Lea Fastow begins prison term

Monday, July 12, 2004 | 9:14 a.m.

BLOOMBERG NEWS

HOUSTON -- Lea Fastow, the wife of Enron Corp.'s former chief financial officer, began a one-year prison term today for her role in the accounting fraud that forced the company into bankruptcy in 2001.

Fastow, 42, a former Enron assistant treasurer, entered the Federal Criminal Detention center in downtown Houston at 8:20 a.m. local time. She pleaded guilty in May to not reporting some of the income that her husband, Andrew Fastow, had earned as a result of his participation in an accounting fraud that triggered the second-largest bankruptcy in U.S. history.

Andrew, 42, who pleaded guilty to the fraud in January, refused to help the U.S. investigation of his company before his wife was indicted in May 2003. After she was, the Fastows attempted to ensure through plea bargaining that their prison terms did not overlap so one parent was free to care for their two sons, Jeffrey, 8, and Matthew, 5. The sentencing judge rejected a government-recommended five-month prison term for Lea Fastow, heiress to a local grocery and real estate fortune.

"She's coming in as nobody, and she's not accustomed to that," said Ray Hill, a prison activist who hosts a Houston radio show about inmates. "The people she's going to be with are not very impressed with who she was."

Andrew Fastow, who is helping prosecutors pursue former Enron Chairman Kenneth Lay, former Chief Executive Officer Jeffrey Skilling and others who have been charged in the fraud, faces a proposed 10-year prison term. The trials of Lay and Skilling may not take place until next year, by which time Fastow's wife may have finished her sentence.

Lea Fastow arrived at the prison with her father, brother and sister before the 2 p.m. deadline that officials had given her to report.

"She's got a lot of character," her lawyer Mike DeGeurin said after Fastow had entered the prison. "She knew she had to be in by two o'clock. She wanted to get it going."

Lea Fastow left Enron in 1997, prior to the period of alleged fraudulent activity stated in the indictments of Lay, Skilling and her husband. After leaving, she remained in charge of building the Houston-based corporation's art collection.

Fastow had hoped to serve her sentence at a minimum-security women's prison camp near Houston. Instead, federal prison officials assigned her to a high-rise detention center, where nearly 1,000 inmates inhabit 11 floors. Only about 100 of the inmates presently in the facility are women, according to center spokeswoman Maria Douglas. Women are segregated from the male prisoners, some of whom are violent offenders, Hill said.

"At the prison camp, once she had finished her work day, Lea could've gone to the library or chapel or pretty much anywhere on the compound she wanted," said David Novak, a former white-collar convict who now counsels people facing prison terms. "In the Houston facility, she will be much more restricted and have much less access to the outside."

The typical cell at the center is 8 feet by 10 feet and set up for two prisoners, Douglas said. The majority of the prison's inmates are Hispanic and black drug offenders, Hill said.

Fastow, who arrived wearing a black jacket and slacks, will be issued a khaki shirt and slacks as her uniform, said Hill, who visits the facility regularly and was processed in it before serving a four-year term elsewhere for art theft.

Before being assigned a cell, Fastow will have to submit to psychological tests, Douglas said. Cellmates have to share a sink and toilet, Hill said. Water pressure in the sinks has been so low recently that prisoners have to wash their underwear in the toilets, he said. Community showers are available outside the cells, he said.

Prisoners, who have access to a outdoor recreational deck on each floor, spend most of their days in a windowless day room that is about half the size of a basketball court, Novak said. A single television set without sound is available in the room. Prisoners have to buy a small radio at the prison store to listen to the TV's sound, he said.

All meals are served in the day room, Hill said. Prisoners typically get a hot breakfast, a sandwich at lunch and a larger meal at dinner, such as a hamburger with gravy, mash potatoes and vegetables.

Fastow traveled with her family in the days before she reported to the center, DeGeurin said. Prisoners are allowed to bring in almost nothing of their own, Hill said. Permitted items include a plain wedding band, prescription eyeglasses and a soft- cover religious text, he said.

Visits from family members are limited to a couple of hours on weekends. No glass separates visitors from prisoners. Family members may hug prisoners, who do not have conjugal-visiting rights, Hill said.

Inmates, who earn 12 cents an hour doing menial jobs such as washing clothes, may spend $215 a month on items at the prison store, Douglas said. Goods available include toiletries, snack foods, T-shirts and stationery.

"Prison is the great equalizer," Novak says. "It really doesn't matter what you had on the outside. Inside, you all wear the same clothes, eat the same food and sleep in the same conditions. It really doesn't matter if you have $1 million in the bank. All you can spend is $215 a month, period."