"I would love to personally escort (Ken) Lay to an 8-by-10 cell that he could share with a tattooed dude who says, 'Hi, my name is Spike, honey,'" - California Attorney General Bill Lockyer, June 2001
Ken Lay is still nobody's slammer mate, but there remains a chance Lockyer will get his wish. In that light, I combed every word of today’s
The New York Times story on Enron ex-CFO Andrew Fastow and his wife and Enron ex-assistant treasurer Lea Fastow’s efforts to plea bargain themselves into briefer prison time for providing damning information on other Enron heavies, possibly including Lay. I was sorely disappointed. Happily, the
Houston Chronicle version gave me a slender thread of hope:
It is unclear how much or whether the Fastows would be cooperating with the government, though it would be surprising if they did not do so.
Defense lawyers involved in the case have long assumed prosecutors consider Andrew Fastow the prize witness in their effort to charge former Enron CEO Jeff Skilling and possibly even former Chairman Ken Lay.
For now, we’ll have to be satisfied with whatever the court ultimately hands out to the Fastows.
By KURT EICHENWALD
Andrew S. Fastow, the former chief financial officer of Enron, has tentatively agreed to plead guilty to fraud charges and has provided evidence for criminal charges expected to be brought as soon as this week against another former high-ranking executive, people involved in the case said today.
A plea by Mr. Fastow and the expected charging and arraignment of Richard Causey, the company's former chief accounting officer, would be the most significant turning point in the two-year criminal investigation into Enron's collapse.
Still, the situation remained fluid. The deal with Mr. Fastow — which would result in him serving at least 10 years in prison — hinged in part on a resolution of a related criminal case against his wife, Lea. However, late today, a federal judge in Houston rejected the deal with Lea Fastow because it left him with no ability to increase the sentence above an agreed-upon term of five months.
Mr. Fastow had been scheduled to enter his plea today in Federal District Court in Houston, and Mr. Causey had been expected to be arraigned on Friday. However, the judge's rejection of Lea Fastow's agreement has put all of those plans in question. Still, people involved in the case expressed confidence that the final hitch involving Lea Fastow's deal would be resolved and that her husband would ultimately enter his plea. …
Mr. Fastow — who was charged with using a Byzantine series of off-the-books partnerships to enrich himself and disguise Enron's financial troubles — has been a central figure in virtually every criminal case brought in the Enron investigation, even those in which he was not a defendant.
If no plea bargain is arranged, the first criminal trial in the two-year investigation by the Justice Department's Enron Task Force is expected to start Feb. 10 with Lea Fastow in the dock.
As you may recall, Enron’s collapse was the biggest corporate crash in history. The paper "value" of Enron, once No. 5 of the Fortune 500, fell from $80 billion to pennies. Thousands of workers lost their jobs. Their pension plans, being tied to Enron holdings, turned out to be worthless. Company execs, knowing full well that disaster loomed, sold $1 billion of their own holdings, siphoned Enron assets into holding companies run by these same execs and shredded documents like confetti makers preparing for a royal wedding.
As all this was going on, America was electing a president and a majority of politicians who say that government regulation of big business stifles growth and the creation of wealth.
Obviously, Enron’s top brass weren’t the only miscreants in this robber baron saga. Arthur Andersen and Worldcom also came to public attention for something besides their gilded stock brochures. And, of course, there were the companies who didn’t get caught.
As
Bill Greider wrote last August:
The $300 million Enron "settlement" government regulators worked out with the nation's two largest banks smells so bad that even The Wall Street Journal editorial writers gagged on the rank odor. What Citigroup and JP Morgan Chase did, remember, was to design the funny-money financial deals that directly pumped up Enron's profits and stock price. When Enron's fraudulent scheme unraveled and the stock collapsed, the nation's pension funds lost somewhere between $25 to $50 billion. And these two famous banks each profited mightily from their role as financial architects of the great swindle. The pay-up costs will not even require an asterisk on their balance sheets. …
There are now many Enrons -- more seem to surface everyday -- and we can count on sophisticated high-stakes fraud as a permanent feature of American capitalism so long as the corporate-financial suits write the laws governing their own behavior. I repeat: Where is the anger? In the last three years, we have experienced one of the largest corporate scandals in U.S. history and certainly the most costly since investors large and small lost several trillion dollars in the meltdown of false expectations.
In Washington, aside from a few brave voices, all one hears are self-congratulations for the pale "reform" measures that are allegedly meant to restore faith in the stock market and corporate management. Democrats have gone mute on the matter. Republicans worry that "reform" went too far.