Setback for Enron prosecutors

By RICHARD THOMSON
Updated:

 

THE US government's prosecution strategy in the Enron case is in jeopardy after the collapse of a plea bargain arrangement for the wife of Andrew Fastow, former chief financial officer of Enron, and one of the chief witnesses in the case.

District Judge David Hittner rejected the deal under which Lea Fastow had agreed to plead guilty in return for a five-month prison sentence.

Refusing to limit the court's role in sentencing, he said he saw no reason why she should not serve the full 10 to 16 months that probation officials had recommended in a pre-sentence report.

Fastow immediately withdrew her plea and will now plead not guilty of filing a false tax return.

The judge also warned her that if she dropped her plea he could recommend a 15-to-21-month prison sentence.

The collapse of the deal could prove a blow to the prosecution which is counting on the co-operation of Andrew Fastow in pushing the Enron case forward.

Fastow was instrumental in setting up a series of complex financing arrangements from which he made tens of millions of dollars.

He has pleaded guilty to fraud and faces a 10-year jail term. His wife's plea bargain was part of a deal with prosecutors intended to minimise the amount of time either one of them would be away from their two children.

But with his wife facing a possible longer jail term, Fastow may decide to limit his co-operation with Federal prosecutors. As a senior Enron executive, his evidence is crucial.

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