Ex-Official Agrees to Help Prosecution in Enron Case

Enron's former chief accounting officer pleads guilty to securities fraud and agrees to cooperate with federal prosecutors in return for a reduced prison sentence. Richard Causey now is expected to testify against former top Enron executives, Kenneth Lay and Jeffrey Skilling.

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ROBERT SIEGEL, host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

One count of securities fraud--that's what Enron's former chief accounting officer pleaded guilty to today. Richard Causey has agreed to cooperate with federal prosecutors in return for a reduced prison sentence. He faces five to 10 years in jail. Causey's lawyer, Reid Weingarten, spoke after the hearing in Houston.

Mr. REID WEINGARTEN (Attorney): To the extent he has any involvement in upcoming legal proceedings, he will do one thing: He will tell the truth because that's who he is, that's what he should do and that's what he is going to do.

SIEGEL: Richard Causey was scheduled to go on trial next month with the two former top executives of Enron, Kenneth Lay and Jeffrey Skilling. Now Causey will help the government's case against Lay and Skilling for their part in what was the largest bankruptcy in US corporate history. NPR's Wade Goodwyn has been covering the story and joins me now.

And, Wade, does Causey's plea bargain with prosecutors come as a surprise to you?

WADE GOODWYN reporting:

Well, it's a critical development in this case. It's a huge victory for prosecutors. But, in the end, I guess it's not a big surprise, and that's because Causey faced 30 years in prison if he was convicted at trial. Sure, he could have walked away a free man if he'd prevailed in court. But while Causey himself is relatively unknown, at the defense table he'd be sitting next to two of the most infamous executives in America, and his fate would go hand-in-hand with theirs. With all the pretrial publicity in this case over the last four years, that's risky regardless of the quality of the prosecution's evidence.

Now that he's cooperating, he spares himself and his family the agony and the uncertainty of this big trial. Plus, with this agreement, the government's depiction of Causey will be very different in court. He has gone from executive pond scum to stand-up guy and star witness. Of course, it's just the opposite point of view if you're Skilling or Lay.

SIEGEL: Well, what kind of damage do you think Richard Causey can do to the defense for Skilling and Lay?

GOODWYN: Causey's potentially very damaging to the defense. He reported directly to Jeff Skilling, Enron's former CEO. If he can place Skilling and Lay in the room or on conference calls when these accounting schemes were discussed--if Causey says on the stand, `Yes, we knew we were deceiving investors. We all talked about how to best deceive them,' that's potentially devastating. The chairman and CEO are not accused of being the masterminds of these schemes; that was Andy Fastow, the CFO. But Lay and Skilling are accused of conspiring to further the deception that Enron was in good shape, and Causey was an insider. He can potentially guide the government and the jury, draw a road map of the alleged conspiracy, who was whispering what into whose ear. Prosecutors are going to have Causey play the role of narrator to their evidence in their case.

SIEGEL: Now until this development, the prosecution's star witness was going to be Fastow. You figure Causey looks like a much more effective witness for the state than Fastow?

GOODWYN: I think Causey's better for prosecutors because he didn't steal $45 million from Enron while he bankrupted the company. Fastow may know everything about the accounting schemes. He should; he devised them all. But he's lied so much that his credibility is damaged. In fact, Fastow is going to be Lay and Skilling's first line of defense: that it was Fastow who deceived everybody, including the company's two top executives. So when prosecutors put Fastow on the stand to tell all, the defense could turn that to their advantage on cross-examination. Fastow could potentially leave the stand with the jury thinking, `That's the guy who did this.'

Defense lawyers are just not going to have that same opportunity with Richard Causey. Up until today, Causey, Lay and Skilling--they were all on the same team. They were united in their defense. Now Causey is Lay and Skilling's deadliest enemy, at least he has the potential to be. So the judge has given the defense lawyers two extra weeks to adjust, and I expect it will be two of the busiest weeks of their lives.

SIEGEL: Trial now delayed until January 30th.

GOODWYN: That's right. The defense lawyers had wanted two months to try to extend this trial to adjust to this, but the judge didn't really want to extend it at all. He's already done extensive voir dire, and, you know, they're going to keep this jury pool and they're going to go in two weeks, not two months.

SIEGEL: That's NPR's Wade Goodwyn. Thank you, Wade.

GOODWYN: It's my pleasure.

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