Lea Fastow withdraws plea agreement; June trial set

HOUSTON -- The wife of former Enron finance chief Andrew Fastow backed out of a plea bargain Wednesday after a federal judge refused to go along with a sentence of five months in prison and five months of confinement at home.

The proposed sentence for Lea Fastow had been carefully worked out as part of a larger plea agreement involving her husband's criminal case. But prosecutors said her decision will not affect his part of the bargain, which calls for up to 10 years in prison for conspiracy.

"His plea stands and he is still required to cooperate," said Andrew Weissmann, head of the Justice Department's Enron Task Force.

Lea Fastow, 42, withdrew her guilty plea to a tax crime after U.S. District Judge David Hittner said he wanted a sentence of between 10 and 16 months. The judge did not specify whether he wanted a combination of prison and home confinement.

The Fastows had insisted on the five-month prison sentence to ensure that their sons, age 4 and 8, had at least one parent at home.

"I am going to have to go back to the drawing board and think about this," said Lea Fastow's attorney Mike DeGeurin. "I am a bit embarrassed for everyone who was there who witness this.

"The agreement to plead guilty and resolve all of these matters at once included an agreed sentence. It resolved a lot of matters," DeGeurin said. Now, "I don't know what is going to happen."

Lea Fastow is now scheduled to go to trial June 2 on all six original charges of conspiracy and filing false tax forms.

The charges carry up to 37 years in prison, but she would probably get far less if convicted.

The judge also ordered the trial moved from Houston to Brownsville in far South Texas to help ensure an impartial jury.

Andrew Fastow, 42, was not in the courtroom Wednesday. His attorneys did not immediately return calls for comment.

After on-again, off-again negotiations, Lea Fastow pleaded guilty Jan. 14 to filing a false tax form, acknowledging she helped her husband hide ill-gotten income. But the judge refused at the time to guarantee her the sentence agreed to by prosecutors. And she retained the right to withdraw her plea.

Andrew Fastow pleaded guilty the same day, admitting he orchestrated schemes to make Enron appear financially healthy while enriching himself. He also agreed to cooperate with prosecutors investigating higher-ups at Enron.

His cooperation so far has led to indictments against former Enron chief executive Jeffrey Skilling and former top accountant Richard Causey, and prosecutors have said his wife played an "integral role" in securing his guilty plea and cooperation.

While he cannot back out of his deal, he could face repercussions if he does not fully cooperate, said Kirby Behre, a former federal prosecutor.

Prosecutors could refuse to drop 96 other counts of fraud, money laundering, insider trading and other offenses unless they are satisfied with his help.

"He still has a huge incentive to cooperate fully, and that incentive is that he got an incredibly reduced exposure when he pleaded guilty and agreed to 10 years. He was facing 20 some-odd years," Behre said.

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Associated Press Writer Mark Babineck contributed to this report.