Causey to take plea agreement

At 2 PM today, former Enron chief accountant Rick Causey will take a plea rather than go to trial.

It wasn't known what the exact terms will be but the deal includes cooperating with the government — which may include testifying in trial — in exchange for the chance at a lesser jail sentence.

Causey was scheduled to go to trial Jan. 17 along with former Chairman Ken Lay and former CEO Jeff Skilling. All three men previously have pleaded not guilty to charges ranging from fraud to conspiracy related to schemes that led to the company's 2001 bankruptcy.

The former chief accounting officer lacked the status and salaries of his two co-defendants, but a plea deal will likely make him the government's new star witness.

Like former Chief Financial Officer Andrew Fastow, who agreed to cooperate with the government in 2004, he has intimate knowledge of the company, particularly in its last days before it filed for bankruptcy.

Causey was responsible for the company's public accounting statements, reported directly to Skilling for years and took part in conference calls with Lay in fall 2001 as Enron fell from being one of the world's largest companies to one of the country's largest bankruptcies.

Unlike Fastow, however, Causey doesn't have the taint of having tried to personally enrich himself through side deals, as Fastow admitted in his plea agreement.

"To have another high ranking officer who knows the numbers but who hasn't been demonized the same way Fastow has serves the government's case very well," said Robert Mintz, a New Jersey-based legal expert who follows the case. "From the standpoint of wanting to go into the trial from a position of strength, this is not what Skilling and Lay were hoping for on the eve of trial."

All of this certainly looks good for the Enron Task Force, and as Tom notes in his overview of Causey's situation, he had more to worry about than Skilling or Kenny Boy due to his closer connections to Fastow and his side agreements. It's a little early to celebrate, though, if you're on the prosecution team. Remember the Enron Broadband trial, and how that was supposed to be an easy win for them? This case is certainly no less complex than that one, and there's the specter of Causey pleading out because he had no choice financially, thus making him less effective on the stand than one might hope:

David Berg, a Houston defense attorney who has followed the case, said the Lay and Skilling teams may try and compare Causey to David Duncan, the former Arthur Andersen executive who pleaded guilty in connection to the 2002 document shredding case. The U.S. Supreme Court overturned a guilty verdict against the accounting firm and Duncan's guilty plea was withdrawn.

"Duncan pled guilty, but when he got on the stand it was pretty clear he was innocent," Berg said, referring to testimony Duncan gave under cross examination. "I think the main hope of the defense will be to make the case that Causey cratered under pressure, that he just pled so he could avoid a long jail sentence."

Tom notes the same thing in this WaPo piece:

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."

With all due respect, the jails are full of people who don't believe they did anything wrong. That by itself means nothing. I certainly hope that what we've got here is the feds using one guilty person to put the screws to two others, but we'll have a better idea of that soon. What we probably won't have soon is the start of this trial, as I'm sure the defense will renew motions to move the proceedings elsewhere. Stay tuned.

Posted by Charles Kuffner on December 28, 2005 to Enronarama | TrackBack