helping the government. They will be sentenced at some point down the road.

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