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HOUSTON (AP) -- Former top Enron Corp. accountant Richard Causey pleaded guilty to securities fraud Wednesday and agreed to help pursue convictions against Enron founder Kenneth Lay and former CEO Jeffrey Skilling.
Lay, Skilling and Causey were 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 Lay and Skilling with another opponent rather than an ally who has been part of their united defense front since the trio was first indicted last year.
Causey will serve seven years in prison and forfeit $1.25 million to the government, according to the plea deal. However, if the government is happy with his cooperation, prosecutors can ask that his sentence be reduced to five years.
The maximum penalty for securities fraud is 10 years in prison, followed by three years of probation.
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.
Many of the charges against Causey overlapped with the 35 counts of fraud, conspiracy, lying to auditors and insider trading pending against Skilling. The pair are accused of conspiring with others to fool investors into believing a wobbly Enron was healthy in the years leading to its December 2001 crash.
Some of Causey's charges also overlap with the seven fraud and conspiracy counts pending against Lay, in which the former chairman is accused of perpetuating the ruse after Skilling's abrupt resignation in August 2001.
Skilling and Lay maintain that they neither committed nor knew of any crimes at Enron, and both have pleaded not guilty.
Causey, 45, could be more damaging to Lay and Skilling than former Enron finance chief Andrew Fastow, who 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.
Also, Lay has repeatedly pointed to Fastow as the crook who abused his trust, highlighting the former finance chief's admitted skullduggery.
"There is some safety in numbers from the government's perspective. It's not just Andy Fastow now, it's another senior official. That takes some of the pressure and burden off of Fastow," said Kirby Behre, a former federal prosecutor. "They might make an effective one-two punch in terms of government witnesses."
Another former prosecutor said the Lay and Skilling defense teams knew a Causey plea was possible.
"It changes the face of the trial for the prosecutors and the defense," said Jacob Frenkel. "They had to have some contingency plan for trial preparations for a case without Causey. Now they just put that plan in place."
He said the deal should streamline what had been expected to be a four- to six-month trial set to begin with jury selection on Jan. 17.
(Copyright 2005 by The Associated Press. All Rights Reserved.)
