Guilty plea to aid case against top Enron execs

WASHINGTON — Enron's former top accountant pleaded guilty Wednesday to a single securities-fraud charge in exchange for a prison sentence of five to seven years, giving a strong boost to the government's conspiracy and securities-fraud case against the ill-fated company's founder, Kenneth Lay, and former chief executive, Jeffrey Skilling, lawyers say.

The guilty plea by Richard A. Causey, 45, gives the Justice Department's Enron Task Force a second key witness to help guide jurors through a maze of complex deals that helped pitch the Houston energy company into bankruptcy.

U.S. District Judge Simeon T. Lake III accepted the guilty plea as preparations intensified for a trial widely viewed as the climax of the Enron saga.

The agreement essentially rewrites the script for the upcoming fraud trial for Lay and Skilling, the climax of a series of financial scandals that rocked investor confidence and sent markets reeling.

The once admired energy-trading company collapsed in an accounting scandal in 2001, costing thousands their jobs and retirement savings and investors billions.

With Causey's help, prosecutors can dispose of weeks of arcane and potentially confusing testimony by other witnesses about accounting issues at the heart of their case.

For their part, defense lawyers must now prepare to cross-examine a man who strategized with the defense team for years, maintaining his innocence.

Lake delayed the trial for Skilling and Lay to give the defense time to prepare for Causey's testimony and retool its case based on the watershed plea deal. The trial, which was to begin Jan. 17, was changed to Jan. 30.

The defense had been expected to exploit complex accounting at Enron to muddy the central issue of whether the former executives intended to break the law.

Causey is the 16th defendant to plead guilty in the Enron debacle. A total of 34 people have been charged, with five convicted and one acquitted. Others await trials.

The U.S. Supreme Court overturned the conviction of Enron's accounting firm, Arthur Andersen, and prosecutors dropped charges against Andersen's key Enron liaison, David Duncan, who had pleaded guilty.

The plea agreement described in broad strokes the substantial assistance Causey can provide. At a minimum, he will help prosecutors corroborate testimony by Enron's former chief financial officer, Andrew Fastow, who had been scheduled as the government's star witness at the upcoming fraud trial.

Defense lawyers had repeatedly called Fastow a liar and a thief because of admissions that he had siphoned $60 million from Enron using secretive business partnerships. Fastow pleaded guilty to two criminal charges in exchange for a 10-year sentence.

The deal with Causey comes after a week of intense negotiations between his Washington-based lawyers, Reid Weingarten and Mark Hulkower, and the government task force led by Assistant U.S. Attorney Sean Berkowitz.

Causey had rejected previous government offers. But as the trial approached, and the defense gained access to several incriminating statements about Causey by key witnesses, taking his case to a jury looked like an increasingly long shot, experts said.

Causey also risked Lay and Skilling pointing the finger at him during the trial, as the only defendant with accounting expertise.

Prosecutors had been set to produce a document known as the "global galactic" memo, in which Causey and Fastow allegedly agreed in writing that Fastow's partnerships would never lose money in their dealings with Enron. If it existed, such a deal would clearly violate securities laws.

Causey could be a difficult government witness in at least one respect. He has told close friends that he did not believe he did anything wrong at Enron, an issue that Michael Ramsey, a defense lawyer for Lay, highlighted in comments to The Washington Post last week.

Defense lawyers in the obstruction-of-justice case against Arthur Andersen painted accountant and star witness David Duncan as a man pressured to admit wrongdoing to spare his family hardship, an issue jurors in that case later said influenced them to disregard his testimony.

The plea leaves just two men at the defense table for what has been called the most remarkable corporate-fraud trial in a generation.

Lay and Skilling are unlikely to resolve the charges against them short of a jury verdict, experts say. Lay signaled his take-no-prisoners approach in a blistering speech in Houston earlier this month, when he blasted prosecutors.

"There's nothing the government can offer them, and there's nothing they would take," Philip Hilder, a Houston lawyer who represents several witnesses in the case, said of the company's former leaders. "This matter is headed for an absolutely certain collision course."