Video: Fastow's plea deal falters

updated 4/7/2004 1:51:46 PM ET 2004-04-07T17:51:46

The wife of former Enron Corp. finance chief Andrew Fastow withdrew a plea agreement Wednesday after a federal judge balked at a sentencing deal that would have sent her to prison for five months and confined her at home for another five months.

Lea Fastow’s action throws into question a plea arrangement with her husband, who was to have faced 10 years in prison on two counts of conspiracy under a plea deal and cooperation agreement with prosecutors pursuing cases against higher-ups. Prosecutors insist her decision won’t affect his plea agreement.

U.S. District Judge David Hittner wanted a sentence of between 10 and 16 months for Lea Fastow.

“Based upon my consideration and full reading of the presentencing report, the court declines to voluntarily limit its role in the sentencing process,” Hittner said, in rejecting the sentence.

He set trial for June 2 in Brownsville after a terse exchange with her lawyer about grounds for his decision.

After on-again, off-again plea talks, Lea Fastow pleaded guilty in January to filing a false tax form. Andrew Fastow admitted to orchestrating schemes to make Enron appear financially healthy while enriching himself. She acknowledged helping him hide ill-gotten income from the government, including endorsing and depositing checks made out to their 4- and 8-year-old sons.

Based on presentencing guidelines, Lea Fastow could face 15 to 21 months in prison if convicted.

The original indictment included six counts that had been reduced to one as part of the plea. Now that plea is rejected, it again is a six-count indictment — four counts of filing false tax returns and two counts of conspiracy, with one conspiracy to commit wire fraud and the other money laundering conspiracy.

“I am going to have to go back to the drawing board and think about this,” DeGeurin said outside the federal courthouse. “I am a bit embarrassed for everyone who was there who witness this.”

He said that the judge jeopardized due process by not allowing attorneys on both sides to make statements before the sentence was rejected.

“The agreement to plead guilty and resolve all of these matters at once included an agreed sentence. It resolved a lot of matters,” DeGeurin said. Now, “I don’t know what is going to happen.”

Andrew Weissmann, director of the Justice Department’s Enron Task Force, said the government would move forward with trial preparations. When asked how Lea Fastow’s plea withdrawal affected her husband’s plea, he said: “They’re not linked in any way.”

Andrew Fastow’s attorneys, John Keker in San Francisco and David Gerger in Houston, did not immediately return phone messages left Wednesday by The Associated Press. Fastow spokesman Gordon Andrew also did not have an immediate response.

Hittner and the Fastows’ lawyers have clashed before.

In January, plea negotiations stalled after the judge refused to guarantee Lea Fastow a five-month prison sentence, even though prosecutors approved of it. DeGeurin said the couple insisted on the sentence to ensure their two sons had at least one parent at home. Hittner retained the right to alter Lea Fastow’s term.

“Generally, once a plea is entered, if they don’t receive the sentence they expect, that is not grounds to withdraw the plea,” said Robert Mintz, a former federal prosecutor and expert in white-collar crime. “It depends on the terms of the precise deal. If there clearly was an expectation on the part of Andrew Fastow that he thought his wife would receive the sentence that the government was offering, that could be grounds for him to withdraw his plea as well.”

Prosecutors had supported the sentence agreement for Lea Fastow, and her lawyers did not ask that she receive less than five months in prison. Prosecutors noted in a court filing last week that nearly 60 percent of tax offenders received split sentences or probation in fiscal 2001.

Prosecutors say that Lea Fastow played an “integral role” in securing her husband’s guilty plea and cooperation more than a year after he was indicted. The Fastows also relinquished nearly $24 million in cash and property to the government.

Andrew Fastow was indicted on 78 counts of fraud, money laundering and other charges in 2002. Prosecutors added another 20 counts, including tax crimes and insider trading, when a separate indictment charging his wife with two counts of conspiracy and four counts of filing false tax forms was unsealed in May.

The wife of former Enron Corp. finance chief Andrew Fastow withdrew a plea agreement Wednesday after a federal judge balked at a sentencing deal that would have sent her to prison for five months and confined her at home for another five months.

Lea Fastow’s action throws into question a plea arrangement with her husband, who was to have faced 10 years in prison on two counts of conspiracy and had agreed to cooperate with prosecutors pursuing cases against higher-ups.

U.S. District Judge David Hittner wanted a sentence of between 10 and 16 months for Lea Fastow.

“Based upon my consideration and full reading of the pre-sentencing report, the court declines to voluntarily limit its role in the sentencing process,” Hittner said, in rejecting the sentence. He set trial for June 2.

Based on presentencing guidelines, Lea Fastow could face 15 to 21 months in prison if convicted at trial.

After on-again, off-again plea talks, Lea Fastow pleaded guilty in January to filing a false tax form. Andrew Fastow then pleaded guilty to two counts of conspiracy and admitted orchestrating schemes to make Enron appear financially healthy while enriching himself. He had been indicted with nearly 100 counts of fraud, money laundering, insider trading and other charges.

The couple had wanted to ensure that at least one of them was free to take care of their 4- and 8-year-old sons.

Lea Fastow acknowledged helping her husband hide ill-gotten income from the government, including endorsing and depositing checks made out to the children.

Federal prosecutors have said that her husband’s plea agreement would not be affected by any change in Lea Fastow’s case.

Prosecutors had supported the split sentence agreement, and Lea Fastow’s lawyers did not ask that she receive less than five months in prison. Prosecutors noted in a court filing last week that nearly 60 percent of tax offenders received split sentences or probation in fiscal 2001.

Prosecutors say that Lea Fastow played an “integral role” in securing her husband’s guilty plea and cooperation more than a year after he was indicted. The Fastows also relinquished nearly $24 million in cash and property to the government.

© 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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