Enron’s Lea Fastow Withdraws Plea as Sentencing Deal Fails

The wife of former Enron Corp. finance chief Andrew S. Fastow withdrew a guilty plea to a tax crime Wednesday after a federal judge rejected a sentencing deal that would have given her just five months in prison and five months home confinement.

The proposed sentence for Lea Fastow was part of a larger plea deal involving her husband’s criminal case, although prosecutors said her decision won’t affect his plea and cooperation agreement under which he faces up to 10 years in prison on two counts of conspiracy.

“His plea stands and he is still required to cooperate,” said Andrew Weissmann, head of the Justice Department’s Enron Task Force.

Now Lea Fastow, 42, is scheduled to go to trial June 2 on all six original charges -- four counts of filing false tax forms and two counts of conspiracy. If convicted, she could face a heftier prison sentence -- though probably not the maximum of 37 years.

“I am going to have to go back to the drawing board and think about this,” said her lead lawyer, Mike DeGeurin.

U.S. District Judge David Hittner and Lea Fastow’s lawyers had clashed before.

In January, plea negotiations stalled after Hittner refused to guarantee Lea Fastow a five-month prison sentence, even though prosecutors approved it. DeGeurin said the couple insisted on the sentence to ensure their 4- and 8-year-old sons had at least one parent at home. Hittner retained the right to alter Lea Fastow’s term.

Hittner said Wednesday that he wanted a sentence between 10 and 16 months for Lea Fastow.

A split sentence of five months in prison and five months’ home confinement would have fit the bottom of that range, but the plea agreement would have bound him to that split.

“Based upon my consideration and full reading of the pre-sentencing report, the court declines to voluntarily limit its role in the sentencing process,” Hittner said.

Lea Fastow had worked at Enron as an assistant treasurer before stepping down after her first child was born. Prosecutors said she played an “integral role” in securing her husband’s guilty plea and cooperation more than a year after he was indicted. The Fastows also relinquished nearly $24 million in cash and property to the government.

Hittner ordered that Lea Fastow’s trial be moved from Houston to Brownsville in far South Texas to ensure an impartial jury could be chosen.

Lea Fastow pleaded guilty Jan. 14 to a single count of filing a false tax form in January after on-again, off-again plea talks. She acknowledged helping her husband hide ill-gotten income from the government, including endorsing and depositing checks made out to her children.

Andrew Fastow pleaded guilty the same day, admitting that he orchestrated schemes to make Enron appear financially healthy while enriching himself. He agreed to cooperate in the prosecutors’ investigation of higher-ups in the collapse of the energy company in December 2001.

His cooperation so far has led to indictments against former Enron Chief Executive Jeffrey K. Skilling and former top accountant Richard A. Causey.