Enron Corp.’s former chief financial officer and his wife each pleaded guilty today to criminal charges in a deal that government investigators hope will lead to information about what other top executives knew about massive fraud at the energy giant.
Andrew S. Fastow entered his plea in federal court in Houston under a agreement that would put him behind bars for 10 years. Fastow also agreed to cooperate with federal prosecutors investigating the collapse of the Houston energy firm, which filed for bankruptcy protection in December 2001. He also will hand over $20 million in gains from secret partnerships that, according to the indictment, he created to hide Enron’s mounting debt and to enrich himself.
Fastow’s wife, Lea W. Fastow, a former assistant treasurer at Enron, also pleaded guilty in a related settlement that would send her to prison for several months but would ensure that one parent would be home to care for the couple’s sons, ages 4 and 8.
Sources familiar with the terms of the deals said they are not markedly different from those that were under discussion last week until U.S. District Judge David Hittner suggested he wanted the flexibility to dole out a sentence of longer than five months to Lea Fastow.
Today, Hittner said he is withholding his decision on a sentence until court employees finish a background investigation, which could take about two months. The judge pointed out in court that he could decide to give a sentence of longer than five months.
Lea Fastow faced tax and conspiracy charges, related to her alleged failure to report income from her husband’s partnerships.
Andrew Fastow was indicted in 2002 on scores of fraud, money laundering and conspiracy counts.
Legal experts had predicted that the Fastows and the government would eventually strike deals after last week’s highly publicized talks fell through, in part because Andrew Fastow faced decades behind bars and his wife as many as four years in prison had they taken their chances and gone to trial.
At the same time, the Justice Department’s Enron Task Force, which has been probing fraud at the company for two years, needed Fastow’s help to learn what former Enron chief executive Jeffrey K. Skilling and former chairman Kenneth L. Lay might have known about the company’s worsening finances at the same time they sold stock. Neither man has been charged with wrongdoing.
Attorneys for Skilling and Lay said last week that a plea by Fastow would not implicate their clients, so long as he told the truth.
But sources close to the case said they believe Fastow could prove to be a valuable witness, providing some information about what Skilling might have known about accounting tricks.
Fastow has implicated Enron’s former chief accounting officer, Richard A. Causey, according to lawyers involved in the case. Prosecutors already have prepared a criminal complaint against Causey that could be filed later this week. Causey’s attorney, Reid H. Weingarten, has said his client followed the law and accounting rules.
“It was inevitable,” said Houston defense lawyer Philip H. Hilder of the Fastow deal. “Both sides had way too much to lose.”