Ex-Enron Accountant Pleads Guilty to Fraud
Thursday, December 29th 2005, 9:59 am
By: News On 6
HOUSTON (AP) _ Since they were indicted last year, Enron Corp.'s former top accountant, founder Kenneth Lay and former CEO Jeffrey Skilling put up a united front to fight fraud charges connected to the energy giant's 2001 collapse. But three weeks before their trial was set to begin, that alliance broke apart _ and now the government has another potential witness to bolster its case.
Richard Causey, the company's former top accountant, pleaded guilty Wednesday to securities fraud in return for a seven-year prison term. If prosecutors are satisfied with his cooperation, the term could be reduced to five years.
In a five-page statement, Causey admitted that he and other senior Enron managers made various false public filings and statements. He also agreed to turn over $1.25 million to the government as part of his plea deal.
``Did you intend in these false public filings and false public statements, intend to deceive the investing public?'' Lake asked.
``Yes, your honor,'' Causey replied.
The trial for the remaining executives _ the last and biggest of a string of corporate scandal cases _ was moved to Jan. 30, giving Lay and Skilling two extra weeks to regroup after the setback.
Skilling and Lay maintain that they neither committed nor knew of any crimes at Enron, and both have pleaded not guilty. Neither attended Causey's plea hearing, but their attorneys did.
``They broke an innocent man,'' said Daniel Petrocelli, Skilling's lead trial lawyer. ``We have been preparing to go to trial and he was poised to be a very key part of the defense. He is one of the most honest, decent men you could ever get to know.''
Michael Ramsey, Lay's lead lawyer, said Lay sympathized with Causey.
``His heart goes out to Mr. Causey. Ken has been under the same stress that Causey has been under and can understand and sympathize with a man with a family who is broke, making peace with the government,'' Ramsey 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. His sentencing is set for April 21, though it could be postponed.
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.
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.
The securities fraud count to which Causey pleaded guilty is among those also pending against Skilling.
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.
The amount of cash Causey must forfeit is slim compared to multimillion-dollar fines and forfeitures assessed to other former Enron executives who admitted to crimes.
Former finance chief Andrew Fastow, who masterminded schemes to manipulate Enron's books while skimming millions for himself on the side, agreed to forfeit nearly $30 million in cash and property when he pleaded guilty to two counts of conspiracy in January 2004.
Causey's 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.
Weingarten 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 the truth, because that is who he is, that is what he should do, and that is what he is going to do,'' Weingarten said.