Posted on: Tuesday, January 13, 2004

Lawyers try to salvage plea deal in Enron case

By Kristen Hays
Associated Press

HOUSTON — After a weekend of negotiations, lawyers for the wife of former Enron Corp. finance chief Andrew Fastow tried again yesterday to clear a hurdle in a plea agreement for their client.

But Mike DeGeurin, Lea Fastow's lead attorney, did not indicate how close he was to resolving last week's impasse in crafting a plea bargain for Lea Fastow that would satisfy the judge presiding over her case.

A deal with Andrew Fastow, the highest-profile former Enron executive charged so far in the Justice Department's two-year probe into the company's 2001 collapse, is contingent upon a deal with her, according to sources close to the case, who spoke on condition of anonymity.

Leslie Caldwell, head of the Justice Department's Enron Task Force, and Bryan Sierra, the department's spokesman, didn't return calls for comment yesterday.

Andrew Fastow, who was indicted in October 2002, is charged with 98 counts of insider trading, fraud, money laundering, tax violations and other charges for allegedly running a complicated web of partnerships and financing methods that hid debt, inflated profits and funneled millions of dollars to him, his family and chosen friends and colleagues.

His wife is charged with six counts of conspiracy and filing false tax forms for allegedly joining her husband in scheming to make one of those partnerships appear independent of Enron so the failed energy giant could continue getting tax benefits for wind farms after buying a utility.

Specifically, the indictment in her case alleges she and her husband loaned $419,000 to Michael Kopper, Andrew Fastow's former top aide who is cooperating with prosecutors, to appear to be an independent investment in the partnership.

The Fastows then allegedly failed to report their $62,850 return on the loan to the Internal Revenue Service.

Last week, a plea deal with Lea Fastow fell apart after U.S. District Judge David Hittner, who must approve her agreement, balked — unhappy with its requirement up front to sentence her to five months in prison on one of the tax charges.

The judge's concerns threaten to derail a deal worked out with Andrew Fastow that, according to sources, would have sent him to prison for 10 years with a $20 million fine.

The sources said Andrew Fastow's deal was conditional upon a five-month prison term for his wife so that the couple's two young children would have at least one parent at home.