Posted on 01/14/2004 7:08:31 AM PST by Liz
Lea Fastow Gets Preliminary Approval On Deal
Wife Of Enron's Former Finance Chief To Spend 5 Months In Prison
HOUSTON -- A federal judge Thursday conditionally agreed to accept a plea agreement from the wife of Enron's former finance chief in a deal that would send her to prison for five months and also could result in a plea bargain involving her husband.
U.S. District Court Judge David Hittner, however, citing "preliminary concerns," said he wanted to wait to make the agreement final until completion of a presentencing investigation of Lea Fastow so he could determine if the sentence was appropriate.
Fastow, a former assistant treasurer at Enron Corp., is the wife of Andrew Fastow, a central figure in Enron's scandalous implosion. People close to the case said Andrew Fastow was negotiating a plea deal with prosecutors that could send him to prison and force him to pay $20 million.
Any deal with Fastow also could bring Enron's former top executives, Kenneth Lay and Jeffrey Skilling, closer to prosecution for the energy giant's downfall.
Hittner gave attorneys until noon Friday to accept his findings and said he would delay Lea Fastow's scheduled Feb. 10 trial if all parties agreed. She is charged with six counts of conspiracy and filing false tax forms for allegedly participating in some of her husband's deals.
A full presentencing investigation by federal probation authorities could take up to 70 days.
"We are somewhat puzzled right now to do about that. If there is an agreement, she would serve five months and only five months," Fastow's lawyer, Mike DeGeurin, said. "You would have to be a mother to fully understand. She has two children at home -- 5 and 8 (years old).
"It is a problem because of timing. If Andy, her husband, has to go to jail at some time, we don't want the children to be without parents. For reasons I don't want to go too much into right now, five months will work."
DeGeurin also said the plea bargain included "no agreement that Mrs. Fastow cooperate."
The judge indicated that federal guidelines would probably dictate a sentence between 10 and 16 months for Lea Fastow, News2Houston reported. If, at the end of the investigation, Hittner decides the 5-month sentence is not tough enough, he could throw out the entire plea deal.
An attorney told News2Houston that the judge has complete leeway in federal cases.
"In federal court, judges can veto a plea agreement for any reason at all, and David Hittner, who has a reputation as being fearless and somewhat of a maverick, realizes that he doesn't have to answer to anybody's public opinions. And if he doesn't think this sentence is fair and just, he certainly (has) the right to put the kibosh on it," Brian Wice said.
Leslie Caldwell, head of the Justice Department's Enron Task Force, told the judge the Lea Fastow plea was part of a "global resolution of two cases of significant magnitude to the government."
She did not mention Andrew Fastow by name in court although his lawyers were present there during arguments Thursday morning.
Hittner said 200 potential jurors summoned Thursday to the federal courthouse to fill out questionnaires related to Lea Fastow's scheduled Feb. 10 trial was "pure insurance."
U.S. District Judge Kenneth Hoyt, who is presiding over Andrew Fastow's case, would have to approve a deal for him, which may include a 10-year prison sentence and a $20 million fine to the Securities and Exchange Commission, said sources close to the case. Defense lawyers huddled in Hoyt's chambers earlier in the day.
Plea deals often involve agreements to testify against others, and the potential of a Fastow plea deal raises the possibility that prosecutors are closer to bringing a case against Lay and Skilling.
Neither Lay nor Skilling has been charged in the Enron scandal, and attorneys have not said whether Fastow is willing to cooperate in prosecuting them. Enron whistle-blower Sherron Watkins said Thursday that Fastow's knowledge of Enron's inner workings could crack open the case.
"Sometimes I liken Jeff Skilling to a Mafia boss who used particular words. He never said, 'Go whack Joey.' He said, 'Go take care of Joey.' And now that there have been corporate problems, he tries to say that 'I just meant, send Joey on vacation.'
"Andy's almost like the assassin who can now tell the government what his orders were or were not," Watkins told ABC's "Good Morning America."
Fastow would be the highest-ranking executive to plead guilty in the criminal investigation of Enron. The company's collapse into bankruptcy in late 2001 was the first in a series of scandals that rattled corporate America and shook investors' confidence in the stock market.
He allegedly masterminded a complex web of schemes that hid Enron's debt, inflated profits and allowed him to skim millions of dollars for himself, his family and selected friends and colleagues. Prosecutors say he reaped an estimated $30 million from the web of partnerships he set up.
When Fastow was indicted in October 2002, his lawyers said Skilling and Lay approved his work. Skilling and Lay both maintain their innocence in Enron's demise.
Fastow, 42, is charged with fraud, money laundering, insider trading and other charges. He is free on $5 million bond pending trial scheduled for April. If convicted, the maximum penalties for the charges against him include 20 years in prison for money laundering, 10 years for securities fraud and five years each on the mail fraud and conspiracy charges.
Authorities also were preparing criminal charges against Enron's former chief accountant, Richard A. Causey, but backed off plans for him to surrender as early as Thursday, sources with knowledge of the matter told The Associated Press on condition of anonymity. Causey could surrender Friday instead, the sources said.
The exact nature of a complaint against Causey was not immediately clear.
Causey, 43, was fired Feb. 14, 2002, after a board of directors report noted his failure to properly monitor a partnership that became a focal point of the fraud investigation. The partnership, called LJM, was devised by Andrew Fastow, and prosecutors say it was used to conduct sham transactions to fraudulently improve Enron's books and enrich Fastow and others.
Causey's lawyer, Reid Weingarten, did not return calls.
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