Meet Rick Causey

With the Fastows headed to the pokey and Skilling and Lay not yet in the crosshairs, the biggest Enron target right now is Rick Causey, about whom I know little. Here's a story that gives some background on the former chief accounting officer and how he wound up in federal custody.

In The Woodlands, his neighbors, friends and priest speak glowingly of him.

"I have nothing but praise for him. If there were more parents like the Causeys, America would be better-served," said Francis Alleman, who managed one of Causey's sons on a Little League team.

Some who knew him at Enron say it was that very desire to please others, particularly bosses, that led Causey to sign off on dubious accounting practices that caused the company's downfall. For his role in Enron's collapse, he was indicted Thursday on six counts of securities fraud and conspiracy to commit securities fraud.

In the indictment, Causey was described as "a principal architect and operator of the scheme to manipulate Enron's reported earnings" to fool investors and inflate the company's stock price.

When Enron executives created dubious off-the-books partnerships to hide debts, Causey, 44, helped them pull it off, former colleagues say. When asked to pressure the Arthur Andersen auditors to go along with the partnerships, they say, he picked up the phone.

Behind his back, some Enron workers called Causey "the Pillsbury Doughboy."

"It was about his appearance and because he was such a softie," an Enron executive said. "He was pretty pliable, especially by (then-CEO Jeff) Skilling. He wanted to do what the company needed, and especially what Skilling wanted."

Enron Task Force prosecutor Sam Buell said Causey was one of several executives who trumpeted the company as being in "robust health and growing rapidly" when it was really "propped up by accounting schemes and, in many areas, was failing."

[...]

Causey was born in Houston in 1960 and has lived here most of his life. He was one of three children in a family living in southwest Houston. He attended elementary and Johnson Middle School before moving to Connecticut. While he was in high school, his family returned to Houston, where he went to Lee High School. He was a standout student, easily mastering even difficult subjects such as trigonometry and calculus, said Paul Haefner, who was on the cheerleading team with Causey and drove with him to school.

"That's how you know somebody is smarter than you — when they take calculus and enjoy it," said Haefner. "He was the most mature senior in the group I ran with. He was a little bit prim and proper."

Yes, well, as a math major, I'll try to remain modest.

At Andersen, Causey and Sherron Watkins, who has been widely hailed for her memo warning that Enron could "implode in a wave of accounting scandals," were colleagues, along with a host of others who later worked on the Enron account for Andersen or joined Enron.

One of them was David Duncan, the Andersen executive who oversaw the Enron account. He pleaded guilty two years ago to obstruction of justice for his role in the shredding of Andersen documents on the Enron account.

Causey rose to manager, but not partner. In 1991, he was hired as assistant controller in Enron's fledgling natural gas trading operation, Enron Gas Services, Skilling's brainchild. He began helping review accounting for off-the-books partnerships, a skill the company increasingly relied on.

He rose rapidly, even though he didn't have the abrasive, aggressive Enron personality typified by Fastow and Skilling.

Colleagues viewed him as "the anti-Fastow," a source close to Causey said.

"Causey is a great guy, one of the nicest people," the current Enron executive said. "He's not aggressive or arrogant, none of the things you associate typically with Enron employees. He and Dave Duncan were cut from the same cloth: Boy Scout types."

After Skilling became Enron president in January 1997, he made Causey, then 37, his chief accounting officer. Causey usually reported to Skilling and Lay, he told Enron internal investigators.

"Causey was certainly one of Skilling's guys," said a lawyer who represents a former executive who doesn't face investigation. "He was very close to Skilling, in Skilling's inner circle."

[...]

Several former and current executives said Causey's problem was not the advice of Andersen's accountants, but his unwillingness to buck superiors.

"He was intimidated by Fastow," said a former Enron executive. "He was a good person and didn't have that Machiavellian side that Andy has. He didn't have the experience or fortitude to deal with management and say, 'I know what Wall Street is looking for, but I think what you're asking of me is irresponsible.' "

Another former executive said, "He wanted to please. That may be his downfall. You need a strong moral compass."

Well, this may be his chance to make amends for that. Stay tuned.

Posted by Charles Kuffner on January 25, 2004 to Enronarama | TrackBack