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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?


To: stockman_scott who wrote (3045)6/23/2004 11:37:31 AM
From: Glenn Petersen  Read Replies (1) | Respond to of 3602
 
After Enron, a Sunless Year in a Tiny Cell

nytimes.com

June 20, 2004

By KATE MURPHY

Houston

JUST two years ago, Lea Fastow, former assistant treasurer of the Enron Corporation, was anticipating a move into a 12,000-square-foot house that she and her husband were having built in the exclusive River Oaks section of this city. It would have six fireplaces and Italian flagstone flooring, and would cost $3.9 million.

Instead, on July 12, she will move into the austere, high-rise Federal Detention Center downtown. A closet-size cell there will be her home while she serves a one-year sentence after pleading guilty last month to tax evasion.

She and her husband, Andrew S. Fastow, had to sell their River Oaks house after the implosion of Enron left both of them in a legal morass. Mr. Fastow, Enron's former chief financial officer, will also go to jail. As part of a plea bargain agreement, he could serve up to 10 years for concealing Enron's debt and inflating its profits while making millions for himself.

Besides dealing with the dangers and indignities of prison life - from the threat of violence and routine strip searches to scratchy toilet paper and narrow bunk beds - Mrs. Fastow, 42, is likely to find that the mixed-sex, highly secure detention center will be anything but the kind of pastoral prison camp that many people still associate with white-collar criminals. And, former convicts say, her time will be more difficult because she is a woman, white and wealthy.

That is grim news for Martha Stewart, another well-known woman accused of a white-collar crime, unless her conviction is overturned on appeal or she has more luck than Mrs. Fastow did in persuading a federal judge to recommend that she be assigned to a low-security, women-only prison.

"Let's be honest: jails are racist, sexist and homophobic places," said Ray Hill, who served eight years in prison for burglary and is now a consultant to people facing time behind bars. He is also the host of "The Prison Show," a call-in radio program for inmates and their families in southeast Texas. When white people are a minority in prisons, he added, they often suffer the most abuse. Being rich only makes things worse.

Gabriela Reza, a Hispanic woman who served 4 months of a 10-month drug-possession sentence at the Houston center last year, agreed. "You hate to say it, but just like on the outside, people tend to help people who are like them - and Hispanics and blacks are the majority in there," she said.

After Mrs. Fastow surrenders to the authorities, which she is scheduled to do at 2 p.m. on July 12, she will be assigned to an 8-by-10-foot cell in the 11-story, 1,100-bed prison, which houses people serving relatively short sentences or awaiting trial on a variety of charges, including violent offenses.

She will be locked in her cell at night, fed Army-style rations and rarely permitted to see sunlight. The center is within sight of Minute Maid Park, the downtown baseball stadium that was called Enron Field before Enron filed for bankruptcy in 2001. Not that Mrs. Fastow will be able to see the stadium, because the only windows in the cast-concrete detention center are narrow strips of translucent glass.

For most inmates, the hardest part of incarceration is the loss of privacy. This is especially true at the Houston site and at other administrative detention centers, which have strict security because they house men and women accused of all kinds of crimes. Mrs. Fastow would have far more freedom of movement at a low- or minimum-security, single-sex lockup like the federal prison camp in Bryan, Tex., that her lawyer had requested, or in similar federal prisons like those currently housing Samuel D. Waksal, the former ImClone Systems founder who pleaded guilty to securities fraud, and Jamie Olis, a former midlevel executive at Dynegy who was convicted of accounting fraud.

Without explanation, Judge David Hittner of the Federal District Court here declined to recommend that the Bureau of Prisons send Mrs. Fastow to such a prison, despite entreaties from her lawyer and prosecutors.

As a result, Mrs. Fastow will be under constant surveillance, as is the rule at detention centers, and will not be allowed to roam about without an escort or scrutiny, as she would at a minimum-security prison camp. Officials will also open all her mail and monitor her phone conversations, which would be unlikely if she were at a lower-security facility.

Perhaps the worst loss of privacy, however, will come at night, when she is locked in her cell and must use the toilet under the gaze of her cellmate. "It's really hard to get used to going in front of someone but after lockdown, you can't ask them to step outside or anything," Ms. Reza said. The steel doors of the detention center's cells are locked promptly at 9 p.m. and do not reopen until 6 a.m., when most of the inmates go to their prison jobs. There is no nightly lockdown at most minimum- and low-security federal facilities.

Like many women at the detention center, Mrs. Fastow may be assigned a job in the laundry or dining area of a cellblock, where she would warm trays of food sent from the kitchen downstairs. As a woman, she is not eligible to work in the kitchen preparing food - as is, say, Ben F. Glisan Jr., the former treasurer of Enron, who is at the Houston center serving part of his five-year sentence for conspiracy to commit wire and securities fraud. To keep the sexes separated, and because of the heavy lifting that is sometimes required, only men work in the kitchen.

Kitchen work is especially desirable, former inmates say, because prisoners can then serve their own food and eat in the kitchen instead of in their cellblock. Not that the food is very good. Ms. Reza described it as "gross." Maria Douglas, a spokeswoman for the Federal Bureau of Prisons, said all correctional facilities served meals using "armed-services recipes at an average cost of $2.74 per day, per inmate."

Women are not eligible for the coveted jobs - trimming the trees and shrubbery around the center or loading supplies at a nearby warehouse - that let inmates go outside; those jobs are also reserved for men. The only sunlight that women at the detention center see is the vague glow that permeates the four-inch-wide frosted-glass windows in their cells.

"You're living a fluorescent existence," said Vanessa Leggett, an aspiring crime writer who served 10 months at the center for refusing to turn over to a grand jury notes from her interviews with people implicated in the murder of a Houston socialite.

Deprived of natural light, female inmates in the center often look as gray as the building's concrete exterior.

Despite their pallor and lack of access to makeup, women at the detention center still attract leers from the male inmates they encounter in common areas like the visitation room and the medical clinic.

Since white inmates are the minority, Mr. Hill said, they are more likely to be sexually, verbally and physically harassed. But Ms. Leggett, who is white, said she did not feel any discrimination while incarcerated, although she added that she might have had special status because she was perceived as someone who had flouted authority.

But more than her sex and race, Mrs. Fastow's wealth will work against her in prison, former inmates said. "You've got to understand that most people in there have nothing," Mr. Hill said. "If you have money, you're going to have to deal with a lot of panhandling and scams."

Typical are inmates who offer to sell physical protection, or pester wealthy prisoners to buy them goodies like off-brand sneakers or candy bars at the commissary. And kindnesses received will usually come with the expectation of payback.

"Don't accept any favors," Ms. Leggett said, giving advice that could also apply in the cutthroat corporate world. "They all have strings attached."



To: stockman_scott who wrote (3045)7/2/2004 6:08:26 PM
From: Glenn Petersen  Read Replies (1) | Respond to of 3602
 
Indictment of Enron's Lay Seen Next Week

news.myway.com|top|07-02-2004::16:10|reuters.html

Jul 2, 4:06 PM (ET)

WASHINGTON (Reuters) - Former Enron Corp. (ENRNQ.PK) Chairman Ken Lay is expected to be indicted next week over his role in the scandal that rocked corporate America, sources familiar with the matter said on Friday.

While a last-minute delay was still possible, federal authorities involved with the U.S. Justice Department's Enron Task Force expect a federal grand jury next week will return an indictment of Lay, the sources said.

The sources would not discuss what charges might be brought against Lay.

Lay, 62, guided Enron for years, shaping the once-obscure pipeline company into the nation's seventh-largest corporation and a world-leading energy trading concern.

Lay's lawyer, Michael Ramsey, told Reuters the government lacked the evidence to win an indictment from a grand jury, and said an internal dispute at the Justice Department had triggered the recent leaks about impending charges.

"I don't think there's going to be an indictment. I think the Task Force is leaking in order to put pressure on Washington" to seek charges, he said.

Ramsey said he met with Enron Task Force officials last week to discuss media reports that an indictment would be handed down soon, but he declined to comment on the specifics of the meeting.

Enron collapsed in a massive scandal in 2001 after the Wall Street darling's abuse of off-the-books partnerships to hide billions of dollars of debt and inflate profits became known.

Prosecutors have tapped former Enron employees for information about its inner workings, including former Chief Financial Officer Andrew Fastow. He agreed to cooperate with investigators in exchange for a 10-year prison sentence.

Lay -- a political ally of President Bush and his father, former President George H. W. Bush -- returned to Enron's chief executive post after Jeff Skilling resigned, shortly before the company imploded in late 2001.

Skilling pleaded not guilty in February to counts of fraud, insider trading and misrepresenting Enron's finances.

The fall of Enron touched off investigations that uncovered widespread financial fraud in corporate America and caused the high-flying energy trading industry to collapse.

Spokesmen for the Justice Department and the U.S. Securities and Exchange Commission declined to comment. (Additional reporting by Matt Daily in Houston)



To: stockman_scott who wrote (3045)7/7/2004 6:48:32 PM
From: Glenn Petersen  Read Replies (1) | Respond to of 3602
 
Sources: Lay Indicted in Enron's Collapse

apnews.myway.com

Jul 7, 5:02 PM (ET)

By KRISTEN HAYS

HOUSTON (AP) - Former Enron Corp. chairman and CEO Kenneth Lay has been indicted on criminal charges related to the energy company's collapse as a web of accounting schemes unraveled, sources close to the case told The Associated Press on Wednesday.

Lay, the company's founder, was expected to surrender to federal authorities Thursday, the sources said, speaking on condition of anonymity. Two sources said the indictment against Lay, 62, was expected to be unsealed upon or shortly after his surrender to the FBI.

Prosecutors from the Justice Department's Enron Task Force presented an indictment to U.S. Magistrate Judge Mary Milloy in Houston on Wednesday. At their request, the judge sealed both the indictment and an arrest warrant.

A hearing before Milloy was scheduled for late Thursday morning.

Michael Ramsey, Lay's attorney, didn't immediately return a call for comment. Lay has consistently maintained his innocence.

It was unclear specifically what charges Lay would face.

But the sources said they probably would allege he participated in hiding Enron's dire financial condition from investors, analysts and the public in the weeks before the energy company crumbled into bankruptcy in December 2001.

Prosecutors have aggressively pursued the one-time friend and contributor to President Bush who led Enron's rise to No. 7 in the Fortune 500 and resigned within weeks of its stunning failure. Barring last-minute delays, Lay is the 30th and highest-profile individual charged.

Enron had more than 20,000 employees worldwide before the company imploded amid revelations of hidden debt, inflated profits and accounting tricks.

The company's collapse led a series of corporate scandals that sent investors fleeing and sparked numerous investigations. Thousands of Enron's workers lost their jobs and stock fell from a high of $90 in August 2000 to just pennies.

The charges against Lay come 2 1/2 years after the federal government launched its painstaking investigation.

The indictment takes the task force to the top of the fallen company's former senior management. Former CEO Jeffrey Skilling and former top accountant Richard Causey are awaiting trial on charges of conspiracy, fraud and insider trading. Both pleaded innocent and are free on bond.

And waiting to testify for the prosecution is former finance chief Andrew Fastow, who pleaded guilty to two conspiracy counts in January. Fastow admitted to engineering partnerships and financial schemes to hide Enron debt and inflate profits while pocketing millions for himself.