Wednesday, January 14, 2009

Today in Plea Bargaining History - The Andrew Fastow Guilty Plea

Five years ago today, Andrew Fastow pleaded guilty to participation in crimes that contributed to the collapse of Enron. In his plea, Fastow admitted to disguising Enron's deteriorating financial health and engaging in a scheme to defraud the company of millions of dollars for his own benefit. Fastow also entered into an agreement to surrender more than $23 million to the SEC to settle related civil charges.

Fastow's plea agreement was the beginning of the end for the Enron conspirators. On January 22, 2004, Richard Causey, former Enron Chief Accounting Officer, was charged with being "a principal architect" of a scheme to mislead investors. On February 19, Jeff Skilling, former Enron CEO, was indicted on 35 counts of fraud, insider trading, and conspiracy. Finally, on July 18, Ken Lay, Enron founder and former CEO, was indicted on eleven counts of conspiracy, making misleading statements, wire fraud, bank fraud, and securities fraud.

In early 2005, Causey pleaded guilty and agreed to testify against Skilling and Lay. The trial began on January 30, 2006, and both Skilling and Lay were convicted on May 25.

Lay died prior to sentencing. Skilling was sentenced to 24 years and four months in prison. Recently, Skilling was ordered resentenced by the United States Court of Appeals for the Fifth Circuit due to a sentencing guidelines calculation error. Skilling is awaiting word on his new sentence, which some predict could include a more than modest reduction.

While Fastow's plea agreement called for Fastow to serve ten years in prison, his cooperation during the subsequent investigation and prosecutions was so extensive that he was eventually sentenced to only six years. He is serving his time at a federal facility in Colorado and is scheduled for release in 2011.

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