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Fastow looms large at Enron trial

As early as Tuesday, former Enron Corp. finance chief Andrew S. Fastow will take center stage as the  most highly anticipated witness in the fraud trial of his onetime boss.
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For five weeks, the shadow of former Enron Corp. finance chief Andrew S. Fastow has hovered over the fraud trial of his onetime bosses.

Jurors have heard lawyers for former chief executive Jeffrey K. Skilling and chairman Kenneth L. Lay denounce Fastow for "stealing Enron's good name." They caught a glimpse of Fastow promoting secretive business partnerships that enriched him by more than $45 million at the company's expense. And they listened last week to testimony that Fastow called the structures "a good deal for me" in the presence of both defendants, leaving Enron employees at that meeting in a "stunned silence."

As early as Tuesday, Fastow will take center stage as the trial's most highly anticipated witness -- and one of its most unpredictable. His presence is expected to electrify the federal courthouse here, where court officials are preparing for an onslaught of bystanders eager to hear Fastow speak publicly for the first time since his January 2004 guilty plea.

Both the Justice Department's Enron Task Force and the defense team have plenty of reasons to fear Fastow and the impact of his testimony. Government lawyers have signaled that they hope to limit their questioning to a day or less, given the liabilities he brings with him -- admissions that he improperly pocketed millions of dollars during his tenure. Defense lawyers intend to keep him on the witness stand for days trying to tear apart his account.

Still demonized
On one point, however, both sides agree: Fastow, 44, remains the most elusive and demonized character in a story that has come to symbolize an era of corporate malfeasance.

To hear former Enron employees tell it, Fastow is far from likable. Under hostile fire at Enron, Fastow did not hesitate to wield his power to cow subordinates and bully investment bankers. The son of a New Jersey salesman, he exuded confidence in his own abilities and punished analysts who dared to cross him. Fastow and the prosecutors will probably try to keep that side of his personality off display.

But defense lawyers must walk a fine line as they seek to discredit Fastow as a liar and a thief. For years, he was the company's go-to man, an award-winning finance chief lauded for his ability to devise clever financial structures. Top executives compensated him handsomely, they said later, because they feared he might defect.

Skilling handpicked Fastow to ascend to the job of chief financial officer, took him on motorcycle races and vested him with tremendous responsibility. Lay insisted for months that Fastow had his "complete confidence" during warnings about his behavior, only to fire him abruptly in late October 2001 after reporters and analysts requested information about his private partnerships.

If Fastow was motivated by greed and the desire for validation, Enron's leaders and its board of directors did little to rein him in. According to congressional testimony, no one at Enron bothered to inquire exactly how much Fastow was making from the deals, which helped the company generate cash flow and move billions of dollars in underperforming assets off its books. When the answer finally came in the fall of 2001, then-board member Charles A. LeMaistre jotted down the word "incredible" on his notepad. Within days, Fastow was gone.

After Enron filed for bankruptcy protection in December 2001 and investigators pounced, Fastow's lawyer at the time took the unusual step of holding a news conference to quash rumors that Fastow had fled to Israel. Fastow steadfastly denied requests to testify before Congress and other investigative bodies, telling lawyers for the company's board the following January that he acted to help Enron and did nothing without the approval of his superiors, accountants and lawyers.

But a former colleague, Jordan Mintz, later told investigators that Fastow had said Skilling would fire him if the chief executive knew the scale of Fastow's profit from the partnerships.

People close to Fastow say he is furious about attempts to portray him as the fall guy for Enron's collapse. The company's downfall carried powerful consequences not only for Fastow, whose black hair has since turned gray, but also for his family.

His wife, Lea W. Fastow, heiress to a Texas real estate and grocery fortune, emerged from a halfway house in July. She spent most of her one-year sentence in an 8-by-10-foot cell in downtown Houston's Federal Detention Center alongside drug offenders and women awaiting trial on violent crime charges. She pleaded guilty to a single misdemeanor tax count for failing to report $141,000 in income from her husband's partnerships. At the time of her plea, she told the judge she was taking prescription drugs often used to treat depression and anxiety.

Guilty pleas
Andrew S. Fastow pleaded guilty to two conspiracy charges that will send him to prison for 10 years -- agreeing to the deal only when his wife was on the verge of heading to trial. Their sons, Jeffrey and Michael, will be in high school and college by the time Fastow returns from prison. Because parole has been abolished in the federal system, Fastow must serve at least 85 percent of his sentence -- more than eight years.

Fastow's lawyer, David Gerger, declined to comment, as did many of Fastow's friends. Fastow mostly has been keeping out of the public eye, working with government lawyers to decode Enron's byzantine accounting practices. He occasionally walks through a local park and dines with his family at local restaurants in the neighborhood surrounding Rice University, near the city's finest museums and his immaculately maintained, ivy-covered home assessed at $690,000 in 2003.

As part of his deal with the government, Fastow turned over $24 million in cash and assets, including his unfinished $3.4 million dream house in another tony Houston neighborhood, waterfront property in Galveston, Tex., and 68 acres in Norwich, Vt.

Prosecutors sandwiched Fastow in the middle of their case in a strategic attempt not to leave jurors with any lasting, negative impressions. The witness scheduled to follow Fastow on the stand is Chris Loehr, a young analyst trainee who went to work for the Fastow-operated partnership LJM, named after the first initials of Fastow's wife and two sons. Loehr has never been charged with a crime, and he has cooperated with investigators for nearly four years -- making him a more difficult target for defense lawyers to sully. Former Enron treasurer Ben F. Glisan Jr., who is serving a five-year prison sentence for his work on some of the partnerships, also will testify for the government.

Researchers Madonna Lebling and Richard Drezen contributed to this report.