Dallas Business Journal
From the October 11, 2002 print edition
Feds show their hand with Fastow complaint
The test case - some might say show trial - of how serious the federal
government is about cracking down on crime in the suites reached a new level
last week when prosecutors charged former Enron CFO Andrew Fastow
with fraud, money laundering and conspiracy.
How the government
moved against Fastow
raised some questions.
"There's got to be some
reason the government
played its hand," said Bill
Reid, partner at law firm
Diamond McCarthy. Reid,
who splits his time
between Dallas, Austin
and Houston offices,
suggests prosecutors may
be sending a signal.
Reid is a former federal prosecutor. He uses that experience in big
white-collar civil litigation on behalf of aggrieved shareholders. Reid said that
while 90% or more of government criminal actions begin with grand jury
proceedings, this time prosecutors issued a 35-page complaint signed by an
FBI special agent.
By proceeding against Fastow based on an agent's complaint, rather than
getting a grand jury indictment, Reid said the feds obligated themselves to hold
a probable cause hearing within 72 hours of Fastow's request. Between the
complaint and the hearing, that's a lot of information about the government's
case available to Fastow's defense.
There are theories why the government chose to proceed on the agent's
complaint.
Maybe the feds worried Fastow would flee
before they could convene a grand jury,
Reid said. But that's far-fetched, he
believes: Fastow "has known for awhile that
the other shoe was about to drop."
Maybe the government hopes Fastow will
lead them to bigger fish, the way Enron's
former managing director, Michael Kopper,
led them to Fastow. Kopper pled guilty earlier this year to two felonies and
fingered Fastow as an accomplice.
Prosecutors are meticulously working their way up Enron's executive ladder,
Reid noted. Indeed, the government's complaint suggests Fastow may already
be cooperating, he said. "Most witnesses see the benefit of cooperating," Reid
said. "It's a rare person willing to fall on his sword," he said.
© 2002 American City Business Journals Inc.
