Enron spouse retreats on deal

Move made after judge refuses to vow short term

Lea Fastow withdraws plea plan

Shift said to have no effect on case against husband

April 08, 2004|By Robert Manor | Robert Manor,CHICAGO TRIBUNE

The wife of Andrew S. Fastow, a key player in the financial collapse of Enron Corp., pulled out of her plea agreement yesterday after a federal judge in Houston refused to guarantee her a brief prison term.

Lea Fastow, 42, withdrew her plea of guilty to a felony tax charge after U.S. District Judge David Hittner indicated that he was not bound by the terms of a deal between her and the Justice Department.

The plea bargain called for a jail term of no more than five months, and five months of home detention, but Hittner has repeatedly kept open the possibility of a longer sentence.

Lea Fastow was never a major figure in the Enron case, but she pleaded guilty this year to filing a false tax return.

Prosecutors and some legal experts said that would not affect her husband's plea deal. The Justice Department issued a statement saying Andrew Fastow is still obligated to work with prosecutors.

Andrew Fastow, also 42, is Enron's former chief financial officer. He was accused of helping the company falsify its financial results. His plea agreement calls for him to testify against former Enron chief executive Jeffrey K. Skilling and others in the case, and to receive a 10-year prison term.

His cooperation led to the Feb. 19 indictment of Skilling and Enron accounting chief Richard Causey for fraud. Prosecutors are investigating former Chairman Kenneth L. Lay. All three former executives have denied wrongdoing.

"This is a message to all those folks out there that the government can't deliver on their promises," Dan Petrocelli, a lawyer for Skilling, said yesterday after news of Lea Fastow's retrenchment. "The Enron task force has been out of control in targeting and co-opting all the witnesses in this case by threats of criminal prosecution in getting them to make deals so that they can testify against people like my client."

Chip Lewis, a Houston defense lawyer, said Andrew Fastow may refuse to continue to cooperate with prosecutors because his wife's plea bargain, designed to leave one parent out of jail at all times to care for their children, did not work out. Such a refusal might jeopardize the government's case against Skilling and other former Enron officers, Lewis said. Skilling was indicted after Andrew Fastow's guilty plea.

"This may be a deal breaker for him," Lewis said of Andrew Fastow. "He can tell the Department of Justice, `I'm done. I came to the table. I did what you asked. You couldn't deliver.' The DOJ knows that without Fastow's cooperation, Causey and Skilling are a lot tougher cases."

"The plea and cooperation agreement reached with Lea Fastow's husband ... is not affected by today's rulings," said Assistant Attorney General Christopher Wray.

Other legal observers also said the collapse of Lea Fastow's plea deal would have no effect on the case against her husband.

"Andrew's deal is locked in," said Gerald Treece, associate dean at South Texas College of Law. "His deal is not being affected by this one way or another."

Kirby Behre, a former federal prosecutor who is now a white-collar defense attorney, said Andrew Fastow "still has a huge incentive to cooperate fully, and that incentive is that he got an incredibly reduced exposure when he pleaded guilty and agreed to 10 years. He was facing 20-some-odd years." Andrew Fastow's attorneys and his spokesman did not return messages yesterday seeking comment.

Some lawyers said they were surprised that Hittner would balk at a brief sentence for Lea Fastow.

"The way the judge has reacted to this is highly unusual," said Behre. "She is not a major criminal."

Behre said the judge may be sending a message that sentencing is his responsibility and not something determined by negotiations between prosecutors and defense lawyers.

But lawyers also were surprised that Lea Fastow would take a chance on a trial and the possibility of a significantly longer sentence. She is now scheduled to go to trial on all six original charges - four counts of filing false tax forms and two counts of conspiracy. If convicted, she could face a maximum of 37 years.

"I am going to have to go back to the drawing board and think about this," said her lead lawyer, Mike DeGeurin.

The Chicago Tribune is a Tribune Publishing newspaper. The Associated Press and Bloomberg News contributed to this article.

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