Dallas Morning News

Earlier this month, federal prosecutors worked out a plea bargain that allows Lea Fastow, wife of Andrew Fastow, the former chief financial officer at Enron, to serve just five months in prison. Her alleged crimes included four counts of filing false income tax statements, one count of conspiracy to commit wire fraud and one count of money laundering.

Her husband, who was the mastermind behind many of the accounting shenanigans at Enron, will serve 10 years in prison and forfeit about $29 million. Federal prosecutors had indicted him on nearly 100 federal counts.

The prosecutors like the deal because they avoid a long, complicated trial. They also apparently will get help in prosecuting other Enron executives. In announcing the plea bargain, Leslie Caldwell, the leader of the Justice Department’s Enron task force, called the prison terms for the Fastows a “very significant development.” Perhaps she is right. But for me, the deal looks like a forehead-slapping loss for the criminal justice system in America and a gigantic win for the Fastows.

The Fastows won on three different fronts: Their attorneys worked out a deal so that they don’t have to be in prison at the same time, allowing one of them to be with their young children while the other is incarcerated. Second, their sentences are nothing when compared to the prison terms meted out to other first-time offenders charged with federal crimes And, finally, despite their prison terms and fines, the Fastows still are going to be enormously rich. Indeed, the Fastows are laughing all the way to lockup.

Throughout the plea bargain negotiations, the Fastows’ lawyers made it clear that they wouldn’t accept any deal that called for both of them to be in prison at the same time. “She has two children at home … and five months works. Anything more than that doesn’t,” Fastow attorney Mike DeGeurin told reporters during the plea negotiations. “If Andy, her husband, has to go to jail at some time, we don’t want the children to be without parents.” Keeping families together is a good thing. But are federal prosecutors offering the same terms to poor and indigent offenders? If so, there can’t be too many examples.

As for sentencing, many press reports have said the five-month sentence for Mrs. Fastow is particularly harsh, given that she is a first-time offender. The problem with that logic is that while she gets five months, a first-time street-level drug dealer caught with just five grams of crack cocaine must serve a federally mandated minimum of five years. Meanwhile, Mr. Fastow gets 10 years, a sentence that doesn’t seem particularly harsh, given that he was the chief architect of the schemes that ultimately sank Enron, a company that once had a market capitalization of $70 billion. His misdeeds put thousands of people out of work and cost them their savings.

Several states now are moving to repeal mandatory drug sentencing laws because they are too harsh. Given the financial wreckage being caused by people like Mr. Fastow, perhaps Congress should pass legislation requiring mandatory sentences for white-collar criminals.

Notwithstanding his sentence, Mr. Fastow, 42, still is likely to be able to enjoy his ill-gotten gains. According to the Fastows’ own income tax returns, they made $2.1 million in 1998, the first year that Mr. Fastow started cooking the books at Enron. In 1999, when Mr. Fastow’s off-balance sheet deals started kicking in, their income was $9.1 million. In 2000, they made a whopping $48.5 million. The feds will take $29 million of that. But even with the federal fine, income taxes and lawyers’ fees, the Fastows still will have $10 million or so.

Federal prosecutors may be proud that they are sending the Fastows to prison. But from here, it looks as though the crooks who ran Enron still are gaming the system.


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