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Plea by Ex-Enron Accountant May Put Heat on Lay, Skilling
Former Enron accounting officer Richard A. Causey and his wife, Elizabeth, leave the federal courthouse in Houston after he pleaded guilty to fraud.
(By Jessica Kourkounis -- Associated Press)
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Causey had rejected previous government offers. But as the trial approached, and the defense gained access to several incriminating statements about Causey by key witnesses, taking his case to a jury looked like an increasingly long shot, experts said. Causey also risked Lay and Skilling pointing the finger at him during the trial, as the only defendant with accounting expertise.
"There are some hands you play, and there are some hands you don't," Weingarten said.
Prosecutors had been set to produce a document known as the "global galactic" memo, in which Causey and Fastow allegedly agreed in writing that Fastow's partnerships would never lose money in their dealings with Enron. If it existed, such a deal would clearly violate securities laws.
Causey could be a difficult witness for both sides. With yesterday's plea deal, he admitted to failing to tell investors about hundreds of millions of dollars in losses that would have cast doubt on Enron's financial condition -- facts harmful to the defense.
But he has told close friends that his accounting decisions at Enron complied with all the rules and the law -- an assertion that could call into question facets of the prosecution's case.
Yesterday Lay's defense lawyer Michael Ramsey told reporters that Lay "can understand and sympathize with a man with a family, who is broke, making peace with the government."
Defense lawyers in the obstruction of justice case against Arthur Andersen LLP painted accountant and star witness David B. Duncan as a man pressured to admit wrongdoing to spare pain and financial hardship on his family, an issue that jurors in that case later said influenced them to disregard his testimony.
"It'll be a very interesting day," said Daniel M. Petrocelli, lead lawyer for Skilling, of Causey's possible turn on the witness stand. "I'm not sure at the end of the day how good a witness he will be for the government."
The plea leaves just two men sitting at the defense table for what has been called the most remarkable corporate fraud trial in a generation. Lay and Skilling are unlikely to resolve the charges against them short of a jury verdict, experts say.
"There's nothing the government can offer them, and there's nothing they would take," Philip Hilder, a Houston lawyer who represents several witnesses in the case, said of the company's former leaders. "This matter is headed for an absolutely certain collision course."
