January 14, 2004
Fastows to plead out

Ladies and gentlemen, we have a deal.

Andrew Fastow, the former chief financial officer, is expected to plead guilty in return for a 10-year prison term. His likely cooperation with prosecutors could start other dominoes falling -- and either clear or condemn ex-Enron CEO Jeff Skilling and Chairman Ken Lay.

Andrew Fastow is set to enter his guilty plea in front of U.S. District Judge Kenneth Hoyt -- at some time prior to his wife, Lea, a former assistant treasurer, pleading guilty before U.S. District Judge David Hittner. Lea Fastow's plea hearing is set for 4 p.m.

"It is no surprise. It was inevitable the deals would go through because they are too good to pass up for the Fastows and too valuable to the government," said Philip Hilder, a former prosecutor who represents several witnesses in the Enron criminal cases.

Andrew Fastow faces nearly 100 charges of fraud, money laundering and tax violations. He is accused of enriching himself in elaborate side deals at the expense of the company and its shareholders.

His wife faces six charges, four of them for filing false tax returns. Their arranged sentences, or something even close to the deals, are far lower than the exposure to longer prison terms either would have at trial.

The ex-CFO's addition to the prosecutorial witness stable might precipitate plea bargains from those already accused and could help the government greatly accelerate its continuing investigation.

Andrew Fastow's cooperation is expected to quickly lead to the arrest of Rick Causey, the former chief accounting officer of the company who was mentioned by job title in the original complaint against Andrew Fastow. Causey was set to surrender to the Federal Bureau of Investigation last Thursday and may now wind up doing so this week.

His lawyer, Mark Hulkower, has said Causey is innocent and will fight any charges.

Fastow is also likely to provide information to prosecutors about former corporate kingpins Skilling and Lay.

Both men have repeatedly proclaimed their innocence. Mike Ramsey and Bruce Hiler, lawyers for Lay and Skilling, last week said they welcomed Andrew Fastow's statements if he tells the truth and thus exonerates their clients.

Lea Fastow could still withdraw her guilty plea if she doesn't like the sentence that Judge Hittner ultimately applies. I don't expect that to happen, but you never know.

Posted by Charles Kuffner on January 14, 2004 to Enronarama | TrackBack