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Enron's former top accountant in plea deal, to testify against top executives
(AP)
Updated: 2005-12-28 11:15
Enron's former chief accounting officer, Richard Causey, has struck a plea
bargain with federal prosecutors and will avoid going to trial with the fallen
energy company's two top executives, according to a person familiar with the
negotiations.
Causey was expected to plead guilty Wednesday to one or more of the 34
criminal charges pending against him, this person told The Associated Press
Tuesday on condition of anonymity because of the private nature of the
discussions.
Causey, 45, agreed to testify against his former bosses, Enron Corp. founder
Kenneth Lay and former CEO Jeffrey Skilling, in exchange for a much lesser
prison sentence than he would receive if convicted on all counts. The trial is
scheduled to begin next month, but a delay is considered likely since defense
attorneys would want more time to prepare for the government's new witness.
Former Enron CEO Jeffrey Skilling, right,
waits to cross the street as Enron founder Kenneth Lay, center, talks with
Skilling's lawyer, Daniel Petrocelli, left, as they make their way to the
federal courthouse for a pretrial hearing Friday, Dec. 16, 2005 in
Houston. [AP] | Causey is charged with fraud,
conspiracy, insider trading, lying to auditors and money laundering for
allegedly knowing about or participating in a series of schemes to fool
investors into believing Enron was financially healthy. The company imploded in
late 2001 amid disclosures of complicated financing schemes that gave the
appearance of success.
U.S. District Judge Sim Lake has scheduled a change-of-plea hearing for
Wednesday afternoon. Causey pleaded not guilty to the charges against him when
he was indicted in January 2004.
Lay's lead attorney, Michael Ramsey, didn't immediately respond to a request
for comment, nor did one of Causey's lawyers, Reid Weingarten.
Causey's plea and agreement to cooperate with prosecutors is a departure from
the unified defense he, Skilling and Lay have shown for nearly two years.
Daniel Petrocelli, Skilling's lead lawyer, said earlier Tuesday that he
planned to ask Lake to postpone the January 17 trial for up to two months if
Causey struck a deal with the government. The additional time would allow his
team and that representing Lay to prepare for yet another key prosecution
witness.
Former Enron chief accounting officer Richard Causey leaves
the federal courthouse in Houston, Feb. 24, 2005.
[AP/file] | Causey could be more damaging to Lay and Skilling than former Enron finance
chief Andrew Fastow, who joined the government's cadre of cooperating witnesses
when he pleaded guilty to two counts of conspiracy in January 2004. Unlike his
former peer, Causey didn't skim millions of dollars for himself from shady deals
and therefore would bring less baggage to the witness stand.
"While they were preparing to deal with Fastow, Causey is another matter,"
said Robert Mintz, a former federal prosecutor. "Fastow has been so demonized by
the books and media accounts of the Enron collapse that he is an enticing target
for the defense teams."
Causey would become the 16th ex-Enron executive to plead guilty and agree to
cooperate with the government.
Enron, once the seventh-largest company in the country, crumbled into
bankruptcy in December 2001 upon revelations of hidden debt and inflated profits
that sent investors running and obliterated Wall Street confidence. Thousands of
workers lost their jobs and investors lost billions in the first of a string of
corporate scandals that prompted stiffer white-collar penalties and more
rigorous regulatory scrutiny.
Causey was indicted about a week after Fastow cut a deal with prosecutors and
agreed to help the government pursue former top Enron executives.
Skilling was added to the indictment in February 2004, followed by Lay in
July that year.
The 35 counts of fraud, conspiracy, lying to auditors and insider trading
pending against Skilling largely overlap with those against Causey, where he,
too, is accused of painting a falsely rosy public picture of Enron until his
abrupt resignation in August 2001. The seven counts of fraud and conspiracy
against Lay alleged he perpetuated the ruse after Skilling quit.
Skilling and Lay maintain that they neither committed nor knew of any crimes
at Enron, and both have pleaded not guilty.
Causey was one of many Enron accountants who once worked for the energy
company's former auditing firm, Arthur Andersen LLP. He joined Enron in 1991 and
was named chief accounting officer in 1999.
Causey was fired in February 2002 when an internal probe concluded he failed
to adequately protect Enron's interests in deals with partnerships run by
Fastow.
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