Fastow to accept 10 year sentence

What is arguably the most important white collar criminal investigation in decades may be bogged down by a dispute over baby-sitting. Such is the current state of the Enron investigation.

Federal prosecutors and defence lawyers last week worked to craft an ambitious dual plea agreement that would send Andrew Fastow, the company's former chief financial officer, and his wife Lea, to prison for crimes that contributed to the energy company's collapse.

The deal would mark a momentous shift for prosecutors, who have struggled for more than two years to crack the inner circle of the Enron executive suite.

Not only would Mr Fastow rank as the most senior former executive to plead guilty
" in connection with the scandal, but many lawyers "believe he would accelerate the government's efforts to build cases against Jeff Skilling, the former chief ' executive, and possibly Ken Lay,
the former chairman.

Mr Fastow has tentatively agreed to accept a 10-year prison sentence as part of the deal. The problem is that his plea hinges on a related agreement for his wife, a former assistant treasurer at Enron.
Mrs Fastow has been accused of helping her husband line up nominal investors for at least one of the off-balance sheet partnerships that Enron used to massage its earnings, and failing to pay tax on the proceeds.
Mrs Fastow missed a deadline imposed by a federal judge on Friday to plead guilty in exchange for a five month sentence. Her lawyers are objecting to the judge's insistence that he retains final authority to alter the proposed sentence until he has read a report from prosecutors.
That uncertainty appears acceptable to Mrs Fastow because she is determined to be out of prison before her husband begins his sentence so she can care for their two young children.
Several lawyers following the case expressed optimism that the two sides could still work out a deal - especially considering how much is at stake for the government.
"I think the plea agreement is an admission that the government needs Fastow," said Tom Dewey, a lawyer' at Dewey, Pegno & Kramarsky in Manhattan.
Leslie Caldwell, the head of the Justice Department's Enron task force, appeared to acknowledge as much when she appealed to the judge during Friday's hearing, saying -the "global
resolution" of the cases was "significant" for the government.
The judge's deadline was designed to continue moving forward preparations for Mrs Fastow's February trial. Technically, she could cement a plea deal with prosecutors any time until a verdict was returned against her.
One possibility might be for the government to insert language into the plea that would allow Mrs Fastow to withdraw it in the event that the judge settled on a longer sentence.
The problem with this option is that if Mrs Fastow later went to trial, it would be hard to find a jury in
Texas unaware that she had already pleaded.
While the judge might refuse on principle to relinquish his right to a final say on sentencing, lawyers said it would not be unusual for him to send some signal that he would not interfere.
It was also possible, they said, that other members of the judiciary might discreetly remind him of the importance of the plea agreement to the government.
In the meantime, the very existence of the plea negotiations is a reminder of the power prosecutors can wield by targeting defendants' families.
Mr Fastow is understood to have resisted prosecutors for months until just days before jury selection was to begin for his wife's trial. The charges against her have been questioned by many lawyers.
"Ultimately, the only way that Andy Fastow was brought to the table was when he saw the possibility of his kids being orphaned, and that pressure did not become sufficiently intense until the eve of his wife’s trial," said Chris Bebel, a former prosecutor who is now in private practice in Houston.
The government also used family pressure to break open its insider trading case against Sam Waksal, the former head of biotechnology company ImClone, another well-known white collar defendant.
Mr Waksal was accused in August 2002 of selling shares in his biotechnology company just before the Food and Drug Administration publicly announced that its promising anti-cancer drug Erbitux, would not be approved.
He ultimately pleaded guilty amid suggestions that prosecutors might make a case against his father and daughter for selling their own shares.
"The work of federal prosecutors is sometimes cruel and ugly," Mr Bebel said. "They're striking hard blows [against the Fastows], but they're not illegal."