Honey, I Implicated the Kids!
After his arraignment on 140 years' worth of felony charges, Andy Fastow's inglorious exit from the federal building last week bore a certain resemblance to the bill of particulars compiled against him by the government.
The former Enron chief financial officer, who glowered with a clamped jaw during most of his face time in court, cooled his heels for several hours in a U.S. marshal's holding room. His attorneys had failed to collect the signatures of his wife and parents on various property deeds to back a $5 million bond, forcing family members to make an unscheduled trip from their houses in Southampton. (Ironically, his parents' house on Bolsover was previously owned by admitted Enron conspirator Michael Kopper, who sold it to Fastow last year.)
After the deeds were done, Fastow and his attorneys slipped out a back entrance while his graying parents, Carl and Joan Fastow, and wife, Lea Weingarten Fastow, scooted out the front door, effectively diverting the camera-and-notebook-armed mob of journalists from its intended quarry.
Lea, a stout brunette clad in a black jacket and tan trousers, seemed to have the same self-preservation instincts as her husband. She raced to a curbside vehicle and jumped in as it started to pull away. Left behind and standing dumbfounded in the midst of the media throng were the hapless in-laws. Apparently noticing someone was missing, the driver braked in mid-street and waited while the oldsters hurried to catch up and join the getaway.
A lack of Fastow familial concern is perhaps the most striking feature of the lengthy affidavit by FBI special agent Omer J. Meisel that backed up the federal charges of fraud -- by securities, wire and mail -- money laundering and conspiracy. It introduced to the world more wacky Enronese expressions like "the global galactic agreement," "bearhugging" and the designation of the company's underperforming assets as "Enron nuclear waste." According to the affidavit, Fastow used his own children and wife as conduits for questionable payments that he himself was afraid to accept. Former friend and Enron subordinate Kopper, who has already pleaded guilty to two counts of conspiracy in the Enron scandal, claimed the routine was just part of a Fastow special gifts program.
"To disguise the nature of the payments," reported agent Meisel, "Fastow instructed Kopper to establish a 'gifting program,' whereby Kopper and his domestic partner [William Dodson] made annual gifts of $10,000 to individual Fastow family members." Even as he was constructing special partnerships that the government and the Securities and Exchange Commission claim broke numerous accounting rules, Fastow was mindful of IRS guidelines.
The $10,000 amount was chosen because gifts of up to that amount to an individual in one year are not required to be reported and are excluded from taxable income. In order to skim kickbacks from the various partnerships, the government claims, Fastow made his own family the mules for the illicit payments.
"Fastow instructed Kopper that he and his domestic partner should write checks not only to Fastow but also to Fastow's wife and two children," according to the affidavit. "Fastow told Kopper that, if ever asked, they could explain the checks from Kopper by saying he and Fastow were very close friends and the checks were gifts." On December 31, 1998, Kopper wrote two $10,000 checks to Fastow's children and one for $19,724 to his wife. The goodies over two years totaled $125,000.
This has all the makings for a smash black-humor TV sitcom, sort of a combination of Father Knows Worst, Deposit It to Beaver, All in the Family Bank Account and The Fastow Bunch.
There's no indication that Fastow plans to cooperate with the government à la Kopper and David Duncan, the Arthur Andersen executive who pleaded guilty to document shredding. Fastow attorney John W. Keker read a brief statement to reporters that mirrored his client's unyielding demeanor.
"Andy Fastow was dedicated to the long-term success of Enron. He never believed he was committing any crime," declared Keker, who claimed that every action taken by the financial officer was approved by Enron's board and brass.
"For the last year, Andy Fastow's former colleagues have denied their own responsibilities, whispered false rumors and often outright lied to discredit him. We will confront the gossip and lies in a courtroom -- not in the press."
The 58-year-old Keker is an interesting choice to represent the man who, depending on your point of view, is either the ultimate corporate greedhog of the '90s or the fall guy for former Enron chair Ken Lay and CEO Jeff Skilling. An ex-marine and wounded Vietnam vet, Keker is also a cause-oriented San Francisco defense attorney. He once represented the late Black Panther Eldridge Cleaver and twice served on the San Francisco Police Commission investigating the high level of police brutality in the city. A colleague described him in a San Francisco Chronicle profile as "the last true liberal."
Although he came out of the Vietnam conflict with an antiwar perspective, Keker put his military credentials to good use as the lead prosecutor in the Contragate trial of fellow marine Ollie North, securing convictions of the future talk show host that were overturned on appeal.
He also gained an acquittal for Patrick Hallinan, a California defense attorney accused of running a drug ring, laundering money and obstructing justice. In what could be a preview for Fastow trial watchers, Keker put the government on trial for hounding a respected member of the San Francisco legal community. He ridiculed Hallinan's former associates who testified against him as "Slick Willies" dependent on their federal controllers who gave them reduced sentences.
A California legal journal, The Recorder, quoted Keker's impassioned opening remarks to the jury in the Hallinan trial: "I submit to you that we are all in hell, Pat Hallinan and his family are in hell and the government has sold our birthright to the devil."
Whether a Houston jury -- drawn from a community saturated by a year of Enron horror stories -- will feel much sympathy for Andrew Fastow is another question. Fastow's defense team is already polling local jury consultants about the wisdom of seeking a change of venue for a future trial.
The choice is not open-and-shut. Although Houston is at the epicenter of the Enron blast, it is also considered one of the most tolerant communities in Texas, and the jury pool could be expected to include minorities as well as members of Fastow's Jewish faith. His legal team is concerned enough about the specter of anti-Semitism, a source says, that they are trying not to play up his religious connections. Those ties had been publicized when the Houston Chronicle quoted Rabbi Shaul Osadchey of Congregation Or Ami, a conservative synagogue attended by the Fastows.
"They're worried that it just plays into the hands of a lot of bigots," the source says. "I think they see that as just another problem."
UH Center for Public Policy director Dick Murray says he would be inclined to seek another location for a trial.
"That would be my gut reaction," says Murray. "This is probably going to be a more difficult community than, say, San Antonio, where Enron would have a far lower profile."
Rice University dean of social sciences Bob Stein takes the opposite tack. "It's hard to imagine another venue where Fastow could find a less hostile environment in Texas or anywhere else. It's not absolutely clear that there's a better venue right now or a year and a half from now."
After all, Ken Lay is still being wined, dined and entertained in some of Houston's most respectable homes and at high-profile social events. And don't look for Keker to push for a change of venue to his home turf in energy-ravaged California, where the Enron players would probably draw higher public negatives than Saddam Hussein.
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