Last week Houston federal district court judge Kenneth Hoyt sentenced former Enron CFO Andy Fastow to six years’ imprisonment plus two years’ community service for his pleading guilty to conspiracy to commit wire fraud and securities fraud. Following Enron’s collapse Fastow faced a 98-count indictment that could have led to his imprisonment for 20 years. In 2004 Fastow made a plea agreement that contemplated he would serve ten years in exchange for his cooperation. I think Fastow deserves a longer sentence, a sentiment expressed in most of the news reports I’ve read. Here’s a sample:
- “How in the name of Enron did such a sleazy operator like Andy Fastow get off with only a six-year prison sentence?” Fastow got off too easy, Tennesean.com Sep-29-06
- “‘In my opinion Andy Fastow was the most culpable of all the Enron hooligans’ [criminal appeals lawyer Brian] Wice said in an interview outside the courthouse. ‘If anybody deserves the death sentence, it’s Andy Fastow. Given the sheer egregiousness of his conduct, I thought 10 years was a gift.'” Thom Weidlich and Laurel Brubaker Calkins, Fastow, Lead Architect of Enron Fraud, Gets Six Years, Bloomberg.com, Sep-26-06
- “[S]ome former Enron workers left jobless when the company crashed decried Hoyt’s decision. ‘He helped the government’s case, but he did it very reluctantly,’ said Rod Jordan, who heads a coalition of laid-off workers. ‘If he had cooperated sooner, his wife would have never spent a day in jail. He held out. He only did it when he had to to save himself.'” Kristen Hays and Tom Fowler, Some former Enron workers decry reducing 10-year deal, Houston Chronicle , Sep-27-06
Everything I’ve read about Enron’s collapse paints Andy Fastow as a bad guy. He engaged in brazen criminal conduct. He concocted half-baked financial schemes that served no business purpose other than to line his pockets. He promoted himself shamelessly inside and outside the company while possessing a shocking lack of comprehension about basic corporate finance. (After Enron’s collapse revealed Fastow’s colossal incompetence, how badly must have CFO Magazine wanted to renege on bestowing Fastow its 1999 Excellence Award for Capital Structure Management?) Two excellent in-depth looks at Enron are Kurt Eichenwald, Conspiracy of Fools: A True Story, Broadway Books 2005 and Bethany McLean, Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron, Penguin Group 2003. In sentencing Fastow the judge stated that Fastow’s cooperation with prosecutors and plaintiffs in various civil suits and public disgrace “calls for mercy.”
I have no sympathy for Andy Fastow. Merit did not warrant his high position in Houston society, his pre-indictment reputation as a financial wunderkind, or the trust placed in him–disastrously–by Enron’s senior management and directors. His personal “redemption” in the service of government prosecutors is just the latest incarnation of a craven, ethically bankrupt personality.