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Enron financial whiz to take stand

Associated Press
Published March 6, 2006

HOUSTON - Andrew Fastow, the purported financial whiz whose web of financial machinations helped fuel Enron Corp.'s crash, is about to break his silence.

And after years of being labeled as the crook who brought down Enron - most notably by company founder Kenneth Lay - he's ready to throw some punches in his much-anticipated courtroom faceoff with Lay and former Chief Executive Jeffrey Skilling in their fraud and conspiracy trial, Fastow's longtime spokesman said.

"He's felt from the start that he was the scapegoat," said Gordon Andrew, who noted he hasn't talked to Fastow for months.

"If he's going down, they're going down with him, and this is his moment. I think Andy will say whatever he has to to bring these two guys down with him."

But Fastow, who has a hair-trigger temper, could be a wild card for prosecutors and unlikable to jurors, Andrew said.

"He's been stewing for quite a while," the spokesman said.

Fastow, 44, is on deck to take the spotlight in the sixth week of his former bosses' trial, as early as Tuesday. Prosecutors anticipate questioning him for less than a day, and then Lay and Skilling's multimillion-dollar legal teams get their turn.

A string of witnesses last week bruised the defense and set the stage for his court appearance, most notably Kevin Hannon, a former broadband executive, who said Skilling told several top executives - including Lay - "They're on to us" during a discussion of an analyst's criticism of partnerships Fastow ran that conducted deals with Enron.

Lay and Skilling say the LJM partnerships were proper and received all necessary approvals from lawyers, accountants and Enron's board.

Fastow, who had closer proximity to Lay and Skilling than most, could inflict more damage on the defense. "It's going to be interesting to hear from Andy Fastow and to see the level of contrition that he brings to his testimony," said Robert Mintz, a former federal prosecutor and a white-collar defense attorney with McCarter & English.

"Prosecutors certainly want him to be credible," Mintz said. "It if looks like he's shifting too much blame onto others, that could backfire."

Fastow was initially indicted in October 2002 on what grew to 98 criminal counts, including fraud, conspiracy, money laundering and cheating on his taxes for engineering myriad schemes to hide Enron debt, inflate profits and skim millions of dollars for himself on the side.

He came out fighting, claiming through his attorneys that Lay, Skilling, the board and Enron's accountants knew what he did and approved his work. "They had a failing business and his job was to put his finger in the dike," Andrew said.

Fastow remained defiant in May 2003 when the government obtained an indictment against his wife, Lea, for conspiracy and tax crimes for helping him hide ill-gotten gains. In January 2004, at her urging, Fastow pleaded guilty to two counts of conspiracy in a deal that was contingent upon prosecutors striking a plea agreement with his wife. She eventually pleaded guilty to a misdemeanor tax crime and last July finished serving a year in Houston's downtown federal prison.

Fastow then gave prosecutors ammunition to get to the top of Enron's corporate ladder with indictments against Lay and Skilling.

Lay has repeatedly targeted Fastow as a criminal who betrayed his trust.

"It looks like Fastow was the mastermind of all of it," Lay told the Associated Press days after he was indicted in July 2004. "And again, he apparently did a pretty good job of selecting those he wanted involved in it. But we're more likely to think there was bad activity going on very close to him than anywhere else in the company."

Fastow's testimony could skewer Lay and Skilling's insistence that there was no fraud at Enron beyond Fastow and two others who stole money from the company.

[Last modified March 6, 2006, 00:58:14]

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