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Plea Deal With Fastows Withers

From Reuters

A federal judge Friday ordered the trial of former Enron Corp. Assistant Treasurer Lea Fastow to proceed after a plea bargain package with the government fell apart.

The decision is a setback for federal prosecutors, who were counting on a plea agreement with Lea Fastow in order to move forward with a potential guilty plea by her husband, former Chief Financial Officer Andrew S. Fastow.

Defense lawyers held out hope that a deal still could be reached after a deadline of midday Friday passed without an agreement. The deadline had been imposed by U.S. District Judge David Hittner for agreement on his modifications to a deal that called for Lea Fastow to plead guilty to one count of tax evasion.

“The government and the defense lawyers are working over the weekend in hopes of resolving this case,” said Mike DeGeurin, Lea Fastow’s lawyer.

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Hittner, in a court filing Friday, ordered jury selection to proceed for a trial, which is scheduled to begin Feb. 10. Lea Fastow faces six criminal counts of false tax reporting, fraud and money laundering that could send her to prison for as long as 37 years.

Federal prosecutors are targeting Andrew Fastow in their two-year probe of accounting fraud and bogus energy trading at Enron. His cooperation with prosecutors could net indictments of his former bosses, former Chairman Kenneth L. Lay and former Chief Executive Jeffrey K. Skilling.

But an Andrew Fastow plea deal hinged on his wife reaching an agreement with prosecutors first. The Fastows want to avoid having their potential prison sentences overlap because of their two small children.

DeGeurin said Hittner’s refusal to approve a five-month prison sentence in the plea deal for his client remained the main issue. The judge had said he would take two months to determine sentencing in the case.

Lea Fastow still could agree to a plea bargain at any point in the proceedings before a verdict is issued.

Sources have said Andrew Fastow’s potential plea agreement included a 10-year prison sentence and a $20-million payment to settle civil charges by the Securities and Exchange Commission.

He faces 98 charges for his alleged role in the complex financial deals that hid debt, artificially boosted Enron’s profit and siphoned millions of dollars into off-the-books partnerships he controlled. His trial is scheduled to begin in April.


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