Fastow: Lay's optimism was disingenuous

HOUSTON, March 8 (UPI) -- The top prosecution witness in Houston's Enron Corp. trial testified that founder Ken Lay's public optimism about the company in 2001 was disingenuous.

On Day Two of Andrew Fastow's testimony in the fraud and conspiracy trial of Lay and former Enron president Jeff Skilling, Fastow said he told Lay that by the time Skilling left Enron "the foundation was crumbling," The Washington Post reported Wednesday.

"I told Mr. Lay we had $5-to-$7 billion of embedded problems," Fastow said about a meeting a few days after Skilling left in August 2001. "Even if we are smart enough and don't make a mistake for five years, it would us take that long to work ourselves out of our problems."

Still, Lay put on an upbeat face in public, even saying in a Business Week interview that Enron was "probably in the strongest and best shape that it has ever been in."

Fastow collected more than $45 million from secret partnerships allegedly set up to hide Enron's billions in losses. He forfeited nearly $24 million of that as part of a plea agreement that binds him to serve a 10-year prison term.