On October 31, 2002, Andy Fastow, the former Chief Financial Officer of Enron, was indicted. He faced seventy-eight counts of fraudulent conduct, most involving the money he obtained through deals with Enron, such as those involving RADR, Chewco, and LJM. In the RADR transaction, for example, Fastow received an above market rate of interest on a loan and obtained kickbacks from a co-conspirator that were disguised in the form of Hannukah "gift checks" in the names of his wife and children.
Prosecutors secured a guilty plea from Fastow after they indicted his wife, Lea Fastow, on criminal tax evastion charges stemming from the RADR Hannukah gift check scheme. Fastow decided a plea agreement was preferable to having his two young sons raised by others while the Fastows served potentially lengthy prison terms.
On January 14, 2004, in Houston's Federal District Courthouse, Fastow stood before the bench next to his lawyers as Judge Kenneth Hoyt asked, "I understand you will be entering a plea of guilty this afternoon?" Fastow replied, "Yes, your honor." The deal, as laid out by prosecutor Matt Friedrich, required Fastow to plead guilty to two counts involving wire fraud and securities fraud, serve ten years in prison, cooperate with authorities in the ongoing Enron investigation, and surrender $23.8 million dollars of assets. A second prosecutor, John Hemann, listed the crimes to which Fastow was confessing. The crimes related to the Southampton and Raptor frauds, as well as the Global Galactic agreement that protected his LJM fund against any losses. Asked by Hemann if the facts outlined were true and whether he engaged "in the conspiratorious conduct as alleged," Fastow replied, "Yes, your honor." Judge Hoyt announced, "Based on your pleas, the court finds you guilty." Fastow returned to his seat at the defense table and stared off into space.
Fastow's decision to plead guilty would make him the star witness for the prosecution in the Kenneth Lay/Richard Skilling trial two years later.
On September 26, 2006, Fastow was sentenced to six years in prison, followed by two years of probation. Judge Hoyt stated that Fastow deserved leniency because of his cooperation in the Enron prosecutions. Fastow was incarcerated at the Federal Prison Camp near Pollock, Louisiana. After his release from prison on December 16, 2011, Fastow took a job as a document review clerk at a Houston law firm.