HOUSTON -- Former Enron Corp. finance chief Andrew Fastow is negotiating a plea bargain that could send the high-powered executive to prison for his role in the accounting scandal that brought down the energy company, sources close to the case said yesterday.
However, another source familiar with the matter said a potential agreement for Fastow to pay at least $20 million to the Securities and Exchange Commission and his plea bargain are contingent upon whether a separate plea deal is reached for his wife, Lea, who rose to the rank of assistant treasurer at Enron before quitting in 1997.
US District Judge David Hittner, who is presiding over Lea Fastow's case, yesterday rejected a plea deal that would have called for her to serve five months in prison. The judge said the deal was too binding and he wanted more leeway on her sentence.
Andrew Fastow's plea deal, if finalized, would go before US District Judge Kenneth Hoyt.
Attorneys on both sides also could revise a proposed deal for Lea Fastow to propose to Hittner, but 250 jurors remain scheduled to be at the federal courthouse in Houston this morning to fill out questionnaires to see whether they are fit to serve as jurors in her Feb. 10 trial.
The Fastows have two young children. In November, plea talks with Lea Fastow, which also would have called for a five-month sentence, broke down shortly before Hittner denied her request to move her trial outside of Houston. If that deal had been finalized, she could have gone immediately to prison and been released by the time her husband's April trial began.
Authorities also were preparing criminal charges against Enron's former chief accountant, Richard A. Causey, but backed off plans for him to surrender as early as today, sources with knowledge of the matter told the Associated Press, speaking on condition of anonymity. Causey could surrender tomorrow instead, the sources said.
The exact nature of a complaint against Causey was not immediately clear. He was assigned to review all Enron transactions with a partnership called LJM that was controlled by Fastow. Prosecutors say LJM was used to conduct sham transactions to fraudulently improve Enron's books and enrich Fastow and others.
The 98-count indictment against Fastow says Causey and others had a secret side agreement with Fastow that LJM would not lose money in its dealings with Enron.
If attorneys and judges agree on the proposed plea deal with Fastow, the former executive could appear in court to change his innocent plea to guilty as early as yesterday, the sources said.
Fastow would be the highest-ranking executive to plead guilty in the criminal investigation of Enron. The company's collapse into bankruptcy in late 2001 was the first in a series of scandals that rattled corporate America and shook investors' confidence in the stock market.
Fastow allegedly masterminded a complex web of schemes that hid Enron's debt, inflated profits and allowed him to skim millions of dollars for himself, his family and selected friends and colleagues. Prosecutors say Fastow reaped an estimated $30 million from the Byzantine web of partnerships he set up.
The potential plea deal raises the possibility that prosecutors are closer to bringing a case against Enron's former top executives, Kenneth Lay and Jeffrey Skilling. Plea deals often involve agreements to testify against others, but there was no immediate indication whether that was happening in this case.
When Fastow was indicted in October 2002, his lawyers said Skilling and Lay approved his work.
Skilling and Lay have not been charged and both maintain their innocence in the implosion that wiped out billions of investor and employee savings and resulted in thousands of layoffs and dozens of lawsuits.