Federal prosecutors finally won their battle to persuade Andrew Fastow, the former chief financial officer of the collapsed energy giant Enron, and his wife, Lea Fastow, to enter guilty pleas yesterday for their roles in the company's demise in exchange for reduced prison sentences.
Andrew Fastow pleaded guilty to criminal charges during a court hearing in Houston yesterday. His wife later admitted to one count of filing a false tax return. The high-profile pair have been under intense pressure from the American government for more than a year to reverse their claims of innocence. Mr Fastow is described as the mastermind of the web of hidden partnerships in Enron used to disguise its true financial troubles.
Mr Fastow pleaded guilty to two charges of conspiracy and has agreed to serve 10 years in prison and to forfeit $23.4m assets, most of which have already been frozen. Prosecutors dropped another 96 counts against Mr Fastow after he agreed to help the government investigation into Enron's collapse.
Expectations are high that the deal will give prosecutors the leads they need to crack open the Enron case and possibly file criminal charges against Kenneth Lay and Jeffrey Skilling, two of its most senior former executives, who have both maintained they are innocent of any wrongdoing. Neither man has yet been charged.
"Unquestionably, this is the breakthrough that the government has been pursuing" to lead them to Mr Lay and Mr Skilling, said Robert Mintz, a former federal prosecutor and an expert in white-collar crime. "There is nobody besides [Andrew] Fastow who can make this case for the government and that's why they have been pursuing him for so long and so aggressively."
The former chief financial officer, who was charged with multiple offences in 2002, including money laundering, tax evasion, fraud and insider trading, had resisted all attempts by prosecutors to agree to a guilty plea, insisting instead he would go to trial.
He apparently changed his mind, however, on the eve of jury selection for a separate trial for his wife, who is accused of conspiracy and filing false tax forms.
Targeting a family member is a common strategy for US prosecutors. The Fastows have two young children and it seems that it was the prospect of them being "orphaned" that led to the breakthrough. Mrs Fastow is expected to complete a five-month sentence before her husband goes to prison.
An earlier attempt to seal the guilty agreements unexpectedly stalled last week after the judge in Mrs Fastow's case objected to proposed limits on her prison sentence.Reuse content