He helped engineer one of the biggest frauds in history and yesterday former Enron Chief Financial Officer Andrew Fastow pleaded guilty to charges that will put him in prison for 10 years. His wife Lea, former Enron assistant treasurer, pleaded guilty to a lesser tax charge and will spend five months in prison.
The plea by Fastow includes a stipulation that he will cooperate with prosecutors who are investigating, but haven’t charged, other top Enron officers, including former Chairman Kenneth Lay and former CEO Jeffrey Skilling.
Prosecutors say Fastow masterminded a web of partnerships and tangled financing deals that hid Enron debt and inflated company profits while funneling millions of dollars to him, his family and selected friends, the Associated Press reported. Enron was the nation’s seventh largest firm before its 2001 demise.
"I and other members of Enron senior management fraudulently manipulated Enron’s publicly reported financial results," Fastow said in a statement accompanying the deal, adding that the purpose was to mislead investors while inflating the company’s stock price and credit rating, the AP reported.
Fastow, 42, pleaded guilty yesterday in Houston to conspiracy to commit wire fraud and conspiracy to commit securities fraud. In addition to assisting prosecutors and serving a 10-year prison term, Fastow must forfeit $23.8 million in assets. If he complies with the terms of the deal, other charges against him will be dropped.
"I also engaged in schemes to enrich myself and others at the expense of Enron’s shareholders and in violation of my duty of honest services to those shareholders," Fastow said in his statement.
Plea talks had broken down last week over the couple’s insistence that Lea Fastow serve only a five-month term so she could continue to care for their two young sons. U.S. District Judge David Hittner, who had objected to the five-month sentence, demanded that he retain the right to alter her term, the AP reported.
While some believe the Fastow deal could pave the way to charges against Lay and Skilling, both men issued statements through their attorneys again professing their innocence in the matter.