by John M. Curtis
(310) 204-8700

Copyright March 8, 2006
All Rights Reserved.

ttacking the government's star witness, Enron's former Chief Financial Officer Andrew Fastow, former CEO Jeffrey Skilling's attorney Daniel Petrocelli blasted Fastow for being an untrustworthy psychopath. Telling the jury Fastow's greed landed his wife behind bars, Petrocelli hammered away at Fastow's credibility, telling jurors he lacked the integrity to be trusted. “You must be consumed with an insatiable greed is that fair to say?” asked Petrocelli, raising doubt in jurors' minds over Fastow's claim that he was ordered to cook Enron's books by former CEOs Ken Lay and Skilling. Petrocelli implied that Fastow duped his bosses for his own gain, covering up Enron's financial problems to secure exorbitant salary and bonuses. By cooperating with the government, Fastow already has dicey credibility. He hopes to save his hide, undermine the defense's case and win reduced time in club-fed.

      Skilling and Lay claim that Fastow was a rogue accountant, lining his pockets at the expense of Enron. Skilling claims he had no accounting background and was unaware of Fastow's shenanigans. Petrocelli reminded jurors how Fastow's deceptions, including misreporting income on his federal taxes, resulted in his wife going to prison. “I believe I was extremely greedy, and that I lost my moral compass, and I've done terrible things that I very much regret,” said Fastow, as if reciting damage control talking points. In the game of impeaching witnesses, credibility is a relative phenomenon, asking jurors, in effect, whom do you dislike the most and trust the least. Petrocelli was doing his utmost to get jurors to dislike Fastow more than his client Skilling, who at least testified before the House Energy Committee Feb. 7, 2002 that he was somehow duped by rogue employees.

      Skilling faces 31 counts of fraud, conspiracy, insider trading and lying to auditors. Petrocelli has an uphill battle explaining why Skilling dumped $200 million of Enron stock, before the company went under Dec. 2, 2001. No matter how Skilling and Lay's lawyers trash Fastow and no matter how they feign ignorance, jurors are treated to the most egregious piracy in U.S. corporate history. Fastow told jurors that he apprised Lay Aug. 20, 2001 of the “hole in earnings” projections, promising to devastate Wall Street's quarterly expectations. “The company is probably in the strongest and best shape that it has ever been in,” Lay told BusinessWeek Sept. 26, 2001, while he and Skilling simultaneously dumped massive quantities of shares. Lay knew and approved of Fastow's off-balance-sheet deals and partnerships, designed to keep mounting debt off Enron's books.

      No matter how truthful Fastow's statements now, Petrocelli must destroy his credibility, pointing out how his deceptive schemes landed his wife a one-year jail sentence. “We're talking about the fact that your wife, because of your conduct, spent one year doing hard time. And you think that's funny?” asked Petrocelli, painting Fastow as a callous witness. “No, sir, it is not funny at all,” Fastow reacted to Petrocelli, trying to repair his credibility. Going for the jugular, Petrocelli called Fastow “a master at telling one person one thing and another person another thing,” painting Fastow as a clever con artist, continuing the same deception that got him millions in dubious off-shore partnerships. According to Fastow's account, his wife, Lea, didn't know that gifts reported on their income taxes were actually illegal kickbacks, something that stretches credulity to the breaking point.

      Fastow and his wife knew that obscene amounts of money paid in checks to her and her children weren't manna from heaven. Despite acting naïve, she ran to the bank, in what amounted to a family-owned slot machine. “I did this,” Fastow said, holding back “tears.” “I led her to believe that,” something that doesn't pass the smell test. No matter how the government painted Lea as a “dumb housewife,” she was assistant treasurer at Enron, an experience Certified Public Accountant. Insisting she didn't know her husband was receiving unlawful kickbacks, doesn't pass plausible deniability. Petrocelli couldn't stop Fastow from saying his illegal partnership schemes came with Skilling's blessings, who asked Fastow to “get me as much of that juice as you can.” Skilling wanted to wipe a much debt off the books as possible to dupe Wall Street, investors and Enron employees.

      Petrocelli has done a journeyman's job impeaching Fastow's credibility. Painting him as a serial con artist presents problems to jurors having to convict Skilling and Lay beyond a reasonable doubt. No matter how Petrocelli hammers away, he's defending one of the most diabolical figures in U.S. corporate history. It's one thing to trash Fastow but still another to restore Skilling's credibility, in light of his wholesale liquidation of his Enron stock portfolio. Petrocelli walks a dangerous tightrope, telling jurors with a straight face that Skilling was duped by Enron's rogue CFO. Overselling Skilling presents problems for Petrocelli, whose own credibility might sink, promoting Skilling as an innocent bystander. Fastow's no saint but Skilling and Lay must account for how they got rich while Enron went broke. Blaming the whole mess on Fastow doesn't pass the smell test.

About the Author

John M. Curtis writes politically neutral commentary analyzing spin in national and global news. He's editor of OnlineColumnist.com and author of Dodging The Bullet and Operation Charisma.

©1999-2005 Discobolos Consulting Services, Inc.
(310) 204-8300
All Rights Reserved.