HOUSTON, (AP) -Former Enron Corp. financial whiz Andrew Fastow found a sympathetic ear as he pleaded for leniency while facing a 10-year prison term for his role in the fallen energy company’s bankruptcy.
Fastow, the ex-chief financial officer who cooperated with prosecutors in other cases related to Enron’s 2001 implosion, had agreed to serve a maximum 10-year term when he pleaded guilty in 2004.
But U.S. District Judge Kenneth Hoyt instead sentenced him on Tuesday to six years, saying Fastow had already paid a heavy price for his actions.
“Prosecution is necessary, but persecution was not,” Hoyt said.
Hoyt justified the lighter sentence by saying Fastow had suffered public ridicule for Enron’s failure and that his family has suffered enough. Fastow’s wife, Lea, served a year for her role in the scandal.
“These factors call for mercy,” Hoyt said.
Fastow’s lawyers had asked for leniency, saying their client had admitted his mistakes and tried to correct them.
They as well as prosecutors praised Fastow’s help in the successful prosecution of Enron founder Kenneth Lay and the former chief executive, Jeffrey Skilling.
“Both the court and prosecution are sending a message in future cases that cooperation has the potential to get you something,” Jack Sylvia, a Boston-based attorney with the firm of Mintz Levin, said of Fastow’s reduced sentence.
After the sentencing, Fastow was taken immediately into custody. The judge rejected his request to turn himself in later.
Fastow was allowed to hug his wife, who was seated in the front row of the packed courtroom. They embraced for several seconds before he was taken away in handcuffs.
“I know I deserve punishment. I accept the punishment you will give to me. I accept it without bitterness,” a tearful Fastow told Hoyt.
Fastow must serve all six years because there is no parole in the federal system. He also was sentenced to two years probation after his release.
Rod Jordan, chairman of the Severed Enron Employee Coalition, was disappointed with the sentence.
“I felt that anything less than 10 years was a slap in the face to the employees who suffered so much because of what Fastow did,” he said.
Enron, once the nation’s seventh-largest company, crumbled into bankruptcy proceedings in December 2001 after years of accounting tricks could no longer hide billions in debt or make failing ventures appear profitable. The collapse wiped out thousands of jobs, more than $60 billion in market value and more than $2 billion in pension plans.
Fastow was originally indicted on 98 counts, including fraud, insider trading and money laundering. He pleaded guilty to two counts of conspiracy, admitting to running various schemes to hide Enron debt and inflate profits while enriching himself. He also surrendered nearly $30 million in cash and property.
At Lay and Skilling’s trial, Fastow testified his bosses were aware of fraudulent financial structures engineered by Fastow and his staff. Skilling and Lay were convicted in May of conspiracy and fraud. Lay’s attorneys are working to erase his convictions since his July 5 death from heart disease. Skilling is to be sentenced next month. Lay died of heart disease July 5.
Fastow’s wife pleaded guilty in 2004 to a misdemeanor tax crime and served a year in prison for helping him hide ill-gotten gains from his schemes.
During his brief speech before sentencing, Fastow said he was ashamed for what he had done and had tried to compensate by helping prosecutors and attorneys for investors and employees who had lost money.
“To all of the victims, I apologize to you,” he said, turning toward four people who had been allowed to speak by Hoyt and give their views on Fastow’s sentencing. “I am ashamed of what I did.”
Three of these individuals were attorneys for investors who lost money. They all recommended a lighter sentence, saying Fastow had been helpful in their efforts.
In a 175-page court filing from Tuesday in the investor lawsuit, Fastow said Merrill Lynch, the nation’s largest brokerage, along with global banks Credit Suisse, Barclays PLC and Royal Bank of Scotland Group PLC helped Enron create financial structures that hid the company’s true financial condition.
Fastow said he was committed to making up for his bad choices at Enron.
“I can’t undo the harm I have caused,” said Fastow, whose voice cracked frequently during his speech. “I can try to repair the damage as best I can.”
He apologized to his family and friends, many of whom were weeping.
“I failed them,” he said. “I am more than humbled by the mercy they have shown me when they had every right to reject me.”
The only Enron investor who spoke, Brian Durbin, said he was a small-time investor who considered Enron a “no-brainer” because of the company’s solid reputation.
“When theft and fraud occur within a company, what chance do investors have?” he said.
One of the prosecutors on the Enron Task Force, John Hueston, said Fastow had changed for the better.
“I witnessed a man truly repentant,” Hueston said.
Defense attorney John Keker said during the hearing that Fastow had been unfairly made the scapegoat of the scandal.
“He is not just remorseful. He is not just sorry. He is doing something to try and rectify the situation he was a part of,” Keker said.
Fastow’s sentence came on the same day former WorldCom Inc. chief Bernard Ebbers reported to a federal prison in Louisiana to begin a 25-year sentence for his role in the $11 billion accounting fraud that toppled the company he built from a tiny telecommunications firm to an industry leader.