HOUSTON – The wife of former Enron Corp. (search) Chief Financial Officer Andrew Fastow (search) pleaded guilty to a misdemeanor tax charge and was given the maximum one-year prison sentence, culminating a critical plea bargain that propelled the Enron investigation forward.
Lea Fastow (search), a former Enron assistant treasurer, entered her plea Thursday before U.S. District Judge David Hittner in a deal that forestalled a trial neither the prosecution nor defense wanted.
Hittner gave Fastow, a first-time offender, a year in prison and another year of supervised release. Prosecutors later said its her family received from her husband's secretive partnerships.
"I've made errors in judgment I will always regret. I didn't understand the impact they would have on my family and friends," Fastow said in court. "I only intend to do right from now on."
It was the second time Fastow had gone before Hittner to agree to a plea bargain. The first one collapsed April 7 after Hittner refused to stick with a five-month prison term prosecutors recommended and she pulled out of the deal.
Prosecutors again recommended a sentence of five months in prison and five months' home confinement, but Hittner opted for the harshest penalty at his disposal.
He remarked that Fastow should have known what she was doing was wrong, especially since she has "an MBA from one of the finest business schools in the country," Northwestern University in suburban Chicago.
When Fastow reports to a minimum-security women's federal prison in Bryan, Texas, in the coming weeks, she will be the second former Enron executive to go to prison. Ben Glisan, a former Enron treasurer, became the first last year.
Dressed in a long black skirt and suit jacket, Fastow had no visible reaction when the sentence was imposed. But afterward, she cried and hugged several dozen supporters who crowded the courtroom. Her husband was noticeably absent.
Hittner did not fine Fastow, an heir to a family fortune made in the grocery and real estate businesses, because she and her husband forfeited $23.8 million under their plea bargains.
Hittner permitted Fastow to turn herself in to prison. That is likely to be in four to six weeks, according to defense attorney Mike DeGeurin.
During the sentencing, Hittner lambasted the government for dropping the six felony counts for a misdemeanor offense in the same category as stowing away on a U.S. government ship and damaging trees and fences on federal property.
"The Department of Justice's behavior might be seen as a blatant manipulation of the federal justice system and is of great concern to this court," he said.
Lea Fastow last year was charged with six felony conspiracy and tax counts by the U.S. Justice Department's Enron Task Force, as they pressured her husband to cooperate with their investigation into the bankrupt former energy giant.
It worked. Andrew and Lea Fastow on Jan. 14 agreed to linked plea bargains that were designed to ensure at least one of them was out of prison at all times to care for their young children.
Andrew Fastow pleaded guilty to separate charges and will serve a 10-year prison term after he finishes cooperating with prosecutors.
Enron Task Force Director Linda Lacewell justified the government's decision to drop the felony counts against Lea Fastow, saying she was the one who persuaded her husband to cooperate and forfeit the $23.8 million.
Fastow herself signed on as a cooperating witness about a week ago.
Lacewell added that Andrew Fastow's cooperation led to the indictments of former Chief Executive Jeff Skilling (search) and former accounting chief Richard Causey, both of whom have pleaded not guilty to multiple criminal counts in the company's 2001 collapse into a then-record bankruptcy.