HOUSTON (AP) — A former top accountant at Enron Corp. sealed his plea deal with prosecutors yesterday, becoming a key potential witness in the upcoming fraud trial of former Chief Executive Officers Kenneth L. Lay and Jeffrey Skilling.
Mr. Lay and Mr. Skilling were granted two extra weeks to adjust to the setback before their much-anticipated trial, the last and biggest of a string of corporate scandal cases, starts at the end of January.
The accountant, Richard Causey, pleaded guilty to securities fraud yesterday in return for a seven-year prison term. His sentence could be shortened to five years if prosecutors are satisfied with his cooperation in the trial. He also must forfeit $1.25 million to the government, according to the plea deal.
Causey’s arrangement included a five-page statement of fact in which he admitted that he and other senior Enron managers made various false public filings and statements.
“Did you intend in these false public filings and false public statements, intend to deceive the investing public?” U.S. District Judge Sim Lake asked.
“Yes, your honor,” replied Causey, who said little during the short hearing, appearing calm, whispering to his attorneys and answering questions politely.
Mr. Lay, Mr. Skilling and Causey had been scheduled to be tried together Jan. 17 on conspiracy, fraud and other charges related to the scandal-ridden company’s collapse more than four years ago. The deal leaves Mr. Lay and Mr. Skilling with another opponent rather than an ally who has been part of their united defense front since the three were first indicted last year.
After Causey’s plea, the judge granted a defense request to delay the trial’s start for two weeks, until Jan. 30.
Causey’s formal sentencing was set for April 21 but could be postponed. The maximum penalty for securities fraud is 10 years in prison and a fine of $1 million or twice the amount illegally gained, followed by three years of probation.
The amount of cash Causey must forfeit is slim compared with multimillion-dollar fines and forfeitures assessed to other former Enron executives who admitted to crimes. Former finance chief Andrew Fastow, who masterminded schemes to manipulate Enron’s books while skimming millions of dollars for himself on the side, agreed to forfeit nearly $30 million in cash and property when he pleaded guilty to two counts of conspiracy in January 2004.
Causey’s attorneys have noted repeatedly in filings that their client didn’t have the resources to set aside $20 million for legal fees like Mr. Skilling and Fastow, often forcing them to tag on to the wealthier defendants’ trial-preparation efforts.
Causey attorney Reid Weingarten said Causey reached the deal because it was the right thing to do.
Mr. Weingarten also represented former WorldCom CEO Bernard Ebbers, who was sentenced in July to 25 years in prison for orchestrating the $11 billion accounting fraud that toppled the telecommunications firm three years ago.
Causey, the government’s 16th cooperating witness in exchange for a plea, had faced more than 30 counts of conspiracy, fraud, insider trading, lying to auditors and money laundering.