SEC Charges Ex-Enron Executive
Will SwartsJan 22, 2004 | www.thestreet.com The Securities and Exchange Commission Thursday charged former Enron Chief Accountant Richard Causey with fraud and record keeping violations, several hours after he surrendered to federal authorities.
After turning himself in at the FBI office in Houston this morning, Causey, 44, soon became the latest high-ranking executive to face charges related to the collapse of the bankrupt energy trader.
The complaint against Causey, coupled with last week's plea bargain arrangement with former Chief Financial Officer Andrew Fastow are thought to be critical moves in federal prosecutors' attempts to build criminal cases against former Enron Chairman Kenneth Lay and former CEO Jeffrey Skilling, who have yet to be charged.
In his plea bargain, Fastow said he was among the Enron executives who hid Enron's ballooning debt while inflating its profits. In Fastow's October 2002 indictment, Causey was mentioned by job title, though not by name, for alleged participation in the accounting fraud, while ensuring that Fastow didn't lose money in his off-the-books partnership deals.
The SEC complaint states Causey was instrumental in using a group of off-balance-sheet partnerships and a group of special purpose entities known as the Raptors to hide losses and protect profits for investors, which included Enron senior executives.
The complaint also states that Causey had a critical role in improper transactions with offshore partnerships that manipulated Enron's financial results.
"The transactions were not arm's length and could not have been accomplished using legitimate independent counterparties," the complaint said. "In many instances, the transactions were conducted pursuant to an undisclosed side agreement between Causey and Fastow that LJM would be guaranteed against loss in certain of its transactions with Enron, and that other losses to LJM would be made up through other transactions with Enron."
At the FBI office, Causey's lawyers told Reuters their client was "not happy to be here" and said he had done nothing wrong.