Enron: One Step Closer to Ken Lay By Andrew L. Jaffee, January 14, 2004	Home   Search   Forum   Terms

Two ex-Enron employees are expected to plead guilty tomorrow for their roles in causing that company's implosion in 2001. Former CFO Andrew S. Fastow and his wife Lea reached the plea agreement today with prosecutors. It is hoped that the deal will help prosecutors finally get a hold of Enron's alleged chief scoundrel, Ken Lay. (I love that word... "alleged".)

Back in the frothy days of the 1990's stock market buddle, some members of Enron's management allegedly engaged in shady deals to make their company's financial condition look better than it was, pump up the stock price, and profit from the pain of their shareholders and employees. Enron's stock hit $90.00/share in 2000. It is now worthless ($0.00/share). I've recently written about how justice was catching up with some of Enron's scoundrels. Ken Lay has until now evaded the long arm of the law -- well, almost -- but I doubt he will for much longer. According to FOXNews.com,

"Unquestionably, this is the breakthrough that the government has been pursuing" to possibly lead them to Lay and Skilling, said Robert Mintz, a former federal prosecutor and an expert in white-collar crime.

"There is nobody besides Fastow who can make this case for the government and that's why they have been pursuing him for so long and so aggressively." ...

Andrew Fastow, who was indicted in October 2002, is charged with 98 counts of insider trading, fraud, money laundering, tax violations and others for allegedly running a complicated web of partnerships and financing methods that hid debt, inflated profits and funneled millions of dollars to him, his family, friends and colleagues.

His wife is charged with six counts of conspiracy and filing false tax forms. She is accused of helping her husband make one partnership appear independent of Enron so the company would continue receiving related tax benefits.

Michael Kopper, Fastow's one-time top lieutenant at Enron, led prosecutors to Fastow when he pleaded guilty to conspiracy in August 2002. Fastow was indicted two months later, and his wife was indicted last May.

To shorten their sentences, the Fastows probably agreed to provide information that will implicate Ken Lay in the Enron scandal. In other words, they're going to rat on their former boss. We'll see justice for the burst of the economic bubble. Keep in mind that the U.S. has thousands of public and private companies. There were scandals at only few of them. The sky is not falling. The world is not coming to an end. Economies are like the weather -- they run in cycles.