FORMER ENRON ASSISTANT TREASURER LEA FASTOW
SENTENCED TO 12 MONTHS IN JAIL

Fastow Agrees To Cooperate With Government

WASHINGTON, D.C. - Deputy Attorney General James B. Comey, Assistant Attorney General Christopher A. Wray of the Criminal Division, Enron Task Force Director Andrew Weissmann and FBI Director Robert Mueller announced today that Lea W. Fastow was sentenced today in Houston, Texas, to one year in jail.

Fastow, a former Enron Assistant Treasurer and the wife of former Enron Chief Financial Officer Andrew Fastow, was sentenced today to one year in jail and a one-year period of supervised release to follow her term of incarceration. Fastow had pleaded guilty to one count of filing a false federal income tax return, a misdemeanor that carried a maximum sentence of one year’s incarceration. Under applicable rules, Lea Fastow will not be eligible to receive “good time” credit from the Bureau of Prisons, which reduces a jail term by approximately 15 percent and is applicable to felony sentences over one year; it is not available to misdemeanor offenses. Mrs. Fastow also relinquished any claim to almost $30 million in forfeited funds seized by the Enron Task Force in May 2003 for the benefit of victims of fraud at Enron.

The government agreed to accept a misdemeanor plea from Fastow as part of a cooperation agreement. The agreement requires Lea Fastow to provide truthful assistance to the government’s ongoing investigation into Enron. Under this agreement, Lea Fastow at a minimum will serve the year in jail imposed by the court today. The felony charges previously filed against Fastow were dismissed pursuant to the agreement. If she violates the agreement, she can be charged with any and all crimes she committed, and her plea and sentence cannot be withdrawn. Pursuant to the agreement, Fastow will not be eligible for any reduction in the one-year sentence imposed today, irrespective of her cooperation.

Fastow is expected to surrender after the Bureau of Prisons determines the facility to which she will be designated.

Fastow entered her guilty plea today before Judge David Hittner of the U.S. District Court in the Southern District of Texas. Under the applicable U.S. Sentencing Guidelines, Fastow faced an estimated range of imprisonment of 10 to 16 months. The parties recommended to the Court a sentence at the low end of this range, which allowed the Court to impose a “split” sentence of five months incarceration and five months of home confinement as a condition of supervised release. The court rejected that joint recommendation, but the one-year sentence imposed today is within the guideline range.

As part of her plea agreement, Fastow admitted that from December 1997 through 2000, she failed to report as income a total of $204,444.34 in proceeds that her family received from an Enron “special purpose entity” known as RADR. Fastow admitted that she knew that this money was derived from RADR and that her husband had been prohibited from investing in RADR. To hide the fact that it was taxable income, the money was disguised as “gifts” to the Fastow family, through checks made payable to Fastow, her husband Andrew and their children. To avoid triggering the law's requirement that gifts in excess of $10,000 to another person be reported to the Internal Revenue Service, most of these checks were made payable in amounts of $10,000 or less and in the names of different members of the Fastow family. Although she knew that the payments represented income that should have been reported on their joint federal income tax returns, Fastow concealed the income from the Fastows’ accountant and intentionally failed to report the income on their joint federal income tax returns for the years 1997 through 2000. Fastow admitted that she signed these income tax returns under penalty of perjury and caused them to be filed with the Internal Revenue Service. Fastow’s crime involved self-dealing, with her husband and others, and was not part of the crimes to which her husband and others have pleaded guilty involving the manipulation of Enron's books.

Andrew Fastow pleaded guilty in January 2004 to two counts of conspiracy to commit securities and wire fraud and is cooperating fully with the Enron investigation. Under the terms of a plea agreement, Fastow will serve a 10-year prison sentence and forfeit more than $29 million.

The investigation into Enron's collapse is being conducted by the Enron Task Force, a team of federal prosecutors supervised by the Justice Department's Criminal Division and agents from the FBI and the IRS Criminal Investigations Division. The Task Force also has coordinated with an received considerable assistance from the Securities and Exchange Commission. The Enron Task Force is part of President Bush's Corporate Fraud Task Force, created in July 2002 to investigate allegations of fraud and corruption at U.S. corporations.

Twenty-nine individuals have been charged to date, including 20 former Enron executives. Ten people and Arthur Andersen LLP have been convicted as a result of the ongoing investigation and, with today's sentence, two have been sentenced to jail. In addition, the Enron Task Force has restrained more than $150 million in proceeds derived from criminal activity. The Task Force investigation is continuing.

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