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Enron smaller fish face judge

Underlings, some of whom testified against their former bosses, will be sentenced this year.

HOUSTON - Now that Enron Corp. founder Kenneth Lay and former chief executive Jeffrey Skilling are felons, the string of ex-executives whose testimony helped the government snag those convictions face punishments of their own.

Sixteen former Enron executives have pleaded guilty to various crimes during the government's four-plus-year investigation into the energy trader's 2001 collapse. Last week, prosecutors won their most sought-after convictions. That done, most of those underlings, including eight who testified during the trial, will face judges for sentencing this year.

Most prominent among them is former chief financial officer Andrew Fastow, whose January 2004 admission of orchestrating fraudulent deals to manipulate earnings led prosecutors to indictments against Lay and Skilling. There's also former chief accounting officer Richard Causey, who didn't testify, but who cut a last-minute plea deal and avoided trial alongside the former CEOs.

During the four-month trial, defense lawyers repeatedly noted how the government can ask judges to impose probation if prosecutors determine cooperators "perform" well.

"The government has sole discretion over your future," lead Lay lawyer Michael Ramsey needled prosecution witnesses during the trial.

But judges retain the last word on sentencing, and experts said it's unlikely most cooperators will avoid prison.

While judges will credit cooperators with helping prosecutors, "that will also be balanced against the severity of the crimes and the staggering losses to the many victims of the Enron fraud," said Robert Mintz, a former federal prosecutor.

"It is a good bet that most of the sentences will involve some jail time," he said.

Enron crashed into bankruptcy protection in December 2001 with the collapse of accounting tricks, designed to make the wobbly company appear healthy.

The collapse wiped out more than $60-billion in market value, nearly $2.1-billion in employees' retirement savings and, initially, 5,600 jobs.

A jury on May 25 convicted Lay and Skilling of perpetuating Enron's ruse through repeated lies to investors and employees about the company's health.

Lay was convicted of six counts of fraud and conspiracy and one count of bank fraud and three counts of lying to banks in a separate, non-jury case stemming from his personal banking.

Skilling was convicted of 19 counts of fraud, conspiracy, insider trading and lying to auditors, and acquitted of nine counts of insider trading.

Of the ex-Enron executives who pleaded guilty, two have served or are serving their prison sentences.

Former Enron treasurer Ben Glisan Jr. is slated to be released from prison in September to spend the last four months of his term confined at home.

He testified against his former bosses.

Fastow's wife, Lea, finished a yearlong prison term in July 2005. She pleaded guilty in 2004 to a misdemeanor tax crime for helping her husband hide ill-gotten income from his Enron schemes.

Fastow will go into his Aug. 28 sentencing hearing having already agreed to serve the maximum 10-year term.

He pleaded guilty to two counts of conspiracy and was the most-anticipated prosecution witness in their trial.

Several who testified in the Lay-Skilling case or other Enron trials said they hoped they wouldn't serve prison time.

At least one, former top Fastow lieutenant Michael Kopper, faces a sentencing judge who hinted last year that he won't get his wish.

Sam Buell, a former prosecutor with the Justice Department's Enron Task Force who is a visiting professor at the University of Texas School of Law, said prosecutor recommendations for leniency almost always prompt a "significant reduction" in sentences as prescribed by federal sentencing guidelines.

But those are just guidelines, so judges can impose whatever punishments they see fit.

[Last modified June 3, 2006, 06:18:56]