Business
Judge Rejects Plea Bargain in Enron Case
Wed Apr 7, 2004 04:36 PM ET
By C. Bryson Hull
HOUSTON (Reuters) - The wife of Enron's former finance chief pulled out of her plea bargain with prosecutors on Wednesday after a federal judge rejected a recommended prison term of five months, sending the case to trial.
Lea Fastow, a former Enron assistant treasurer, changed her plea to not guilty after U.S. District Judge David Hittner snubbed a deal the prosecution and defense had vigorously advocated.
As Lea Fastow stood before him, the judge said he saw no reason why she should not serve the 10 to 16 month term probation officials recommended in a pre-sentence report.
"The court declines to voluntarily limit its role in the sentencing process," Hittner told the attorneys, before abruptly silencing objections from both sides.
Hittner warned for months that he was not going to be bound by the deal, part of negotiations that led former Chief Financial Officer Andrew Fastow to plead guilty.
He warned Lea Fastow that dropping her plea could lead to a recommended sentence of 15 to 21 months on the charge to which she pleaded guilty, filing a false tax return.
Mike DeGeurin, Fastow's attorney, accused the judge of threatening his client.
"I'm not threatening anything! I'm just stating the law," Hittner shot back.
DeGeurin told Hittner they were withdrawing the guilty plea. The judge ordered the trial moved to Brownsville, 350 miles away at Texas' southernmost tip, and scheduled jury selection for June 2.
Now, instead of facing sentencing on one count of filing a false tax return, Fastow faces trial on the original six charges against her: false tax reporting and conspiracy to commit fraud and money laundering in husband Andrew Fastow's schemes.
DeGeurin said "due process" was threatened by the judge's refusal to hear objections.
"I was embarrassed for the system. I don't recall a situation where neither the government nor the defense was allowed to speak before a decision like this was made," he told reporters afterward.
It was history repeating itself between the judge and DeGeurin. In 2000, Hittner rejected a plea-bargained sentence of six months for a woman in a drug case and gave her nearly five years.
PRIZE AT RISK?
Lea and Andrew Fastow pleaded guilty to separate charges on Jan. 14 in a prize package deal for prosecutors, agreeing to cooperate in the Enron (ENRNQ.PK: Quote, Profile, Research) probe. The deals were arranged so at least one parent would be out of prison to care for their young children.
Andrew Fastow, who set up complex deals that buried Enron's debt, burnished its finances and made him tens of millions, pleaded guilty to conspiracy to commit wire and securities fraud. He agreed to a 10-year prison term.
While Fastow cannot change his plea nor limit his cooperation under the law, the government's failure to deliver on his wife's half of the bargain could cool his enthusiasm to cooperate, a former federal prosecutor said.
"The judge's decision today clearly throws sand into the gears of the government's plan to charge ahead with Andy Fastow leading the pack," said Robert Mintz, who runs a white collar defense practice at McCarter & English.
Enron Task Force Director Andrew Weissmann told reporters in Houston there would be no effect on Andrew Fastow's guilty plea and ongoing cooperation.
Prosecutors charged Lea Fastow as they pressured her husband for more than a year to implicate others higher on the corporate ladder.
A month after Andrew Fastow pleaded guilty, the U.S. Justice Department's Enron Task Force used his testimony to charge former Enron Chief Executive Officer Jeff Skilling with multiple conspiracy, fraud and insider-trading counts. Skilling has pleaded not guilty.
Prosecutors are still investigating former Enron Chairman Kenneth Lay. He has not been charged with a crime and has denied any wrongdoing. (Additional reporting by Matt Daily in Houston and Deborah Charles in Washington)
--------------------------------------------------------------------------------
© Copyright Reuters 2004. All rights reserved. Any copying, re-publication or re-distribution of Reuters content or of any content used on this site, including by framing or similar means, is expressly prohibited without prior written consent of Reuters.
Quotes and other data are provided for your personal information only, and are not intended for trading purposes. Reuters, the members of its Group and its data providers shall not be liable for any errors or delays in the quotes or other data, or for any actions taken in reliance thereon.
© Reuters 2004. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.