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Enron's Fastow sentenced to six years

Former Enron executive Andrew Fastow leaves the federal courthouse in Houston, Texas, in chains on Tuesday after being sentenced to six years in prison. PHOTO: AP

The mastermind behind financial schemes that doomed Enron Corp, Andrew Fastow, was sentenced to six years in prison -- four years less than he had agreed to in a plea bargain -- by a judge who felt he deserved leniency.

Fastow, the former chief financial officer who cooperated with prosecutors in other cases related to Enron's 2001 implosion, had agreed to serve a maximum 10-year term when he pleaded guilty in 2004.

But the judge said he deserved a lighter sentence because Fastow has been persecuted after Enron's failure and because his family has suffered enough. Fastow's wife already has served a year for her role in the scandal.

"Prosecution is necessary, but persecution was not," US District Judge Kenneth Hoyt said. "These factors call for mercy."

Fastow's attorneys had asked for a lighter sentence, citing Fastow's admission of guilt and his help in the successful prosecution of Enron founder Kenneth Lay and the former chief executive, Jeffrey Skilling.

Rod Jordan, chairman of the Severed Enron Employee Coalition, said he was shocked and disappointed that Fastow was given a reduced sentence.

"I felt that anything less than 10 years was a slap in the face to the employees who suffered so much because of what Fastow did," Jordan said.

Hoyt "didn't have to stick with the agreement but I think he should have. Maybe the judge knows something I don't. Do the crime, do the time," he said.

Fastow was taken immediately into custody after the judge rejected his request to turn himself in later.

The judge did allow him to hug his wife, Lea, who was seated in the front row of the packed courtroom. They embraced for several seconds before he was taken away in handcuffs.

"I know I deserve punishment," said Fastow, who cried before the sentencing while telling the court he was sorry for what he had done. "I accept it without bitterness."

Fastow must serve all six years because there is no parole in the federal system. He also was sentenced to two years probation after his release from prison.

Enron, once the US' seventh-largest company, crumbled into bankruptcy proceedings in December 2001 after years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable. The collapse wiped out thousands of jobs, more than US$60 billion in market value and more than US$2 billion in pension plans.

Fastow had originally been indicted on 98 counts, including fraud, insider trading and money laundering.

He pleaded guilty to two counts of conspiracy, admitting to running various schemes to hide Enron debt and inflate profits while enriching himself. He also surrendered nearly US$30 million in cash and property.

At Lay and Skilling's trial, Fastow testified that his bosses were aware of fraudulent financial structures engineered by Fastow and his staff.

Skilling and Lay were convicted in May of conspiracy and fraud. Lay's attorneys are working to erase his convictions since his July 5 death from heart disease. Skilling is to be sentenced next month.

Lea Fastow pleaded guilty in 2004 to a misdemeanor tax crime and served a year in prison for helping her husband hide ill-gotten gains from his schemes.

In a 175-page court filing from Tuesday in the investor lawsuit, Fastow said Merrill Lynch, the US' largest brokerage, along with global banks Credit Suisse, Barclays PLC and Royal Bank of Scotland Group PLC helped Enron create financial structures that hid the company's true financial condition.

Fastow said he was committed to making up for his bad choices at Enron.

"I can't undo the harm I have caused," Fastow told the court, his voice cracking frequently during his speech. "I can try to repair the damage as best I can."

He apologized to his family and friends, many of whom could be heard weeping.

"I failed them," he said. "I am more than humbled by the mercy they have shown me when they had every right to reject me."

Fastow's sentence came on the same day former WorldCom Inc chief Bernard Ebbers reported to a federal prison in Louisiana to begin a 25-year sentence for his role in the US$11 billion accounting fraud that toppled the company he built from a tiny telecommunications firm to an industry leader.
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