In their 36-page criminal complaint filed this week against Andrew Fastow, Enron’s former chief financial officer, prosecutors gave clear signals that they have other senior Enron executives in their sights. But none more so than Richard Causey.
Mr Causey, Enron’s former chief accounting officer, is mentioned more often in the charges than any other company official except for Michael Kopper, the Fastow protÃ©gÃ© who has already pleaded guilty for his role in the scandal, and Mr Fastow himself.
Mr Causey, the heavy-set former Andersen accountant is named as an accomplice in a wide range of Mr Fastow’s alleged illicit dealings.
He is accused of cutting a secret deal to ensure that one of Mr Fastow’s private partnerships, LJM, would never lose money on an Enron deal. He allegedly conspired to alter documents, backdating them so Enron could make its financial statements look better. And he is accused of working with Mr Fastow to “manufacture” a $41m payment to LJM. Mr Causey’s attorney did not return a call seeking comment.
Legal experts said the repeated mention of Mr Causey is a good indication that he is the next target as prosecutors attempt to round up Enron’s top executives in a final push to gather witnesses against the most prominent names on their target list: former chief executives Kenneth Lay and Jeffrey Skilling.
“The use of a criminal complaint in these cases is clearly a strategic ploy by prosecutors,” said Jacob Frenkel, a former federal prosecutor and an expert on white collar crime. “The prosecutors’ case is enhanced enormously if you have Andy Fastow plus others against Jeff Skilling. As chief accounting officer, you know Causey is going to be in the centre of the whole case.”
Mr Causey, who invoked his Fifth Amendment rights and did not testify when called before a congressional inquiry this year, could pose particularly thorny problems for Mr Skilling.
A review of Mr Causey’s interviews with Enron’s internal investigators shows that he worked with Mr Skilling in a restructuring of Enron-related partnerships called Raptors, which investigators believe was intended solely to hide losses from Enron investors.
Congressional investigators estimated that, if the Raptors had not been restructured, Enron would have had to take a $500m charge against earnings.
When Enron restated its earnings in October 2001 – an event that triggered its collapse into bankruptcy “accounting errors” at the Raptors were one of the main reasons cited.