Former Enron Executive Pleads Guilty, to Cooperate with Prosecutors
The admonition adds to the federal government’s case against the leaders of Enron, a Houston-based energy trading giant whose 2001 financial collapse destabilized the energy market and economically devastated thousands of investors.
As part of a plea agreement, Causey will cooperate with federal prosecutors in the case against his former bosses, Enron founder Kenneth Lay and former CEO Jeffrey Skilling. In exchange, Causey will serve a seven-year sentence and forfeit $1.25 million to the government.
Although Causey pleaded guilty to only one of 30 counts against him, he also faces charges of conspiracy, fraud, insider trading, lying to auditors and money laundering. Many of the charges against Causey overlap with the 35 charges against Skilling and the seven charges against Lay.
The three men were scheduled to go on trial together on Jan. 17. After the plea, the defense requested the trial be postponed, and the judge agreed. The trial is now set for Jan. 30. Formal sentencing for Causey is set for April 21 but may be postponed.
The plea agreement included a five-page document in which Causey admitted to making 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 during Wednesday’s proceedings, according to the Association Press. “Yes, your honor,” replied Causey.
It is not clear if Causey will testify against Lay and Skilling, but his cooperation alone is considered an advantage for the government. Causey may be able to explain key financial documents and is considered more reputable than Andrew Fastow, another Enron executive who pleaded guilty and plans to testify.
“There is some safety in numbers from the government’s perspective. It’s not just (former Chief Financial Officer) Andy Fastow now, it’s another senior official,” former federal prosecutor Kirby Behre told the AP. “They might make an effective one-two punch in terms of government witnesses.”
The plea agreement includes incentives for Causey to cooperate. If he cooperates fully, prosecutors may reduce his prison term to five years. The maximum penalty for securities fraud is 10 years in prison, followed by three years probation.
Causey’s decision to plead guilty came after lengthy negotiations between his legal team and the Justice Department’s Enron task force. During similar discussions last year, lawyers said Causey had rejected a plea agreement and insisted he would go to trial.
Reid Weingarten, Causey’s attorney, said Causey agreed to the deal because it was the right thing to do.
“Today, Rick Causey, a very decent, honorable man, began the process of putting behind him the unfortunate Enron episode,” Weingarten said, reported the AP. “He will tell the truth, because that is who he is, that is what he should do, and that is what he is going to do.”