Possible Snag In Enron Plea Deal

A possible plea bargain by a leading figure in the Enron scandal may be in jeopardy because of a federal judge's rejection of a plea deal involving his wife.

Former Enron finance chief Andrew S. Fastow, is negotiating a plea deal with prosecutors that could send him to prison and force him to pay $20 million, people close to the case said.

His plea talks were to continue Thursday, but a source familiar with the matter said a deal would be contingent upon whether a separate agreement also is reached for his wife, former Enron assistant treasurer Lea Fastow.

On Wednesday, U.S. District Judge David Hittner, who is presiding over Lea Fastow's case, rejected a plea deal that would send her to prison for five months, saying it did not allow him sufficient leeway on her sentence.

Attorneys could still revise that deal, but in the meantime, more than 200 potential jurors were summoned to a courthouse Thursday to answer questionnaires in preparation for her trial, scheduled to begin Feb. 10.

Andrew Fastow — whose deal would include an agreement to pay at least $20 million to the Securities and Exchange Commission — could nix a plea agreement for himself if no deal is reached for his wife, the source said, speaking on condition of anonymity.

U.S. District Judge Kenneth Hoyt would have to approve a deal for Andrew Fastow, which had included a 10-year prison sentence, sources close to the case said. If attorneys and judges agree on a deal, the former executive could appear in court to change his plea to guilty as early as Thursday, the sources said.

Andrew Fastow, 42, is charged with fraud, money laundering, insider trading and other charges. He is free on $5 million bond pending trial scheduled for April. If convicted, the maximum penalties for the charges against him include 20 years in prison for money laundering, 10 years for securities fraud and five years each on the mail fraud and conspiracy charges.

Lea Fastow, 42, is charged with six counts of conspiracy and filing false tax forms for allegedly participating in some of her husband's deals.

If a deal is made, Lea Fastow would apparently serve her term of some months first, allowing one parent to remain with the couple's two young children, reports CBS News Correspondent Anthony Mason.

Fastow would be the highest-ranking executive to plead guilty in the criminal investigation of Enron. The company's collapse into bankruptcy in late 2001 was the first in a series of scandals that rattled corporate America and shook investors' confidence in the stock market.

He allegedly masterminded a complex web of schemes that hid Enron's debt, inflated profits and allowed him to skim millions of dollars for himself, his family and selected friends and colleagues. Prosecutors say he reaped an estimated $30 million from the web of partnerships he set up.

Any deal with Fastow also could bring Enron's former top executives, Kenneth Lay and Jeffrey Skilling, closer to prosecution for the energy giant's downfall.

Neither Lay nor Skilling has been charged, and attorneys have not said whether Fastow is willing to cooperate in prosecuting them.

But plea deals often involve agreements to testify against others, and the potential of a Fastow plea deal raises the possibility that prosecutors are closer to bringing a case against Lay and Skilling.

When Andrew Fastow was indicted in October 2002, his lawyers said Skilling and Lay approved his work. Skilling and Lay both maintain their innocence in Enron's demise.

"The questions are: what will the Fastows deliver in return for a deal? And what benefit will they get from the deal?" says CBSNews.com Legal Analyst Andrew Cohen. "If you are Jeffrey Skilling or Ken Lay this is ominous news, not because it necessarily means there will soon be charges against them but because the Fastows represented for a long time a very important line of defense."

Authorities also were preparing criminal charges against Enron's former chief accountant, Richard A. Causey, but backed off plans for him to surrender as early as Thursday, sources with knowledge of the matter told The Associated Press on condition of anonymity. Causey could surrender Friday instead, the sources said.

The exact nature of a complaint against Causey was not immediately clear.

Causey, 43, was fired Feb. 14, 2002, after a board of directors report noted his failure to properly monitor a partnership that became a focal point of the fraud investigation. The partnership, called LJM, was devised by Andrew Fastow, and prosecutors say it was used to conduct sham transactions to fraudulently improve Enron's books and enrich Fastow and others.

Causey's lawyer, Reid Weingarten, did not return calls.