Fastow sentence reduced
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Fastow sentence reduced
KAI RYSSDAL: It was a big day today for corporate criminals. Former WorldCom CEO Bernie Ebbers surrendered himself to the Federal Correctional Institution in Oakdale, Louisiana this morning. The 65 year old Ebbers will be there for the next 25 years. He was convicted of plotting an 11 billion dollar accounting fraud at WorldCom. But denied being any part of it until the day his appeals ran out. Down in Houston there was a somewhat different story. Where a federal judge went easy on Andrew Fastow. Fastow was the chief finance officer at Enron. As part of his plea deal Fastow had agreed to serve ten years for his role in that company’s collapse. Today the judge reduced the sentence to just six years. As Marketplace’s Amy Scott found out, it pays to cooperate.
CHARLES PRESTWOOD: He got lucky. Oh, lord, yeah he did.
AMY SCOTT: Charles Prestwood was stunned when he got the news that Andrew Fastow would spend only half a dozen years in jail. Prestwood worked as an engineer at Enron and its predecessor for more than 33 years. He lost more than a million dollars in retirement savings when the company dissolved.
PRESTWOOD: Ma’am I tell you what I’d like to see, life with no parole.
Many legal experts had expected Fastow to get the full 10 years he’d accepted in his plea bargain. But today, his attorneys asked for leniency. Fastow cried as he told the court how he’d failed his family and friends, and would have to live with the shame for the rest of his life.
Even a government prosecutor spoke on Fastow’s behalf. Assistant U.S. Attorney John Hueston called Fastow’s cooperation a “key breakthrough” in the case against ex-CEOs Jeffrey Skilling and Kenneth Lay.
Dan Richman teaches law at Fordham University. He says “the changed man” argument is a staple at sentencings. But he says there may be something to it.
DAN RICHMAN: I don’t think it’s appropriate for the government to claim that somebody’s readiness to testify in exchange for deep sentencing discounts signifies some moral transformation. On the other hand, once one has signed up with Team America, one often is far more ready to make peace with society and one’s family than otherwise.
And yet many see Fastow as guiltier in the Enron fraud than the former CEOs he helped convict. Ken Lay died during the summer before he could be sentenced. Jeff Skilling, who’ll be sentenced next month, faces up to 30 years in prison. But Columbia University law professor John Coffee says it was Andy Fastow who orchestrated secret partnerships to disguise Enron’s financial troubles. He also pocketed about $45 million from the deals.
JOHN COFFEE: Of all the people in the Enron drama, Mr. Fastow was the only one who was lining his own pockets with self-dealing and that usually affects the sentence. Because he was stealing from Enron, as opposed to the others participating in an attempt to inflate Enron’s stock price.
It’s exactly because of Fastow’s involvement that he was so useful to the government. He’s also helping investors go after several banks he says helped Enron disguise its troubles. Fordham University’s Dan Richman says an irony of the justice system is that the guiltiest parties are the ones with the most information.
RICHMAN: If a prosecution is going to be brought successfully, it’s going to turn on information from insiders. These insiders have lot of baggage. They have real culpability. They are bad guys. And most of these people are testifying only because the government has them in its vices.
Whatever the motivation, U.S. District Judge Kenneth Hoyt said Fastow’s persecution since the Enron collapse and his family’s suffering called for mercy. Since Fastow has already forfeited $24 million, Hoyt did not impose a fine. He recommended Fastow serve his time in a minimum-security prison.
In New York, I’m Amy Scott for Marketplace.
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