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The Honolulu Advertiser
Posted on: Thursday, November 7, 2002

Ex-Enron CFO pleads innocent

By Mark Babineck
Associated Press

HOUSTON — Former Enron Corp. chief financial officer Andrew Fastow pleaded innocent yesterday to a 78-count federal indictment charging him with masterminding complex financial schemes that enriched him and helped doom the energy trading powerhouse.

"Your honor, in answer to each of the charges, I am not guilty," Fastow said to U.S. Magistrate Judge Marcia Crone during a five-minute hearing, where he was arraigned alongside a dozen other accused criminals who were handcuffed. Fastow wore a gray suit.

Attorneys for Fastow and the U.S. Justice Department had no comment after the arraignment.

Fastow, ousted a year ago as Enron spiraled toward bankruptcy, was initially charged Oct. 2 and indicted on Halloween on various counts of fraud, money laundering, conspiracy, obstruction of justice and other charges. Fastow entered his plea yesterday afternoon in federal court in Houston.

If convicted, he technically could face a maximum sentence of 860 years in prison.

The indictments, returned by a special Enron grand jury in Houston, allege Fastow crafted multiple schemes that produced phantom profits and let him skim millions for himself, his family and inner circle.

Fastow's attorneys have said top Enron executives approved his work and that Fastow did not believe he committed any crimes. Former chief executive officers Jeffrey Skilling and Kenneth Lay were Fastow's immediate superior at different times.

Fastow, 40, is free on $5 million bond. A pretrial conference has been set for Jan. 13 before U.S. District Judge Kenneth Hoyt.

At the time of his initial charge, which had been anticipated for months, Fastow attorney John W. Keker predicted Fastow "will be set free" by a jury once all the facts are known.

Prosecutors have said Fastow has not cooperated as the Enron Task Force further pursues the case. Assistant U.S. Attorney Andrew Weissmann has publicly left the door open to a deal, noting last month the charges against Fastow "carry significant jail time."

Enron, No. 7 on the Fortune 500 list of the biggest companies two years ago, filed for bankruptcy Dec. 2 after revealing a $618 million loss and eliminating $1.2 billion of shareholder equity.

Enron's collapse was only the first in a series of corporate scandals that sent investors fleeing from a volatile stock market. Enron's stock collapse destroyed employee retirement accounts, and the bankruptcy cost more than 4,500 workers their jobs.

The indictment alleges Fastow and others created schemes to defraud Enron and its shareholders through transactions with off-the-books partnerships that made the company look far more profitable than it was.

Prosecutors also say he reaped an estimated $30 million from kickbacks funneled through former lieutenant Michael Kopper and investors or family members. Investigators say Fastow also siphoned income from the partnerships.