The wife of former Enron finance chief Andrew Fastow struck a bargain with prosecutors Thursday for a five-month prison sentence a deal that could lead to a guilty plea from her husband and crack the scandal wide open.
Under the plea bargain, Lea Fastow’s term would not overlap her husband’s, so that at least one of them could raise their two children. That was a major concern of the couple.
U.S. District Judge David Hittner gave his tentative approval to the deal but said he would await a background investigation to make sure the sentence for the 42-year-old former Enron assistant treasurer is appropriate.
Sources close to the case said Andrew Fastow, 42, was negotiating a deal with that could send him to prison for 10 years and force him to pay $20 million. A source speaking on condition of anonymity said any plea bargain with Fastow would be contingent on a deal for his wife.
Plea bargains with the Fastows would represent a significant break in the Enron investigation, bringing prosecutors closer to Enron’s former top executives, Kenneth Lay and Jeffrey Skilling. Neither has been charged, and both maintain their innocence.
Prosecutors say Fastow was a central figure in a scandal that wiped out billions of dollars in investor and employee savings and resulted in thousands of layoffs at the one-time energy giant. It was the first in a series of scandals to rock corporate America in the past two years.
Fastow allegedly masterminded a complex web of off-the-books deals that hid Enron’s losses and allowed him to skim millions for himself, his family and friends. Prosecutors say he reaped an estimated $30 million.
Lea Fastow is charged with six counts of conspiracy and filing false tax forms for allegedly participating in some of her husband’s deals. A full pre-sentencing investigation by probation authorities could take two months.
Andrew Fastow is charged with fraud, money laundering, insider trading and other offenses. He is free on $5 million bail while he awaits trial in April.
Attorneys have not said whether he is willing to cooperate in making a case against Lay and Skilling. When Fastow was indicted in October 2002, his lawyers said Skilling and Lay approved his work.
“As long as everybody tells the truth in there, it doesn’t affect Ken Lay one way or the other,” Mike Ramsey, Lay’s attorney, said Thursday outside the federal courthouse.
Robert Mintz, a former federal prosecutor, said the “contortions” the Justice Department was going through indicated that all roads to Skilling and Lay lead through Andrew Fastow.
“Without his help, the government has recognized that they will be hard-pressed to ultimately bring criminal charges against anybody higher up the chain,” said Mintz, now in private practice handling white-collar crime cases. “They’re under enormous pressure to climb to the top of the corporate pyramid here.”
Leslie Caldwell, head of the Justice Department’s Enron Task Force, told the judge that Lea Fastow’s plea was part of a “global resolution of two cases of significant magnitude to the government.” She did not mention Andrew Fastow by name, though his lawyers were in the courtroom.
The couple have two sons, ages 4 and 8.
“She has two children at home and five months works. Anything more than that doesn’t,” said Mike DeGeurin, Lea Fastow’s attorney. “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.”
Enron whistleblower 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.”
Authorities also are preparing charges against Enron’s former chief accountant, Richard Causey, but backed off plans for him to surrender as early as Thursday, sources speaking on condition of anonymity said.