By now, the heat Andrew Fastow is feeling is probably more than just the scorching temperatures that bake Houston every August.
How the former Enron CFO reacts to that heat is anybody’s guess.
Last week, Michael Kopper, the former managing director of Enron Global Finance, pled guilty to two counts of conspiracy. Kopper’s cooperation with the Justice Department has provided a wealth of detail about the financial machinations at Enron, and will likely make it easier for federal prosecutors to lean on Fastow.
As The Houston Chronicle reported on Sunday, the papers filed with the court last week make it clear that Fastow is the next obvious target of government prosecutors. The question The Chronicle asked is whether the former Enron finance chief still has enough maneuvering room to cut a deal — or if the DOJ simply moves forward with an indictment and ignores any bargaining attempts by Fastow’s lawyers.
Beyond the court filings, the profiles of Kopper that have been published in the past few days describe him as being Fastow’s protege. Inside Enron, he was known as one of “Andy’s Boys,” and someone who should not be crossed. Other Enron employees were reportedly kept ignorant of the inner workings of many of the deals that Kopper and Fastow collaborated on. The knowledge Kopper gained from that close relationship could prove very valuable to prosecutors.
Already, Kopper has reportedly provided the DOJ with a great deal of information about Fastow’s off-balance sheet partnerships.
The problems for Fastow don’t end there, however. While never identified by name in last week’s court filings (referred to only as “The Enron CFO”), he is the only high-ranking Enron official cited in the papers. In fact, the papers make no mention of his two bosses, former Enron CEO Ken Lay and former President Jeffrey Skilling.
It’s possible prosecutors will eventually go after Lay and Skilling. Indeed, Fastow’s cooperation might help government attorneys build a case against the two.
Last week, the Justice Department appeared to be turning up the flame on the former Enron finance chief. On Wednesday, prosecutors identified at least $14 million of Fastow’s assets they want to seize. Mostly, those assets consist of bank and brokerage accounts, and Fastow’s $2.6 million Houston home.
Then on Thursday, the judge in the case ordered at least some of those accounts frozen. That came after it was learned that Fastow’s brother was apparently trying to move millions of dollars out of one of the accounts.
As several lawyers told The Chronicle last week, freezing the bank accounts of a criminal suspect is the type of tactic usually reserved for drug dealers and gangsters, not chief financial officers at Fortune 500 companies.
On Sunday, The Chronicle also reported that prosecutors are intent on getting testimony from at least one of the three former bankers from National Westminster Bank plc, who allegedly passed $7.2 million of NatWest’s money back to Kopper and Fastow. The three were indicted for that fraud in June. If one of them agrees to testify for the prosecution, there will be at least one source of corroborating testimony for Kopper’s version of events.
What’s more, The New York Post reported on Friday that prosecutors are targeting Fastow’s wife Lea as a way to get at the onetime Enron CFO. The two met while both were studying for their MBAs at Northwestern University, worked together at Continental Bank in Chicago, and then moved to Houston together in 1990 to work at Enron. Lea was an assistant treasurer when she left the company in 1997 to raise the couple’s two sons.
One of the things that caught federal prosecutors’ attention was the $54,000 payment Lea Fastow apparently received as an administrative assistant to one of the partnerships, Chewco.
In addition, the Associated Press reported on Sunday that Fastow family friends, who for months have been very eager to support him in the press, have suddenly turned silent. That may not be an indication of a lack of support, however. Instead, it may be the result of Fastow’s lawyers asking his friends to remain silent so they don’t inadvertently provide evidence that prosecutors can use.
And right now, it would seem Andrew Fastow can use all the help he can get.