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The last thing Enron Corp. defendant Lea W. Fastow wanted to hear was word from U.S. District Judge David Hittner that he was rejecting a plea bargain requiring her to spend only five months in federal prison. But Hittner’s April 7 decision was probably just as disappointing to the Enron Task Force prosecutors, who likely didn’t imagine Fastow would be the first Enron figure to go to trial. “They have the proverbial bigger fish to fry,” says Brian Wice, a criminal defense attorney in Houston who has been following the Enron prosecutions. While prosecutors maintain the failed plea agreement with Fastow doesn’t affect the government’s deal with her husband, Andrew Fastow, the former Enron chief financial officer who is cooperating with the government, three criminal defense lawyers in Texas say taking Lea Fastow to trial will inevitably change Andrew Fastow’s relationship with prosecutors. “The prosecutors will morph into foes … if the trial against Lea Fastow goes forward and they attempt to pulverize her in order to obtain a conviction. That would take a toll on anyone,” says former federal prosecutor Christopher Bebel of Houston. “Although Andrew Fastow may have nerves of steel, any mortal would be adversely affected by that type of event.” Bebel, a partner in Sachs, Bebel & Boll, says the Enron Task Force cannot want to go to trial against Lea Fastow on June 2, as Hittner ordered, because they need to maintain “good relations” with her husband. Andrew Fastow was not in court for his wife’s sentencing hearing, and his lawyers, David Gerger, of David Gerger & Associates in Houston, and John Keker, a partner in Keker & Van Nast in San Francisco, did not return telephone calls seeking comment before press time. But Hittner’s dramatic April 7 ruling has hindered the Enron prosecution in ways that go far beyond Lea Fastow’s case — or her husband’s, says Thomas W. Mills Jr., a partner in Dallas’ Mills & Williams who frequently represents white-collar criminal defendants. “It also hurts them in terms of getting other people to think they are going to get cooperation,” Mills says. He also says the failed plea deal may lead other prospective Enron defendants to shy away from cooperating with the Enron Task Force in exchange for a deal. They may question whether prosecutors can really deliver on a plea agreement, Mills says. On April 7, Hittner rejected a plea agreement Lea Fastow had negotiated with federal prosecutors that called for her to spend five months in federal prison and another five confined to her house. The Houston judge’s rejection of the deal prompted Fastow to withdraw her guilty plea to a single count of filing a false tax return, a move that paved the way for a trial. Hittner set jury selection to begin on June 2 in Brownsville. She faces six charges. Hittner hasn’t made it easy for Fastow, a one-time assistant treasurer at Enron, to resolve the criminal charges against her. Fastow pleaded guilty in January to one count of filing a false tax return, but Hittner said then he wanted to read her pre-sentence report before deciding if he would accept the plea deal she had negotiated with prosecutors. The confidential report was filed in March, and despite memoranda filed by prosecutors and Fastow’s lawyer urging Hittner to accept the deal, Hittner rejected it. The judge declined requests from Linda Lacewell, an Assistant U.S. Attorney on the Enron Task Force, and Fastow defense lawyer Mike DeGeurin of Houston to explain his reasoning. He invited them to “show me the case law” that would require him to explain why he rejected the plea deal. He did say in court that “C” pleas, referring to the provision of Rule 11 of the Federal Rules of Criminal Procedure that gave Fastow the ability to withdraw her guilty plea if he rejected her plea deal, are “extremely rare” and some judges won’t even consider them. “The defendant is advised the court is not required to follow the plea agreement,” Hittner told Fastow. But he also told her he saw no reason to depart upward or downward from the recommendation in the pre-sentence report, which called for a sentence of 10 months to 16 months. He told her he would not accept the plea deal, but did not tell her what sentence he intended to impose if he had done so. After hearing Hittner would not approve her deal, Fastow spoke for mere seconds with DeGeurin before deciding to withdraw her guilty plea. DeGeurin, speaking to reporters following the 15-minute hearing in Hittner’s court, said he was embarrassed for the system by the proceedings in Hittner’s court, and said he cannot recall another situation where the judge would not let the lawyers argue their points. Hittner declined requests from Lacewell and DeGeurin, of Foreman, DeGeurin & Nugent, to address him before he announced his decision on the plea deal. “You have briefed this beautifully,” Hittner told the lawyers. “He had a prepared speech and would hear nothing,” DeGeurin said of the judge. In court, DeGeurin cautioned Hittner against rejecting the plea deal simply to prove a point. “Don’t get to the point, judge, where you have to prove something,” DeGeurin said. Following the hearing, when pressed to explain what Hittner would be proving, DeGeurin said it proves “that you can’t bind Judge Hittner to a sentence.” But that’s a point Hittner made clear at Fastow’s plea hearing on Jan. 14, when he refused to accept her plea deal before seeing the pre-sentence report into her alleged crimes and background. Also at that hearing, Hittner refused a request from Lacewell to dismiss the other five charges pending against Fastow before her sentencing hearing. THE VALLEY So where does Hittner’s rejection of the plea deal leave Lea Fastow’s defense and the prosecution? Enron Task Force director Andrew Weissmann said little to reporters following the hearing, deferring to a statement issued by Assistant Attorney General Christopher A. Wray of the criminal division of the U.S. Department of Justice in Washington, D.C., that says Fastow had the right to withdraw her guilty plea after Hittner rejected the plea deal. Weissmann said the proceedings in court will not affect the government’s deal with Andrew Fastow, who pleaded guilty in January to two conspiracy charges and agreed to spend 10 years in prison and forfeit $23.8 million in assets. U.S. District Judge Kenneth Hoyt of Houston originally set Andrew Fastow’s sentencing for this month, but it has been delayed. “There is no connection between what happened today and Mr. Fastow’s plea agreement,” Weissmann said. “His case is resolved. He pleaded guilty and he cooperated with the government.” DeGeurin said he did not know what affect Hittner’s rejection of his client’s deal with prosecutors would have on her husband’s willingness to cooperate with the Enron Task Force. In the time since Fastow began cooperating, former Enron chief executive officer Jeffrey Skilling was named in an indictment charging him with conspiracy, wire fraud, securities fraud and insider-trading at Enron. As to the prospect of a trial in Brownsville, a city in far South Texas on the border with Mexico, Weissmann said he’s “looking forward” to it. Citing the possibility of further pretrial publicity, Hittner changed the location of the trial from Houston to Brownsville without a motion from DeGeurin. The location may have advantages and disadvantages for Fastow. Bebel says fewer people in the jury pool in Brownsville would know that Lea Fastow already pleaded guilty to a criminal charge. On the other hand, he says, the jury will be drawn from a largely Democratic pool of people “more likely of not having a stake in the system” and therefore less likely to be pro-authority jurors. But Brownsville criminal defense lawyer Paul Fourt Jr., a solo practitioner, says, “I can’t imagine [Brownsville] juries would be very sympathetic to her plight.” He says the jury pool will be predominately Hispanic, comprised of mostly lower-income people unfamiliar with a wealthy Houston lifestyle. He says many in the Valley also associate Enron with George W. Bush’s Republican administration, which is not popular with people in South Texas. Bebel says prosecutors have two options to avoid a trial in Brownsville in less than two months. They could go back and negotiate a plea deal with Fastow that Hittner would accept. Or, he says, the Enron Task Force could charge Fastow with a misdemeanor that would carry a lesser maximum sentence, or ask Hittner to dismiss the charges against Fastow without prejudice. “I don’t think this case can ever see the inside of a trial courtroom,” Wice says. “As soon as both sides got back to their respective offices, they were burning up their phone lines [talking settlement].” Neither DeGeurin nor Weissmann returned telephone messages before press time. Wice says Hittner’s decision leaves both sides scrambling. He says, “How can you formulate any strategy when you can no more gauge the judge’s mind-set than you can decipher the Rosetta stone? What do you tell your client if you are Mike DeGeurin? What do you tell [U.S. Attorney General] John Ashcroft if you are the Enron Task Force prosecutors?” Contributing reporter Miriam Rozen contributed to this article.

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