Couple to plead guilty in Enron

Andrew Fastow, and his wife, Lea, reach new deals similar to ones scuttled last week.

The former chief financial officer of Enron and his wife have agreed to plead guilty to crimes after all.

Andrew Fastow, and his wife, Lea, are scheduled to enter their guilty pleas today in separate proceedings in U.S. District Court in Houston, just days after their negotiations with the government collapsed, several media services reported.

The deals could lead investigators to what other top executives knew about massive fraud that led to the collapse of the Houston energy firm, which filed for bankruptcy protection in December 2001.

The terms of the two deals are virtually identical to the tentative agreements that were reached last week. Under those, Andrew Fastow would be sentenced to at least 10 years in prison and be required to cooperate with the continuing investigation. He would hand over some $20-million that he is charged with gaining from secret partnerships he allegedly created to hide Enron's mounting debt and to enrich himself.

Lea Fastow, a former assistant treasurer at Enron, would serve at least five months in prison. The deals are expected to ensure that one parent would be home to care for the couple's sons, ages 4 and 8.

The two had been expected to enter their guilty pleas on Thursday, when the plans were upended after Judge David Hittner, who was hearing Lea Fastow's case, made a series of comments suggesting he was deeply uncomfortable with the length of her prison term.

A judge does not have to accept the terms of a plea deal, and Hittner could sentence Lea Fastow to as much as 16 months, at which point she would have the right to withdraw her plea.

With Lea Fastow merely an asterisk in the Enron case - the government's main interest is the cooperation of her husband - Hittner's comments sent defense lawyers back to the negotiating table, seeking terms that could result in the dismissal of the case against her. They argued that without such a deal, the cooperation of Andrew Fastow might slip away.

But the government refused to agree to the terms Lea Fastow was seeking, causing the negotiations to collapse on Friday.

The discussions resumed this week, with the Fastows ultimately agreeing to take virtually the original deals, with only small changes in Lea Fastow's deal, people involved in the case said. Lea Fastow will still be required to plead guilty to a single felony count, they said.

The revival of plea negotiations was first reported on the Web site of the Houston Chronicle.

The plea deals clear the way for Andrew Fastow, long considered a central figure in the criminal investigation into the Enron collapse, to provide evidence and testimony against other executives in the case.

As part of his effort to obtain a plea deal, Andrew Fastow has already provided evidence against other former Enron executives. Some of the information he offered was used in writing a criminal complaint that was set to be filed last week against Enron's former chief accounting officer, Richard A. Causey, people involved in the case said. But the collapse of the Fastow negotiations led to a delay in those plans. There was no indication on Tuesday of when, or if, the government planned to revive that complaint. Causey has been told that he remains a subject of the investigation.

In his plea negotiations, Fastow also offered evidence about the involvement of Jeffrey K. Skilling, Enron's former chief executive, in certain accounting issues, people involved in the case said. But it was not clear whether that information would suggest or sustain criminal charges.

Andrew Fastow also plays significant roles in criminal cases involving other defendants who have already been charged. If Andrew Fastow pleads as expected, those other cases are sure to feature the former Enron executive as a primary government witness.

Andrew Fastow - who was implicated in wrongdoing by a one-time friend and subordinate, Michael Kopper - has long been viewed as a means for prosecutors into the final stages of the Enron investigation. Given the strength of the case against Andrew Fastow - and subsequently his wife - prosecutors had more leverage over him than over any other senior Enron executive. In the end, he was viewed as the man most likely to succumb to pressure to reveal everything he saw in the company's executive suites.

The criminal charges against Andrew Fastow - which include fraud, money laundering and conspiracy - depict him as a facilitator who manipulated accounting and financial techniques to allow Enron to hide its many business failings, even while enriching himself at the company's expense. His wife was charged with conspiracy and tax violations for aiding him in disguising secret income he received as being the payment from a loan to Kopper.

Kopper led prosecutors to Fastow when he pleaded guilty to conspiracy in August 2002. Fastow was indicted two months later, and his wife was indicted in May 2003.

The day after Kopper's plea, a federal judge froze more than $23-million in bank and brokerage accounts held by the Fastows, their family foundation, his brother, several former Enron employees and two holding companies. Also frozen is $3.9-million in proceeds from the 2002 sale of a three-story, 11,493-square-foot mansion the Fastows built in Houston's wealthiest neighborhood, River Oaks.

Lea Fastow's trial was scheduled to begin Feb. 10, and lawyers in the case were to meet today before Hittner to discuss challenges to potential jurors. Now that court hearing will instead focus on the terms of her plea deal. A separate plea hearing for Andrew Fastow is set for today before Judge Kenneth Hoyt.

A Justice Department spokesman did not return calls. Gordon Andrew, a spokesman for the Fastow family, declined comment late Tuesday.

Legal experts had predicted 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 Skilling and Lay might have known about the company's worsening finances at the same time they sold stock. Neither man has been charged with wrongdoing.

Lawyers for Skilling and Lay said last week that a plea by Fastow would not implicate their clients, so long as he told the truth.

- Information from the New York Times, Washington Post and Associated Press was used in this report.

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