Former Enron Corp. chief accounting officer Richard Causey agreed to plead guilty to securities fraud during a re-arraignment hearing on Wednesday afternoon, according to published reports.
Causey faced 36 counts of fraud, conspiracy, insider trading, lying to auditors, and money laundering for helping convince investors that Enron was financially sound, according to the Associated Press, and faced as much as 10 years in prison. However, unlike former chief financial officer Andrew Fastow, Causey is not accused of making big bucks from his admitted crimes.
Under the plea deal before U.S. District Judge Sim Lake, Causey agreed to serve seven years in prison and to forfeit $1.25 million. His time behind bars could be reduced to five years if he cooperates “fully” with the government, according to the Houston Chronicle; his sentencing is scheduled for April 21. The newspaper also reported that Causey is negotiating a separate settlement with the Securities and Exchange Commission.
Causey’s plea — the 16th by a former Enron executive, reported the Chronicle — comes less than three weeks before he was scheduled to go to trial with former chairman Kenneth Lay and former chief executive officer Jeffrey Skilling.
According to the paper, Causey has told investigators he believes Skilling approved the restructuring of partnerships that prevented reporting a $500 million loss.
Causey’s deal will jolt the plans of attorneys for Kenneth Lay and Jeffrey Skilling, who were preparing a joint defense strategy. The AP suggested, however, that although Causey has inside information on the defense team’s game plan, he would be restricted in how he could use that information if he cooperated with the government. Nonetheless, Judge Lake granted a defense motion and pushed back the opening of the Lay-Skilling trial to January 31.
Causey earned a master’s degree in accounting from the University of Texas, wrote the Chronicle. He then joined Enron auditor Arthur Andersen, rising to senior manager before moving over to Enron itself in 1991.
He eventually rose to the rank of chief accounting officer; in that role he was responsible for Enron’s public accounting statements, reported directly to Skilling for years, and took part in conference calls with Lay in late 2001 as Enron was spinning toward bankruptcy. He was fired in February 2002.