Andrew Fastow and Enron: Wire and Securities Fraud
This paper analyzes the criminal conduct of Andrew Fastow, Enron's Chief Financial Officer, focusing on his violations of wire fraud and securities fraud statutes. It outlines the specific behaviors that constituted each offense, the financial schemes Fastow employed — including aggressive mark-to-market accounting and the creation of shell companies such as LJM — and the character evidence that supports his guilt. The paper also situates the Enron scandal within the broader context of early twenty-first-century corporate fraud and briefly discusses Fastow's cooperation with federal prosecutors in the subsequent convictions of Kenneth Lay and Jeff Skilling.
- Introduction: Fastow's Role at Enron: Defines wire and securities fraud; introduces Fastow
- Offender Behavior That Violated the Law: Specific acts constituting wire and securities fraud
- Financial Schemes Used to Perpetrate the Crimes: Mark-to-market abuse and LJM shell companies explained
- Character of the Offender and Evidence of Guilt: Fastow's cooperation and broader Enron convictions
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What makes this paper effective
- Clearly distinguishes between two separate but interrelated criminal statutes — wire fraud and securities fraud — and explains how Fastow's conduct satisfied the elements of each.
- Uses concrete examples (LJM shell companies, Merrill Lynch payments, mark-to-market abuse) to ground abstract legal concepts in documented events.
- Maintains a consistent analytical lens throughout, linking each scheme back to the specific laws violated rather than simply narrating events.
Key academic technique demonstrated
The paper demonstrates issue-spotting, a core technique in criminal justice and legal analysis writing. The author identifies the applicable law, states the operative definition, and then maps specific factual conduct onto that definition — a pattern that mirrors legal brief writing and is well-suited to criminology coursework.
Structure breakdown
The paper opens with definitions of the two charges and Fastow's general role, then moves through three focused sections: the behavioral acts that violated those laws, the technical financial mechanisms used, and finally character evidence supporting guilt. The conclusion ties the case to the broader Enron prosecution. The structure is tightly thematic rather than chronological.
Introduction: Fastow's Role at Enron
Andrew Fastow served as the Chief Financial Officer of Enron, and as such he was responsible for the vast majority of the company's financial and legal transgressions prior to its dissolution in the early 2000s. The specific laws Fastow violated include wire fraud and securities fraud; he was sentenced to six years on two counts of each charge. Securities fraud consists of deliberately misrepresenting a company's assets in relation to its securities and the perception of those securities. Fastow was aware that Enron's securities were based on incorrect reporting that inflated the company's assets, making those securities more valuable than they otherwise would have been.
Wire fraud is the deliberate misrepresentation of information transmitted by wire within or between states. It is a crime because wired communication is a critical means of conducting business, particularly in financial circles where securities are involved. Fastow was repeatedly implicated in wire fraud whenever financial information — fraudulent by nature — was transmitted through wire channels. Wire fraud involves using federal communication devices, including telephones and email, to make purposeful misrepresentations.
References
Barrionuevo, A. (2006). Fastow a key for plaintiffs in bank suits. The New York Times. Retrieved from http://www.nytimes.com/2006/10/02/business/businessspecial3/02enron.html
Emshwiller, J. R. (2006). In Enron trial, LJM is a double-edged sword. The Wall Street Journal. Retrieved from https://www.wsj.com/articles/SB114058115112979889
McLean, B., & Elkind, P. (2013). The smartest guys in the room: The amazing rise and scandalous fall of Enron. New York: Penguin Random House.
Norris, F., & Eichenwald, K. (2002). Enron's many strands: The accounting; fuzzy rules of accounting and Enron. The New York Times. Retrieved from http://www.nytimes.com/2002/01/30/business/enron-s-many-strands-the-accounting-fuzzy-rules-of-accounting-and-enron.html
Rogers, J. (2004). Fastow and his wife plead guilty. CNN Money. Retrieved from http://money.cnn.com/2004/01/14/news/companies/enron_fastows/
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