By Carrie Johnson
Washington Post Staff Writer
Wednesday, December 28, 2005
Enron Corp.'s former chief accountant agreed to plead guilty today to criminal conduct that preceded the company's collapse into bankruptcy, according to sources familiar with the negotiations, sealing a deal that gives prosecutors another key witness against former chief executives Kenneth L. Lay and Jeffrey K. Skilling on the eve of their fraud trial.
Richard A. Causey, 45, who is facing more than two dozen criminal charges, is scheduled to appear in a Houston courtroom at 3 p.m. Eastern time today, according to court records. He reported directly to Skilling for years and participated with Lay on conference calls and analyst meetings in the weeks before Enron fell apart.
All three men had been scheduled to face trial Jan. 17, and the trio long had presented a united front. But eleventh hour negotiations with the Justice Department's Enron Task Force -- and the prospect of spending decades behind bars if he gambled at trial and lost -- ultimately proved persuasive for Causey, who had rejected previous government offers, the sources said. They spoke only on condition of anonymity because of the impending trial.
The deal comes at a delicate time for Lay and Skilling, who are charged with leading a conspiracy to defraud investors by hiding debt and inflating profits at the Houston energy trading firm before its December 2001 collapse. They are the last and among the most eminent corporate executives to face trial in an era of scandal dating to the 1990s.
Defense lawyers for Lay and Skilling are almost certain to seek a delay in the trial because of Causey's plea deal, the 16th by a former Enron executive. The company cut thousands of jobs after its December 2001 bankruptcy, which also cost shareholders more than $85 billion in losses.
For more than two years, the former executives have maintained that the fraud was confined to a set of rogue employees led by former chief financial officer Andrew S. Fastow. Fastow pleaded guilty to two criminal charges in exchange for a 10-year prison term. He will be one of prosecutors' key witnesses in the upcoming trial. But Fastow's admission that he skimmed more than $60 million from the company and lied to his superiors could be used to undermine his testimony.
Former Enron executives said Causey, a likable family man who remained humble despite his corporate rank and salary, will present a far more difficult target for Skilling and Lay's defense lawyers in cross examination.
With Causey's help, prosecutors may have an easier time homing in on optimistic public statements and stock sales by Lay and Skilling, concepts that may be easier for jurors to understand than Fastow's arcane deals with names such as Raptors and Chewco.
Causey had detailed knowledge of those and other business partnerships that helped the company conceal its mounting financial troubles. It was unclear whether he retained any documents that would shed light on Enron's accounting and business practices. Lay and Skilling rarely used e-mail messages.
U.S. District Judge Simeon T. Lake III, who is known as a taskmaster when it comes to scheduling issues, will be presented with a defense request to delay the trial as early as today. He acceded to previous delays because of conflicts with the schedules of Causey's Washington-based defense lawyers, Reid H. Weingarten and Mark J. Hulkower, who maintain one of the country's busiest white-collar defense practices. Hulkower declined comment yesterday.
More than 400 potential jurors already have completed extensive questionnaires about their contact with Enron and the defendants. A long delay might mean the jury selection process would need to start afresh.
For friends of Causey, including his next-door neighbor Steve Huey, word of the advanced plea negotiations is bittersweet. They say Causey is devoted to his three children, the youngest of whom is in eighth grade, and is a devout Catholic who helped raise funds for a new church in the Woodlands, an upscale suburb of Houston.
"I don't think Rick has ever believed he did anything wrong," said Huey, who shared a Christmas Eve dinner with Causey and his wife, Elizabeth. "I think that Rick's concern is over the family and what the eventual outcome will be for the family. As you get closer to trial, you start to weigh the options and weigh the odds and the resources the federal government has."