The SEC and the Enron Criminal Task Force are preparing to bring civil and criminal charges — along with a plea bargain and a settlement — against Paula Rieker, the former corporate secretary and investor-relations executive of Enron Corp.
Government investigators consider Ms. Rieker to be a potentially strong witness against former Enron CEO Jeffrey Skilling and former Enron chief accountant, Richard Causey. Given her senior positions at Enron, she also could be helpful in the government’s continuing criminal probe of former Enron Chairman Kenneth Lay. Government investigators are focusing on Mr. Lay’s actions during the last six months of 2001 when questions began surfacing publicly about Enron’s financial condition and practices.
Over two dozen individuals have been criminally charged in the Enron Task Force’s investigation, but none of those individuals have taken a case to trial. Several have pleaded guilty to various charges and are cooperating with the continuing investigations. Among those cooperating is former Enron Chief Financial Officer Andrew Fastow, whose cooperation facilitated the indictments earlier this year of Messrs. Skilling and Causey.
The first Enron-related criminal trial — the one known as the “Nigerian Barge case” involving several mid-level former Enron executives and former Merrill Lynch executives — is currently scheduled to begin in early June in Houston before U.S. District Judge Ewing Werlein.

This Chronicle article reports that Lea Fastow, wife of ex-Enron CFO Andrew Fastow, was charged with a misdemeanor tax count today and is scheduled to plead guilty at a new arraignment next Thursday. Previouwly subject to a six counts of felony tax fraud charges, the Enron Task Force superseded Mrs. Fastow’s indictment today with one count of willfully delivering a fraudulent 2000 tax form to the IRS. Although this action was widely anticipated after U.S. District Judge David Hittner declined to approve a prior plea bargain, it is nevertheless an unusual step for prosecutors and greatly reduces Mrs. Fastow’s exposure to a long prison term. The maximum prison sentence for the misdemeanor is 12 months, although it is expected that the Task Force will ask Judge Hittner to sentence Mrs. Fastow to a lesser sentence than the maximum.
With Mr. Fastow already having agreed to a plea deal and cooperating with them, the Enron Task Force had no desire wasting time on Mrs. Fastow ‘s trial when they have bigger cases pending, particularly the six-defendant Nigerian barge trial starting June 7 in front of U.S. District Judge Ewing Werlein.

U.S. District Judge David Hittner kept the pedal to the metal in the Lea Fastow trial today by scheduling the case to begin on June 2. Everyone still expects that the government and counsel for Ms. Fastow will cut a deal that will be acceptable to Judge Hittner, but time is definitely growing short to hammer out such a plea bargain and have Judge Hittner approve it.
The Enron Task Force is also scheduled to go to trial on June 7 in U.S. District Judge Ewing Werlien’s court in the case known as the “Nigerian Barge case” against six former Enron and Merrill Lynch executives.

The Chronicle reports here that the Enron criminal case against several individuals formerly involved in Enron’s Broadband unit has induced U.S. District Judge Vanessa Gilmore to begin quoting the Rolling Stones:

Citing nonlegal scholar Mick Jagger, a federal judge Monday scolded defense attorneys in an Enron case, basically telling them to stop whining.
“We have the Jagger doctrine here. You can’t always get what you want, but if you try really hard, you get what you need,” U.S. District Judge Vanessa Gilmore told lawyers in the Enron broadband case, paraphrasing the Rolling Stones song.

This NY Times article reports that The Bechtel Group and the General Electric Company, partners of Enron Corporation in the troubled Dabhol Power Company in India, have bought Enron’s 65 percent share of Dabhol to recoup part of the $1.2 billion they invested in the failed $3 billion venture. Bechtel and GE, which were the two main contractors for the plant, each previously had a 10 percent stake in Dabhol.
Dabhol was one of several major Enron foreign investments that were poorly structured and unprofitable, eventually contributing to the financial problems that forced Enron into bankruptcy. The background into the Dabhol power plant deal are explained well in the best book on the demise of Enron, Bethany McLean and Peter Elkind’s “The Smartest Guys in the Room — The Amazing Rise and Scandalous Fall of Enron.”

U.S. District Judge David Hittner announced to a crowded federal courtroom this morning that he would not accept the plea arrangement between the Enron Task Force and Lea Fastow. The judge declined to tell Lea Fastow what his sentence would be if she were to enter a guilty plea, anyway, and that she would have to decide whether to take the risk of his sentence. Mrs. Fastow declined and withdrew her guilty plea. Here is the NY Times article on the hearing.
Here is a copy of Mrs. Fastow’s Memorandum in support of the plea bargain.
The parties now saddle up and are scheduled for a Brownsville, Texas trial, with jury selection starting in June. Mike DeGeurin — Dick DeGuerin‘s brother despite the different last name spellings — ably represents Mrs. Fastow.
Although an unusual development, Judge Hittner’s refusal to accept the plea bargain is probably not that big a deal. It will not affect Andrew Fastow’s cooperation with the Task Force under his plea bargain, which is already extensive. Probably the biggest impact is that it may force the Task Force actually to try a case against a former Enron official, rather than simply hammer them into a plea bargain through filing of multi-count indictments that place the defendant at risk of what amounts to a life sentence if he or she dares to assert their innocence at a trial on the charges.
Another interesting dynamic that is not mentioned in the news reports is that I believe that Judge Hittner has never been thrilled with the Enron Task Force’s approach in prosecuting Mrs. Fastow. From the beginning, the prosecution of Mrs. Fastow was pursued to exert pressure on her husband. Knowing Judge Hittner, he may be holding the Task Force’s feet to the fire in this case because he does not appreciate the Task Force using a questionable prosecution to pursue goals in other criminal cases.

This morning, Lea Fastow — wife of former Enron CFO Andrew Fastow — will learn whether federal District Judge David Hittner will accept her plea bargain with the Enron Task Force.