Andrew Fastow the former Chief Financial Officer of Enron and now a convicted felon has signed a “cooperation” agreement with the class action plaintiff law firms involved in recovering losses on behalf of many victims of the Enron fraud.
According a D & O Diary blog article entitled "Enron, Halliburton, and the Milberg Weiss Criminal Investigation" written by Kevin M. LaCroix:
“In return, Fastow received “the formal support of the Enron investors in a plea for leniency (a factor the Judge explicitly noted).” Fastow was also dismissed as a defendant from the civil suit and “even got the plaintiffs’ lawyers to pay his legal fees for his deposition.” As a result of the plea for leniency, the 10-year sentence to which Fastow agreed when he first entered his guilty plea was reduced to 6 years.”
In the Crazy Eddie fraud investigation I also “cooperated” with the government, civil plaintiff’s attorneys, and victims of my crimes. As a result of such “cooperation” they wrote letters to my sentencing Judge noting my “extensive cooperation” which probably kept me out of prison and left me without any civil judgments.
In the Wall Street Journal Law Blog I commented on an article entitled “Are Sentences for These Men Too Long?” written by Peter Lattman about my own cooperation and sentencing:
I have made no secret of the fact (as disclosed on my web site and public appearances) that my reason for “cooperating” with the government and civil plaintiffs was out of self interested fear of a very long prison sentence.
The government had me “cornered” and other family members more culpable than me had set me up to take the fall. Had I not been caught and learned from the consequences of my criminal actions I would still probably be a criminal today.
However, when I did “cooperate” for whatever reason, I did so without the protection of any plea bargain agreement and met thousands of times with investigators without my attorney present. I cooperated (yes of out self interest) and protected myself later with a plea agreement (unlike most felons today).
After about four years of cooperation (which included thousands of meetings without my attorney present) I first signed a plea agreement for two felonies with the US government. A little later they wanted three felony counts after I had agreed to two felony counts and I obliged them by pleading guilty to three felonies.
My “cooperation” was the cornerstone of the Crazy Eddie criminal and civil investigation which resulted in the victims recovering almost all monies made by the Antar family on the Crazy Eddie stock and having an unprecedented percentage recovery by victims of the fraud.
At sentencing I did not bombard the Judge with letters from everyone who I did a good deed for, family members, etc. There were only about 5 letters that went to the Judge – The US Attorney, the SEC, and the balance from attorneys representing all victims of the crimes. They all took note of the value of my “cooperation.”
At sentencing I told the Judge “For most of my adult life I was involved in a massive fraud. I’m embarrassed to…say that I always knew what I did was wrong” and I was ready to fully accept the consequences of my actions. The US Attorney recommended a downward departure sentence of about 2 years from my sentencing guideline exposure of about 4 to 5 years.
The Judge (a “law and order” Ronald Reagan appointee) sentenced me to 6 months house arrest, 1,200 hours of community service, three years probation, and fines.
While you may disagree with this “law and order” Republican appointed Judge’s decision regarding my admittedly light sentence the fact is that he took into account the truthfulness of my testimony, the fact that I made no excuses, the fact the I used no handler’s (attorneys) in making myself fully accessible to both criminal and civil plaintiff investigators and most of all the fact that I was willing to risk everything (by having no legal protection for 4 years) in helping the government and civil plaintiffs obtain justice (yes, for selfish reasons).
I have always disclosed my feeling that my sentencing was lenient and never said otherwise. I have learned that it is better to face the mercy of your victims and a sentencing Judge rather than face their anger.”
The difference between my self interested cooperation and Mr. Fastow’s is that I took the shot of helping the government, various civil plaintiffs attorneys and victims without the benefit of any legal protection in the hope that I would face their mercy rather than anger.
It seems that Mr. Fastow would have been wiser to cooperate with them the same way I did instead of covering himself first. He may have spent less time in prison.
The civil plaintiff’s attorneys could learn a lesson here too. You would not face the criticism leveled at you had you treated Andrew Fastow like me.