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Too Little Too Late...Fastow and Enron

The Wall street journal announces that a federal judge tentatively accepted a plea agreement Thursday for the wife of former Enron Corp. finance chief Andrew S. Fastow, a move that could lead to a plea from Mr. Fastow and possibly his cooperation with prosecutors investigating the energy company's collapse. Fastow would get only 5 months in prison and have to pay up to $20 million of the $30 million prosecutors say he stole. Is this justice for all the investors who lost their life savings?

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Reader Comments (2)

According to VOA News and Reuters, dated 1/9/2004, Mrs. Lea Fastow, a former assistant treasurer at Enron, has failed to accept a plea bargain deal before being sentenced on charges of fraud, money laundering and tax evasion that could send her to prison for as long as 37 years. Her original deal calling for a five-month sentence had been rejected as being too lenient. Federal prosecutors are also in talks with Mrs. Fastow's husband, Andrew Fastow (the former financial mastermind of Enron who faces 98 charges for his role in the complex financial deals that hid debt in offshore subsidiaries and special purpose entities, for his participation in artificially boosting Enron's profits and misappropriating corporate funds) who had agreed to a 10-year prison sentence and a $20 million payment to settle civil charges by the U.S. Securities and Exchange Commission. His plea bargain is contingent on the government reaching a suitable agreement with his wife. The former CFO's cooperation with prosecutors could also net indictments of former Enron Corp. Chairman Ken Lay (who also served as Bush's key advisor on energy policy) and former Chief Executive Jeff Skilling.

Enron disaster is a tribute to American capitalism. Despite the PR pushing for sentences for corporate crimes, it’s not going to make much of a dent in corporate thievery because so few of the perpetrators will ever face criminal prosecution. For a corrupt executive crunching the numbers, the odds will still justify the crime. Irresponsible corporate executives have been allowed to run wild for too long. Alarming statistics: …very few of American corporate crooks will end up in jail. In the last 10 years, SEC turned 609 of its most offensive offenders over to the Justice Department for potential criminal prosecution. Of those, only 187 ended up facing criminal charges. And of those, only 87 went to jail. (Business Journal: 1/2004) Real, not watered-down reforms are needed from our leaders in Washington D.C. And for real changes to occur, pressure has to come from the media, the government and the public. In the meantime, in corporate America crime pays. Incentive-based pay produces an incentive to earn a profit, even to produce it out of thin air or by gross overstatement of profits. Sadly, Enron is not an isolated case. Enron created 881 offshore subsidiaries and paid no taxes in 4 of the last 5 years of its existence. Well, failures are paid as well as successes.

January 9, 2004 | Unregistered Commenterjw
Jeffrey Skilling, the top-ranking former Enron executive, turned himself in at the Houston FBI on Feb. 19th, 2004.

He was finally charged with fraud, insider trading, misleading investors about the company's earnings and other crimes. Skilling posted a $5 million dollar bond with a cashier's check.

If convicted of all counts, Skilling faces up to 325 years in prison and more than $80 million in fines.

The indictment names Skilling in 35 counts - ten of them accusing of insider trading that generated $62.6 million from Enron stock (sold as high as $87/share and as low as $31/share)from April 2000 through September 2001.

Suprisingly, Skilling didn't invoked his Fifth Amendment rights and had cooperated fully with investigators re: Enron collapse. Skilling reported directly to Enron's CEO and chairman, Kenneth Lay.

Will justice prevail? Hm...

February 19, 2004 | Unregistered CommenterJW

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