Enron's ex-CFO pleads guilty, will go to jail, help prosecutors

Fastow's wife pleads to filing false tax return

January 15, 2004|By HOUSTON CHRONICLE

Andrew S. Fastow, Enron Corp.'s former chief financial officer, pleaded guilty yesterday to two counts of conspiracy and agreed to accept a 10-year prison sentence and forfeit $23.8 million to the federal government.

Fastow's wife, Lea, pleaded guilty to filing a false tax return.

Andrew Fastow also is to cooperate with prosecutors in their investigation of wrongdoing at the fallen energy giant.

The property listed in Andrew Fastow's forfeiture agreement includes houses in Galveston and in Norwich, Vt.

Lea Fastow's deal calls for a five-month prison sentence and a year of supervised release, including five months of house arrest. U.S. District Judge David Hittner will decide later whether he accepts the sentencing deal.

Her attorney said the couple insisted on the sentence to ensure that their two young sons have at least one parent at home.

Andrew Fastow pleaded guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit wire fraud and securities fraud.

The two charges relate to off-the-book Talon partnerships and a second deal called Swap Sub that led to Fastow's Southampton partnership splitting about $19 million.

Without a plea, Fastow would have gone to trial on 98 counts of fraud, money laundering, insider trading and other charges.

Lea Fastow's charge was related to $141,000 in gains in 1997-2000 from a wind farm deal through a Fastow subordinate, Michael Kopper.

Kopper previously worked a plea deal to testify against his former boss.

"I signed and filed a tax return that did not include income we received from Mike Kopper," she told the judge.

Fastow, 42, is the highest ranking executive to admit to a crime in the collapse of the once-great and now bankrupt energy trading giant.

He pleaded guilty yesterday in an arrangement with Enron Task Force prosecutors.

"While CFO, I and other members of Enron's senior management fraudulently manipulated Enron's publicly reported financial results," Fastow said in a statement he gave prosecutors to file with his plea agreement. "I also engaged in schemes to enrich myself and others at the expense of Enron's shareholders and in violation of my duty of honest services to those shareholders."

He also admitted that he created the Fastow Family Foundation to receive ill-gotten gains which he could use "to make charitable contributions that I might otherwise have made from my own assets for the purpose of enhancing my position and stature in the community."

If Andrew Fastow successfully cooperates with the government, his plea arrangement states, he will be sentenced to 10 years in prison, a hefty sentence for a white collar criminal with no prior convictions.

"For the first time, the Enron Task Force now has a seat on the 50th floor of Enron," said Leslie Caldwell, head of the Justice Department's Enron Task Force.

"This is a significant step forward in our investigation."

Fastow's testimony could help prosecutors greatly accelerate their two-year investigation into crimes committed at the company.

He could potentially implicate or clear former Chief Executive Officer Jeffrey K. Skilling and former Chairman Kenneth L. Lay.

Those close to the case expect that Skilling will be charged soon and that Lay will be under great scrutiny. Both have steadfastly maintained their innocence.

Andrew Fastow, who remains free on bail, is likely not to begin serving his sentence until after he has spent extensive time, months at least, helping the government prepare and execute cases against others at Enron.

Six other people who have pleaded guilty to crimes in Enron-related cases are still on bail under similar arrangements in their cooperation agreements.

Fastow is to be sentenced April 19 after a pre-sentence investigation. The judge may or may not agree with the 10-year sentence at that time.

Enron's one-time treasurer, Ben Glisan Jr., is the only company executive currently behind bars. He pleaded guilty but did not agree to cooperate with prosecutors and is serving a five-year prison term.

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