Enron's Fastow gets 6-year term

September 27, 2006|By Lianne Hart | Lianne Hart,LOS ANGELES TIMES

HOUSTON -- A federal judge sentenced one-time Enron Corp. Chief Financial Officer Andrew S. Fastow to six years in prison yesterday for his role in running the fraudulent, off-the-books dealings that brought down the company while he made millions.

But the judge stopped short of meting out the maximum term, citing Fastow's contrition and his cooperation with the government.

In 2004, Fastow agreed to serve as many as 10 years in exchange for testifying against the former top executives of the fallen energy company. U.S. District Judge Kenneth Hoyt said that although Fastow was once "drunk on the wine of greed," he has since demonstrated remorse by fully cooperating with government and civil lawyers in lawsuits against Enron. "These factors call for mercy."

Hoyt imposed no fine in meting out his sentence to Fastow, noting that under terms of the plea agreement, he had already forfeited $23.8 million and pleaded guilty to two counts of conspiracy. Hoyt sentenced Fastow to two years of supervised release upon completing his prison term, and recommended a minimum-security prison, as well as treatment for drugs he has been taking for anxiety.

Fastow, 44, hugged his wife, Lea, herself a former Enron executive who had done prison time, before he was handcuffed by marshals and led from the courtroom.

His departure ended an emotional hearing punctuated by sobs from the family and friends who packed the courtroom in a show of support. A parade of lawyers spoke in favor of a reduced sentence, all noting Fastow's willingness to lay out Enron's fraudulent deals in excruciating detail.

When it was Fastow's turn to speak, he paused often to regain his composure.

"When I pled guilt, I was consumed by despair and shame by what I had done," Fastow said, his voice cracking. "I know I deserve punishment. I accept it without bitterness."

Federal prosecutor John Heuston said that "no cooperator ... has cooperated more thoroughly and extensively than Mr. Fastow." Without his assistance, the government would not have obtained convictions against the late Kenneth L. Lay, the company's founder and longtime chairman, and former chief executive Jeffrey K. Skilling, he said.

Fastow's attorney, John Keker, said that Scott Sullivan, the one-time WorldCom Inc. chief financial officer in a "parallel situation" to Fastow's, received a five-year sentence for his crimes.

"Nobody is asking he not get any punishment," Keker said of his client.

Instead, he asked Hoyt to show mercy to a man "disgusted" with his deeds and "desperate to make amends."

Investor Brian Durbin was the only person to speak against reducing Fastow's sentence. When he bought a few thousand dollars of Enron stock, he said, the company appeared to be in prime financial health. But when Enron collapsed, he watched with growing resentment as friends lost their jobs and retirement savings.

"I'm here to convey my personal anger at the management of Enron," Durbin said, looking at Fastow, who returned his unwavering gaze. "We were the victims of a scam."

Fastow's sentence was fair, given his willingness to cooperate with prosecutors, said Barry Boss, a Washington-based white-collar defense attorney and former co-chairman of the U.S. Sentencing Commission's Practitioners Advisory Group. "People have lost perspective on how long six years is," he said.

Yesterday's 75-minute hearing capped a four-year legal battle for Fastow.

From 1997 to July 2001, prosecutors said, Fastow engineered a complex series of "clandestine transactions" that hid staggering Enron debt, inflated profits and diverted millions of dollars to himself, his family and selected friends.

In 2002, Fastow was indicted on 78 counts of fraud, money laundering, insider trading and other charges. He originally pleaded not guilty but changed his mind after the government brought charges against his wife, Lea, for signing a tax return that failed to declare her husband's improperly pocketed gains as income. Lea Fastow, a former Enron assistant treasurer, served a one-year sentence for tax fraud.

The couple sought to stagger their prison time so that one parent could remain with their two sons.

In March, Fastow testified against Lay and Skilling at their federal fraud trial. Both defendants were convicted in May. Lay died of a heart attack in July. Skilling is scheduled to be sentenced Oct. 23.

Lianne Hart writes for the Los Angeles Times.

Andrew S. Fastow

Age: 44

Case: Former Enron Corp. chief financial officer pleaded guilty to two counts of conspiracy, admitting to running various schemes to hide Enron's debt and inflate profits to enrich himself. Enron's collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans.

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