December 20, 2002
Feds examining Fastow and Lay families

Missed this yesterday: Federal prosecutors have brought testimony before the grand jury about Lea Fastow, wife of indicted exec Andy Fastow. They have also interrogated Ken Lay's adult children, though only about Kenny Boy himself.

There had been speculation for some time now that the feds might zero in on Lea Fastow as a wedge against Andy. She has financial savvy, including an MBA from Northwestern, and her name appears in a number of questionable places. The Kremlin watchers see this as a sign that Andy has not been playing ball:

"She is the final and ultimate piece of leverage prosecutors have over Andy Fastow," said Jacob Frenkel, a former Securities and Exchange Commission lawyer and former federal prosecutor based in Washington, D.C. "He does not want to go to trial with his wife at the defendant's table instead of in the gallery."

So far, there are no indications that the government and Fastow's defense team have been negotiating.

"If he has been cooperating on a level that the government found in the least bit satisfactory, they would not have resorted to this kind of pressure," Frenkel said. "His dilemma now is if he is willing to go to trial if the price could include the liberty of a family member."

The feds don't have the same leverage over Kenny Boy, but you can be sure that if they eventually succeed in flipping Fastow, he'll give up some juicy bits on Lay and Jeff Skilling. Keep your fingers crossed.

Posted by Charles Kuffner on December 20, 2002 to Enronarama | TrackBack