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It's time to pay for cheating ways

Andrew Fastow, the former CFO of Enron, gets a 6-year sentence for his role in the downfall of the energy company.

By ASSOCIATED PRESS
Published September 27, 2006

HOUSTON - Andrew Fastow, the mastermind behind financial schemes that doomed Enron Corp., was sentenced Tuesday to six years in prison by a judge who felt he deserved a more lenient term than the decade he had agreed to accept in a plea bargain.

Fastow, the former chief financial officer who cooperated with prosecutors in other cases related to Enron's 2001 implosion, had agreed to serve a maximum 10-year term when he pleaded guilty in 2004.

But the judge said he deserved a lighter sentence because Fastow has been persecuted after Enron's failure and because his family has suffered enough. Fastow's wife already has served a year for her role in the scandal.

"Prosecution is necessary, but persecution was not," said U.S. District Judge Kenneth Hoyt. "These factors call for mercy."

Fastow was taken into custody after the judge rejected his request to turn himself in later. The judge did allow him to hug his wife, who was seated in the front row of the packed courtroom. They embraced for several seconds before he was taken away in handcuffs.

"I know I deserve punishment," said Fastow, who cried before the sentencing while telling the court he was sorry for what he had done. "I accept it without bitterness."

Fastow must serve all six years because there is no parole in the federal system. He also was sentenced to two years of probation after his release from prison.

Fastow's attorneys had asked for a lighter sentence, citing Fastow's admission of guilt and his help in the successful prosecution of Enron founder Kenneth Lay and the former chief executive, Jeffrey Skilling.

Enron, once the nation's seventh-largest company, crumbled into bankruptcy proceedings in December 2001 after years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable. The collapse wiped out thousands of jobs, more than $60-billion in market value and more than $2-billion in pension plans.

Fastow was originally indicted on 98 counts, including fraud, insider trading and money laundering. He pleaded guilty to two counts of conspiracy, admitting to running various schemes to hide Enron debt and inflate profits while enriching himself. He also surrendered nearly $30-million in cash and property.

At the trial of Lay and Skilling, Fastow testified that his bosses were aware of fraudulent financial structures engineered by Fastow and his staff. Skilling and Lay were convicted in May of conspiracy and fraud. Lay's attorneys are working to erase his convictions since his July 5 death from heart disease. Skilling is to be sentenced next month.

Fastow's wife, Lea, pleaded guilty in 2004 to a misdemeanor tax crime and served a year in prison for helping him hide ill-gotten gains from his schemes.

During his brief speech before sentencing, Fastow said he was ashamed for what he had done and had tried to make up for it by helping prosecutors and attorneys for investors and employees who had lost money.

"To all of the victims, I apologize to you," he said, turning toward the four who spoke. "I am ashamed of what I did."

The three attorneys for people who lost money all recommended a lighter sentence, saying Fastow had been helpful in their efforts to recover money.

"I can't undo the harm I have caused," said Fastow, whose voice cracked frequently during his speech. "I can try to repair the damage as best I can."

The only Enron investor who spoke, Brian Durbin, said he was a small-time investor who considered Enron a "no-brainer because of the company's solid reputation."

"It became clear we, like many others, were victims of an elaborate scam, if not outright theft," he said. "When theft and fraud occur within a company, what chance do investors have?"

One of the prosecutors on the Enron Task Force, John Hueston, credited Fastow with allowing investigators to take "jurors through the doors of the executive suites at Enron," referring to his work on the prosecutions of Lay and Skilling.

"I witnessed a man truly repentant," Hueston said.

Former WorldCom chief Bernard Ebbers, drove through the gates of a federal prison in Oakdale, La., on Tuesday to begin a 25-year sentence for his role in the $11-billion accounting fraud that toppled the company he built from a tiny telecommunications firm to an industry giant.

Ebbers, 65, a former high school basketball coach, was sentenced in July 2005 after he was convicted of fraud and conspiracy in the massive fraud that drove WorldCom of Clinton, Miss., into bankruptcy in 2002.

The 2nd U.S. Circuit Court of Appeals upheld Ebbers' conviction and sentence last month. His attorney has said they will continue to appeal.

[Last modified September 27, 2006, 01:10:31]