HOUSTON -- Former Enron finance chief Andrew S. Fastow and his wife, Lea, have agreed to plead guilty for their roles in a massive accounting scandal that brought down the energy giant in 2001, sources close to the investigation said last night.
The two sources, who spoke on condition of anonymity, said an impasse that developed last week over a judge's refusal to give Lea Fastow only a five-month prison sentence had been resolved.
Andrew Fastow will become the highest-ranking executive to plead guilty in the federal government's criminal investigation into the Enron collapse.
The Washington Post reported last night on its website that the plea agreement calls for Fastow to cooperate with prosecutors.
Getting information from Fastow was considered key to the government's efforts to develop cases against Enron's former top executives, Kenneth Lay and Jeffrey Skilling. Neither Lay nor Skilling has been charged; both maintain their innocence.
The Fastows were expected to enter their pleas today in federal court, according to the sources.
Lea Fastow is expected to plead guilty to a tax charge after her husband pleads guilty in a deal that involves a 10-year prison sentence and a fine of at least $20 million. It wasn't clear yesterday what crimes Andrew Fastow would plead guilty to.
Bryan Sierra, spokesman for the Justice Department, declined to comment.
Mike DeGeurin, Lea Fastow's lead attorney, and John Keker, her husband's lead attorney, didn't immediately return calls for comment. Fastow family spokesman Gordon Andrew also declined to comment.
Lawyers for the government and for Lea Fastow had been expected to appear before US District Judge David Hittner today for a routine hearing to discuss potential jurors in her criminal trial set for Feb. 10.
The Houston Chronicle first reported the Fastows' plea agreements in its online edition last night.
A plea deal with Lea Fastow, a former assistant treasurer at Enron, snagged after Hittner balked at a requirement that he sentence her to five months in prison for her alleged role in the accounting schemes. The judge insisted he retain the right to alter her sentence.
The issue threatened a proposed package of plea agreements for the Fastows, who have two young sons. Sources said no deal for Lea Fastow meant no deal for her husband, wiping out the possibility that his cooperation could help the Justice Department build cases against Lay and Skilling.
Under federal sentencing guidelines, Hittner is to consider a prison term of 10 months to 16 months for the tax charge, said Kirby Behre, a former federal prosecutor in Washington, D.C. The judge could depart from that range, and a 10-month sentence could be structured so that only half would be served in prison. US District Judge Kenneth Hoyt, who is presiding over Andrew Fastow's case, will accept his plea, sources said.
Andrew Fastow, who was indicted in October 2002, is charged with 98 counts of insider trading, fraud, money laundering, tax violations, and others for allegedly running a complicated web of partnerships and financing methods that hid debt, inflated profits and funneled millions of dollars to him, his family, and chosen friends and colleagues.
His wife is charged with six counts of conspiracy and filing false tax forms. She is accused of helping her husband to make one of those partnerships appear independent of Enron so the company would continue receiving tax benefits for wind farms after it bought a utility.
Michael Kopper, Fastow's one-time top lieutenant at Enron, led prosecutors to Fastow when he pleaded guilty to conspiracy in August 2002. Fastow was indicted two months later, and his wife was indicted in May 2003.
The day after Kopper's plea, a federal judge froze more than $23 million in bank and brokerage accounts held by the Fastows, their family foundation, his brother, several former Enron employees, and two holding companies. Also frozen is $3.9 million in proceeds from the 2002 sale of a three-story, 11,493-square-foot mansion the Fastows built in Houston.
Behre called a 10-year sentence for Andrew Fastow "excellent" given the millions of dollars involved in the fraud.