Former top Enron Corp. accountant Richard Causey pleaded guilty to securities fraud TOday and agreed to help pursue convictions against...
HOUSTON – Former top Enron Corp. accountant Richard Causey pleaded guilty to securities fraud TOday and agreed to help pursue convictions against Enron founder Kenneth Lay and former CEO Jeffrey Skilling.
Lay, Skilling and Causey had been scheduled to be tried together Jan. 17 on conspiracy, fraud and other charges related to the scandal-ridden company’s collapse more than four years ago. The deal leaves Lay and Skilling with another opponent rather than an ally who has been part of their united defense since the trio was first indicted last year.
After Causey’s plea, the judge granted a defense request for a two-week delay, pushing the trial for Lay and Skilling to Jan. 30.
Causey will serve seven years in prison and forfeit $1.25 million to the government, according to the plea deal. As part of the deal Causey cannot later ask for a lesser sentence, but if the government is happy with his cooperation prosecutors can ask that it be reduced to five years.
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The maximum penalty for securities fraud is 10 years in prison and a fine of $1 million or twice the amount illegally gained, followed by three years of probation.
Formal sentencing was set for April 21 but could be postponed.
The agreement included a five-page statement of fact in which Causey admits he and other senior Enron managers made various false public filings and statements.
“Did you intend in these false public filings and false public statements, intend to deceive the investing public?” U.S. District Judge Sim Lake asked.
“Yes, your honor,” replied Causey, who said little during the short hearing, appearing calm, whispering to his attorneys and answering questions politely.
His attorney, Reid Weingarten, said Causey reached the deal because it was the right thing to do. Weingarten also represented former WorldCom CEO Bernard Ebbers, who was sentenced in July to 25 years in prison for orchestrating the $11 billion accounting fraud that toppled the telecommunications firm three years ago.
“Today, Rick Causey, a very decent, honorable man, began the process of putting behind him the unfortunate Enron episode,” he said. “All the while, and for the remainder of his life, he will regret the damage and the hurt that so many people suffered as a result of this tragedy.”
He said Causey signed a plea agreement, not a cooperation agreement, but that he will work with prosecutors.
“What is true to the extent that he has any involvement in any upcoming legal proceedings, he will do one thing: He will tell to truth, because that is who he is, that is what he should do, and that is what he is going to do,” Weingarten said.
Causey, the government’s 16th cooperating witness in exchange for a plea, had faced more than 30 counts of conspiracy, fraud, insider trading, lying to auditors and money laundering.
Many of the charges against Causey overlapped with the 35 counts of fraud, conspiracy, lying to auditors and insider trading pending against Skilling. The pair are accused of conspiring with others to fool investors into believing a wobbly Enron was healthy in the years leading to its December 2001 crash.
Some of Causey’s charges also overlap with the seven fraud and conspiracy counts pending against Lay, in which the former chairman is accused of perpetuating the ruse after Skilling’s abrupt resignation in August 2001.
Skilling and Lay maintain that they neither committed nor knew of any crimes at Enron, and both have pleaded not guilty.
Daniel Petrocelli, lead trial lawyer for Skilling, asked for a continuance, saying Causey’s plea has “wreaked some havoc” on their efforts to prepare for trial.
Michael Ramsey, lead lawyer for Lay, supported the request. “I think we need to hurry, but we don’t need to rush.”
Sean Berkowitz, head of the Justice Department’s Enron Task Force, said the government did not oppose a two-week delay. He said the deal should streamline what had been expected to be a four- to six-month trial.
Causey, 45, could be more damaging to Lay and Skilling than former Enron finance chief Andrew Fastow, who 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.
Also, Lay has repeatedly pointed to Fastow as the crook who abused his trust, highlighting the former finance chief’s admitted skullduggery.
Associated Press Pam Easton in Houston contributed to this report.