WASHINGTON – Andrew S. Fastow, the former chief financial officer (CFO) of Enron Corp., was sentenced to six years in prison for his role in the conspiracy that led to the collapse of Enron Corp. in 2002, Assistant Attorney General Alice S. Fisher announced today. Fastow was sentenced on two counts of conspiracy to commit securities and wire fraud before Judge Kenneth Hoyt at U.S. District Court in Houston, Texas.
Fastow pleaded guilty to two counts of conspiracy on Jan. 14, 2004. Under the terms of his plea agreement, Fastow agreed to cooperate fully with the government’s investigation and forfeit more than $20 million.
Fastow admitted that he and other members of Enron’s senior management conspired in wide-ranging schemes to fraudulently manipulate Enron’s publicly reported financial results. Fastow also admitted participating in schemes to enrich himself at the expense of the company and its shareholders. Specifically, Fastow admitted that he conspired with senior management to cause Enron to enter into improper transactions with the LJM entities, which were under Fastow’s control. He also admitted to engaging in self-dealing transactions to enrich himself and others in connection with the so-called “Southampton transaction,” which involved the $30 million buyout by Enron of an entity called LJM Swap Sub LP, which Fastow controlled. In engaging in these transactions, Mr. Fastow admitted that he violated his duty of loyalty and honest services to Enron’s shareholders.
Enron, once the nation’s seventh largest company with stock trading as high as $80 per share in August 1999, filed for bankruptcy protection on Dec. 2, 2001, and its stock became virtually worthless.
Former Enron Corp. executives Timothy Despain and David Delainey were sentenced earlier this month. Despain was sentenced on Sept. 15, 2006, to four years of probation and fined $10,000 on one count of conspiracy to commit securities fraud. Delainey was sentenced on Sept. 18, 2006, to 30 months in prison on one count of insider trading.
The ongoing investigation is being conducted by the Enron Task Force, a team of federal prosecutors supervised by the Justice Department’s Criminal Division and Special Agents from the FBI and Internal Revenue Service, Criminal Investigation. The Task Force also has coordinated with and 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. To date, the efforts of the Corporate Fraud Task Force have resulted in 1,063 convictions, including the convictions of 167 corporate presidents and chief executive officers, and 36 chief financial officers.