Top Enron Accountant Said SurrenderingJan 22, 2004 | AP With a guilty plea from former Enron Corp. finance chief Andrew Fastow secured, the case against the failed company's top accountant is moving to the forefront, according to sources familiar with the investigation.
Authorities expected Richard A. Causey to surrender and appear in federal court Thursday in Houston on charges related to the disgraced energy giant's 2001 collapse, two sources close to the investigation told The Associated Press on Wednesday.
Like Fastow, Causey reported directly to former chief executives Kenneth Lay and his successor, Jeffrey Skilling. Causey and Fastow split financial duties at Enron and were at the same management level.
Causey, 44, had been expected to surrender and appear in federal court in Houston two weeks ago on charges stemming from the Justice Department's two-year Enron investigation, the sources said on condition of anonymity. It was not immediately clear what charges Causey faces.
His case moved to the back burner when a plea bargain package for former Enron finance chief Andrew Fastow and Fastow's wife, Lea, hit a snag.
Last week, the Fastows pleaded guilty in their separate cases two counts of conspiracy for Andrew Fastow and one count of filing a false tax return for his wife. The Fastows' guilty pleas needed to be secured before moving on to Causey, the sources said.
"Rick Causey has done absolutely nothing wrong and we will vigorously contest any charges the government may bring," Mark Hulkower, one of Causey's attorneys, said Wednesday.
It was unclear what charges Causey would face, but the sources said they expected him to face a criminal complaint or an indictment, given Andrew Fastow's cooperation with prosecutors.
Fastow admitted that he and others in Enron's senior management misled investors about Enron's finances to inflate its stock and that he schemed to enrich himself and others at shareholders' expense.
Fastow's October 2002 indictment referred to the chief accounting officer as having a secret deal with Fastow ensuring he wouldn't lose money when one of many shady partnerships he ran did business with Enron. Causey was chief accounting officer when the partnerships were operating.
Causey was one of many Enron executives who joined the energy giant after working at its former outside auditor, Arthur Andersen LLP. He started at Enron in 1991 as assistant controller, and became chief accounting officer in 1999.
He was fired in February 2002 after an internal probe into the bankrupt energy giant's collapse determined he failed in his duty to adequately look out for Enron's interests when the energy giant did deals with Fastow's partnerships. He also invoked the Fifth Amendment and declined to answer questions when he appeared before a congressional committee that year.
Enron imploded in late 2001 in a sea of hidden debt, inflated profits and accounting tricks.
In a related case, lawyers for two of four former Merrill Lynch & Co. executives and two former midlevel Enron executives charged with conspiracy stemming from one of Fastow's shady deals said Wednesday their clients maintain their innocence and they intend to go to trial as scheduled in June.
The six former executives are charged with conspiracy for alleged involvement in a December 1999 deal in which a loan from Merrill Lynch was disguised as a sale of Nigerian barges so Enron could appear to have met earnings targets. Prosecutors say the executives knew the deal was a sham because Fastow secretly assured that Enron would buy back Merrill Lynch's interest in the barges within six months.