Andrew S. Fastow, the 40-year-old former CFO of Enron, is scheduled to be arraigned in Houston on Wednesday (Nov. 7) on 78 counts that accuse him of leading the effort to conceal the company’s losses and debts, as well as inflate the former energy merchant’s trading profits. The indictment lists six different crimes, with the following charges: 36 wire fraud; 36 money laundering; 2 conspiracy to commit wire fraud; 2 conspiracy to commit wire and securities fraud; 1 money laundering conspiracy; and 1 obstruction of justice.

Fastow is expected to plead not guilty, and a trial would be scheduled in 2003. The money laundering charges each carry jail sentences of 20 years; securities fraud convictions carry sentences of up to 10 years. The other charges carry maximum penalties of up to five years in prison. If he were to be convicted and punished to the maximum extent of the sentences, Fastow could receive a sentence for more than 100 years. However, federal sentencing is complex, and most likely, a guilty sentence would not be for the maximum under law, said legal experts. Fastow remained free on $5 million bond.

San Francisco attorney John W. Keker, who is representing Fastow, said, “These charges are full of sound and fury, but the truth about Enron has yet to be told. When that truth is told to a jury of 12 honest Americans, Andy Fastow will be set free.”

However, Enron Task Force prosecutor Andrew Weissmann said that the former CFO is not cooperating with the investigation. He said Fastow’s cooperation may come when he considers the possibility of a lengthy prison term. Also at stake for Fastow, said experts, is the possible involvement of his wife, Lea Fastow, who apparently received proceeds from the criminal acts. She holds a masters degree in business administration from Northwestern University, and had been assistant treasurer at Enron until 1997. Because of her background, Weissmann claimed that she would not be able to claim that she did not have any financial expertise about her husband’s personal transactions.

Former executive Michael Kopper, who worked in Enron’s global finance department under Fastow’s direction, already has pleaded guilty and is cooperating with authorities. He will be sentenced in April 2003. Also, Timothy Belden, an energy trader based in California, has pleaded guilty to manipulating the energy markets in California (see NGI, Oct. 21). The grand jury continues to meet secretly in Houston, and there was no word on whether other Enron executives, including former CEO Jeffrey Skilling or Chairman Kenneth Lay may be charged. Skilling had been Fastow’s boss.

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