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Judge sentences former Enron CFO to 6 years
A judge granted leniency for Andrew Fastow who could have served 10 years behind bars for his role in Enron's demise.
September 26 2006: 2:32 PM EDT


HOUSTON (Reuters) -- Andrew Fastow, whose financial wizardry was exposed as fakery and theft in the Enron Corp. collapse, was sentenced to six years in prison Tuesday - four years less than provided in his 2004 plea agreement.

U.S. District Judge Ken Hoyt cited Fastow's cooperation with prosecutors, his desire to help victims suing to recover their losses and his visible remorse in imposing less than the 10 years to which Fastow had agreed in pleading guilty in 2004.


Former Enron CFO Andrew Fastow will serve 6 years for his part in the fraud that brought down Enron.

Noting that Fastow has forfeited more than $24 million and friends and family have turned over more than $5 million, the judge imposed no fine. But he ordered two years of supervised release after the sentence.

Fastow hugged his wife and surrendered immediately after the hearing. The judge rejected a request from lawyers for victims suing banks to recover Enron-related losses that Fastow be allowed to surrender Oct. 23, after giving a deposition in that case.

Legal experts said it was a surprisingly lenient ruling given Fastow's prominence as the vilified face of Enron's demise. And it was particularly unusual given that Judge Hoyt had been harsh in sentencing Fastow's former Enron colleague David Delainey.

Delainey, the former head of Enron's energy trading business, was sentenced to 2 1/2 years behind bars for insider trading last week. Delainey, a Canadian citizen, pled guilty to the charge in 2003 and agreed to testify against both Lay and Skilling during their trial.

But Jack Sylvia, securities litigator at law firm Mintz Levin, told CNNMoney.com that Fastow's testimony against former Enron CEO Jeffrey Skilling and Enron founder Kenneth Lay, as well as his cooperation with attorneys in several shareholder lawsuits tipped the scale in his favor.

"The closest thing you're going to come to showing remorse for your action is to disgorge the money you made and help to recover the funds that shareholders were deprived of," Sylvia said.

But Sylvia said the level of leniency was a surprise, given the fact that before his plea agreement, Fastow faced over 90 different charges that would have resulted in a much stiffer penalty had he gone to trial and been convicted.

Under his plea agreement in January 2004, he pled guilty to two counts of conspiracy and agreed to accept a 10-year prison sentence and forfeit $23.8 million to the federal government.

"Some might say that by cooperating, he already got a bargain," he said.

But Fastow's rabbi speaking to reporters after the sentencing said that Fastow was a changed man and the family had hoped that he would serve even less time.

"What you have seen is a man that innately had good values...a moral man who strayed," said Rabbi Shaul Osadchey. "This man had returned to the true person he actually is [and] hopefully will be in the future."

Fastow was considered one of the star witnesses in the trial against Skilling and Lay earlier this year. He testified that the win-at-all-cost culture within Enron promoted fast dealings.

"In the culture of corruption within the company that rewarded financial performance over economic value, I believe I was being a hero," he testified in March, although he said later regretted his illegal actions.

But Fastow said that Skilling was not only aware of some of the controversial partnerships used to artificially prop up Enron's performance but that he gave those deals his blessing.

And he said that Enron founder Kenneth Lay was aware of Enron's deteriorating financial condition and expected a big third-quarter loss in 2001, but kept telling the public and employees the company was "fundamentally strong."

Skilling was convicted of 19 counts of fraud, conspiracy, insider trading and lying to auditors. Lay was convicted of 6 counts of fraud and conspiracy related to Enron's collapse and four counts of bank fraud in a separate bench trial.

"There's no doubt that we could not have brought jurors inside the doors of Enron's executive suite without Andy Fastow, " John Hueston, lead prosecutor in the Enron trial, said to the reporters after the sentencing.

But Hueston added that Judge Hoyt's sentence "reflected mercy today."