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Enron's Fastow to Serve 6 Years

Citing his cooperation in the fraud case, the judge does not give the ex-CFO the maximum sentence.

September 27, 2006|Lianne Hart | Times Staff Writer

HOUSTON — A federal judge sentenced former Enron Corp. Chief Financial Officer Andrew S. Fastow to six years in prison Tuesday for his role in running the fraudulent, off-the-books dealings that brought down the company while he made millions.

But the judge stopped short of the maximum term, citing Fastow's contrition and his cooperation with the government.

In 2004 Fastow had agreed to serve as long as 10 years in exchange for testifying against the former top executives of the fallen energy company. U.S. District Judge Kenneth Hoyt said that although Fastow was once "drunk on the wine of greed," he has since demonstrated remorse by fully cooperating with government and civil lawyers in lawsuits against Enron.

"These factors call for mercy," the judge said.

Fastow's sentencing turns another page in the saga of Enron, which came to symbolize the wave of corporate accounting scandals of this decade. One of the bosses he testified against, former Chief Executive Jeffrey K. Skilling, will be sentenced on fraud and conspiracy charges next month.

And the same day Fastow was led off in handcuffs and shackles, former WorldCom Inc. Chief Executive Bernard J. Ebbers reported to federal prison to begin serving a 25-year term for leading a massive accounting fraud.

Hoyt imposed no fine in meting out his sentence to Fastow, noting that under terms of the plea agreement he had already forfeited $23.8 million and pleaded guilty to two counts of conspiracy. Hoyt sentenced Fastow to two years of supervised release upon completing his prison term. The judge recommended a minimum-security prison for Fastow, as well as drug treatment for the anti-anxiety medication he has been taking.

Fastow, 44, hugged his wife, Lea, a former Enron executive who had done prison time for tax fraud, before he was handcuffed by marshals and led from the courtroom.

His departure ended an emotional hearing punctuated by sobs from his family and friends who packed the courtroom. A parade of lawyers spoke in favor of a reduced sentence, all noting Fastow's willingness to lay out Enron's fraudulent deals in excruciating detail. In addressing the court, he paused often to maintain his composure.

"When I pled guilty I was consumed by despair and shame by what I had done," Fastow said, his voice cracking. "I know I deserve punishment. I accept it without bitterness."

Federal prosecutor John C. Hueston said no one "has cooperated more thoroughly and extensively than Mr. Fastow." Without his assistance, Hueston said, the government would not have obtained convictions against Skilling and the late Kenneth L. Lay, the company's founder and longtime chairman.

Fastow's attorney, John Keker, said that Scott D. Sullivan, the former WorldCom chief financial officer in a "parallel situation" to Fastow's, received a five-year sentence for his crimes.

"Nobody is asking he not get any punishment," Keker said of his client. Instead, he asked Hoyt to show mercy to a man "disgusted" with his deeds and "desperate to make amends."

Investor Brian Durbin was the only person to speak against reducing Fastow's sentence. When he bought a few thousand dollars of Enron stock, he said, the company appeared to be in prime financial health. But when Enron collapsed, he watched with growing resentment as friends lost their jobs and retirement savings.

"I'm here to convey my personal anger at the management of Enron," Durbin said, looking at Fastow, who returned his gaze. "We were the victims of a scam."

Former Enron employee Tracy Michel, when told of the sentencing, said Fastow should have gotten a longer sentence.

"It's not enough. He got off easy," she said. "But so much time has passed, I guess they hoped people will forgive and forget and move on. I'm sure he's humiliated, so hopefully this is hitting him hard."

Fastow's sentence was fair, given his willingness to cooperate with prosecutors, said Barry Boss, a Washington-based white-collar defense attorney. "People have lost perspective on how long six years is," said Boss, former co-chairman of the U.S. Sentencing Commission's Practitioners Advisory Group.

The sentence could open the door for Skilling to say he should get similar consideration, Boss said.

"Skilling's lawyers may argue that Fastow is the most culpable party. But they tried to play this card before and the jury didn't believe it," he said.

Said Anthony Sabino, professor of law and business at St. John's University in New York: "The sentence will have no effect on Skilling's sentencing. Jeff Skilling is going away for a long, long time."

Tuesday's 75-minute hearing capped a four-year legal battle for Fastow, a Northwestern University business school graduate once regarded as a talented, hard-charging comer.

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