Tuesday, December 27, 2005

Rick Causey (Enron head beancounter) flips

With Ken Lay and Jeff Skilling slated to go on trial in a few weeks, their defense teams just got bad news:

Enron's former chief accounting officer, Richard Causey, has struck a plea bargain with federal prosecutors and will avoid going to trial with the fallen energy company's two top executives, according to a person familiar with the negotiations. ...

Causey, 45, agreed to testify against his former bosses, Enron Corp. founder Kenneth Lay and former CEO Jeffrey Skilling, in exchange for a much lesser prison sentence than he would receive if convicted on all counts. The trial is scheduled to begin next month, but a delay is considered likely since defense attorneys would want more time to prepare for the government's new witness.

Causey is charged with fraud, conspiracy, insider trading, lying to auditors and money laundering for allegedly knowing about or participating in a series of schemes to fool investors into believing Enron was financially healthy. The company imploded in late 2001 amid disclosures of complicated financing schemes that gave the appearance of success.

As indicated, the trials of Lay and Skilling will likely be postponed while their lawyers scheme a strategy to attack Causey, who is now a hostile witness. Causey ranks higher on the totem pole than Fastow, was an insider to the boardroom where Lay and Skilling managed the company, and is without the stain of self-enrichment that accompanies Andy Fastow:

Causey could be more damaging to Lay and Skilling than former Enron finance chief Andrew Fastow, who joined the government's cadre of cooperating witnesses when he pleaded guilty to two counts of conspiracy in January 2004. Unlike his former peer, Causey didn't skim millions of dollars for himself from shady deals and therefore would bring less baggage to the witness stand.

"While they were preparing to deal with Fastow, Causey is another matter," said Robert Mintz, a former federal prosecutor. "Fastow has been so demonized by the books and media accounts of the Enron collapse that he is an enticing target for the defense teams."

And finally, for the trivia buffs:

Causey would become the 16th ex-Enron executive to plead guilty and agree to cooperate with the government.

Could it be more embarrassment for the Republicans in the new year as the Enron thieves turn on each other?

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