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Lea Fastow plea deal scrapped
Former Enron executive changes plea to 'not guilty' after judge rejects agreement with prosecutors.
April 7, 2004: 6:06 PM EDT

NEW YORK (CNN/Money) - Ex-Enron executive Lea Fastow -- the wife of ex-chief financial officer Andrew Fastow -- changed her plea on filing a false tax return to "not guilty" Wednesday after the judge in her case rejected a plea agreement with federal prosecutors.

Lea Fastow changed her plea  
Lea Fastow changed her plea

Lea Fastow had cut a deal with prosecutors in January that would lessen her jail time and allow her husband to begin his sentence after her release so that their young children would not be without one of their parents.

But her deal -- which called for five months of prison time and five months of home confinement --was thrown out by Judge David Hittner in Houston. Hittner, speaking from the bench, said he saw no reason why Lea Fastow should serve less than the 10 to 16 months in prison recommended by probation officials, Reuters reported.

According to Reuters, Hittner angrily struck down objections from defense lawyers and prosecutors who wanted the plea bargain to go forward, silencing them repeatedly.

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Mike DeGuerin, Lea Fastow's attorney, comments on the judge's decision to reject a plea agreement with federal prosecutors.

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The judge 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.

Hittner told Lea Fastow, a former assistant treasurer at the energy trading company, that a new pre-sentencing report would be prepared that would likely recommend a prison term of 15 to 21 months on the charge of filing a false tax return.

He also moved the trial to Brownsville, Texas, from Houston, and set a jury selection date of June 2. Lea Fastow will face all six of the original charges filed against her.

Andrew Fastow pleaded guilty to wire and securities fraud charges the same day his wife entered her original plea and agreed to cooperate with the government in exchange for a recommended 10-year prison sentence. He will also forfeit $29 million under the arrangement.

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"The plea and cooperation agreement reached with Lea Fastow's husband, former Enron Chief Financial Officer Andrew Fastow, is not affected by today's rulings," Christopher A. Wray, Assistant Attorney General of the Criminal Division, said in a written statement.

Andrew Fastow admitted to engineering secret deals that hid billions of dollars of Enron debt and spruced up the company's financial statements, all while he pocketed tens of millions for himself. He is the highest-level defendant to be convicted in the ongoing case.

The remaining 96 criminal charges filed against Andrew Fastow could be dismissed if federal prosecutors determine he has fully cooperated with the investigation.

Related Links
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Indictment (U.S. v. Lea Fastow)
Original Plea Agreement

One legal expert says that Wednesday's events may temper Andrew Fastow's willingness to cooperate.

"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," attorney Robert Mintz told Reuters. Mintz runs a white collar defense practice at McCarter & English.

A month after Andrew Fastow pleaded guilty, the Justice Department's Enron Task Force used his testimony to charge former Enron Chief Executive Officer Jeff Skilling with conspiracy and multiple counts of fraud and insider-trading.

A spokesman for the Justice Department would not comment on possible charges against Enron's former chairman and longtime CEO Kenneth Lay.

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Enron was the nation's largest energy trader and a Wall Street darling before it unraveled in 2001 amid disclosures it had used off-the-books deals to inflate profits and hide billions of dollars of debt.

After restating earnings and cutting shareholder equity by $1.2 billion, the company filed for bankruptcy in December 2001 and has yet to emerge.

A total of 29 defendants have been charged in the investigation, including 20 former Enron executives, but only nine have been convicted, including Andrew Fastow. The Enron Task Force has restrained more than $95 million in proceeds derived from criminal activity, according to the Justice Department.  Top of page


-- Reuters contributed to this story




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.