Enron Corp.’s former top accountant on Wednesday pleaded guilty to securities fraud and agreed to help pursue convictions against the company’s founder and former Chairman Kenneth Lay and former President and CEO Jeffrey Skilling. Causey had been scheduled to go to trial with Lay and Skilling on Jan. 17 in Houston. However, following Causey’s plea, defense attorneys requested that the trial be delayed.
Under the plea agreement, Causey, 45, who was facing decades in prison if convicted, will be sentenced to up to seven years in prison and will forfeit $1.25 million. However, the sentence may be reduced to five years if the government considers Causey’s cooperation in the Skilling and Lay trial to be substantive.
Causey is the 16th cooperating witness for the Enron Task Force, which was put together by the U.S. Attorney’s Office after the company declared bankruptcy in December 2001. The former chief accounting officer had originally pleaded not guilty in January 2004 to 36 counts of conspiracy, fraud, insider trading, lying to auditors and money laundering (see Daily GPI, Jan. 23, 2004).
Causey, Lay and Skilling had been cooperating on their defense strategy through a joint defense agreement, which allowed them to share information for trial. The terms of the agreement were not disclosed, but some information disclosed during the pre-trial discussions may be considered off limits by the prosecution. U.S. District Judge Sim Lake, who is presiding over the case in Houston, has set a trial date of Jan. 31.
Causey received a master’s degree in accounting from the University of Texas, and he provided audit services to Enron on behalf of outside auditor Arthur Andersen LLP from 1986 to 1991. In 1991, Enron hired Causey as assistant controller of Enron Gas Services Group, and between 1991 and 1997, he served in various executive positions.
In 1998, Causey was made chief accounting officer and executive vice president, and in that role, he managed accounting practices and reported directly to Lay and Skilling. Causey also was principal manager of Enron’s financial disclosures to the investing public, and he regularly participated in analyst conferences and other public forums to discuss Enron’s financial condition. Causey also signed Enron’s annual reports, including Form 10-Ks, and the quarterly Form 10-Qs filed with the Securities and Exchange Commission.
Causey was fired from Enron in February 2002, following the bankruptcy filing, He was fired in February 2002 following a review by the company’s new management of a special investigative report prepared for the board of directors (see Daily GPI, Feb. 15, 2002).
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