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[slickmisc] Former Enron Chief Financial Officer
© 2002 Rich Martin
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I admit, I was surprised by Michael Kopper's confession of looting Enron with his boss, Fastow. If Kopper is telling the truth Fastow and his wife should also be posecuted to the full extent of the law. It makes a guy wonder if other execs were crooked. I'd also be curious as to why such wholesale looting wasn't deteced by Arthur Andersen. The scheme couldn't have been as transparent as this article infers if it got by AA undetected.
Rich Martin
Editor, Slick eZine
http://slickplus.spunge.org/list/
Former Enron Chief Financial Officer May Have to Plea Bargain to Protect Wife
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By Mary Flood and Tom Fowler, Houston Chronicle
Sep. 3--As Enron Task Force prosecutors close in on former Enron chief financial officer Andrew Fastow, his wife may also be caught in the net.
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Headlines for Week of Sep 2, 02
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Since Michael Kopper, Fastow's chief lieutenant, pleaded guilty to wire fraud and money laundering Aug. 21, prosecutors have frozen some financial accounts belonging to both the Fastows, claiming the millions of dollars in them were the proceeds of crime. The house they were building in River Oaks is also a target for seizure.
Legal experts say much of the pressure on Fastow springs from consideration of what could happen to his wife, Lea. Prosecutors commonly use the possibility of criminal charges against a spouse, partner or associate to pressure the other.
"Under normal circumstances the public may consider that type of leverage reprehensible," said Jacob Frenkel, a former federal prosecutor and Securities and Exchange Commission lawyer who practices law in Washington, D.C. "But in this current market where the public is looking for blood, such common prosecutorial tactics used to leverage pleas would not likely be met with public derision."
Lawyers familiar with the case said they assume Kopper's plea bargain included an unspoken agreement concerning leniency for his domestic partner, William Dodson, who received some of the money from the partnerships Kopper said were used to loot Enron. The lawyers expect that Fastow has to be figuring how he can do the same thing.
"Fastow should be working furiously right now to work out some agreements and a deal to protect his wife," said an attorney close to the Enron case. "He'd be an idiot if he wasn't."
Most sources say they assume that if Fastow works out a plea bargain it will have to include substantial prison time. With two minor children to consider, how prosecutors treat Lea Fastow becomes critical.
"It's not a 100 percent chance prosecutors would include the spouse in a deal here but something close to that," said Dan Hedges, the former U.S. attorney for Houston. "They'll probably offer Fastow a long sentence and say it's a good deal because they will let his wife walk."
Lea Fastow, 40, cannot claim to lack financial savvy. She comes from the prominent Weingarten family, has an MBA from Northwestern University, worked at a Chicago bank with her husband before they came to Enron in 1990 and left Enron as an assistant treasurer in 1997.
Her name is on the bank accounts targeted by investigators, she has been identified as a participant in a number of partnerships, and, as an Enron finance employee, clearly had knowledge of how many of the transactions worked.
The charge in the Kopper case notes that she was paid $54,000 to act as administrative assistant to Chewco, one of the three partnerships Kopper and the government said were run to enrich Kopper, Fastow and others.
"She went to a top-flight business school," the Kellogg School of Management at Northwestern University, said Hilder. "It would be hard for her to plead ignorance."
If Lea Fastow appears to be somewhat culpable in any of the charges, there's no way prosecutors could look the other way, said Hilder. "But these prosecutors won't put the pinch on her unless they have the clear evidence to do so."
Gordon Andrew, a spokesman for Fastow, declined comment for this story.
Lea Fastow also served as head of Enron's art committee. She organized monthly meetings, prepared slide presentations, traveled to see pieces and did secretarial work for the committee, which was given $20 million to spend on adorning the company buildings.
It is possible that Lea Fastow could be a witness. If her husband fails to make a deal, she could at least choose to testify against him under some circumstances.
A federal marital privilege generally prohibits a spouse from testifying about communications between husband and wife -- if it occurred during the marriage. This holds even if the couple is later divorced.
But the privilege is not absolute. It does not apply, for example, when a third person is present or when one spouse is the victim of a crime committed by the other.
Susan Crump, a professor at South Texas College of Law who has studied spousal privilege, said that though the idea is to "shelter marital communication and create a free zone," there are limits to the privilege. "If a wife conspired with her husband or enabled him in a crime, there is an exception," Crump said.
The law states that if discussions between husband and wife are part of a crime, such as a conspiracy to commit fraud, the couple does not have the protection of marital privilege for communication about the conspiracy. In a situation where both participated in a conspiracy, even if only one spouse is charged, the other, if given immunity, might choose to testify even about marital communication.
Crump said there is some legal precedent for compelling one spouse to testify against another when both participated in a crime. But the federal courts do not uniformly allow the government to force such testimony.
When the testimony in question is not about marital communication, but rather about one partner witnessing the acts of another, the rules are also different.
Should, for example, an innocent wife witness her husband packaging illegal drugs for sale, she could choose to testify about it, despite an objection by her husband.
The Fastows' situation is different in several ways from that of Kopper and domestic partner Dodson. "Dodson and Kopper could be compelled to testify against each other since they don't share the same spousal privilege the Fastows have," Hilder said.
And unlike Lea Fastow, Dodson was not an Enron employee, and thus has somewhat less legal exposure for his role as an investor in some of the partnerships.
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To see more of the Houston Chronicle, or to subscribe to the newspaper, go to http://www.HoustonChronicle.com
(c) 2002, Houston Chronicle. Distributed by Knight Ridder/Tribune Business News. ENRNQ,
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