Wednesday, December 28, 2005

Yep, it's official: Kenny Boy is toast

In a reversal that transforms the criminal case against Enron's former top officers, the company's former chief accounting officer has reached an agreement with prosecutors to plead guilty to violating federal law during his employment there, people briefed on the decision said yesterday.

The former accounting officer, Richard A. Causey, had been viewed by lawyers in the case as likely to strike a plea deal with prosecutors and possibly serve as a witness for the government in the coming trial of two former chief executives of Enron, Kenneth L. Lay and Jeffrey K. Skilling.

While Mr. Causey's name is not widely known to those who have not been paying close attention to the Enron case, he has long been considered potentially one of the most important witnesses in the fraud cases against Mr. Lay and Mr. Skilling. The three men had been scheduled to go on trial together, facing charges of conspiracy, securities fraud, wire fraud and other crimes, beginning Jan. 17.

Corporate records and other documents establish that Mr. Causey engaged in frequent conversations with Mr. Lay and Mr. Skilling about accounting decisions at Enron, the former energy giant. Indeed, Mr. Causey was one of two participants in an Oct. 12, 2001, meeting with Mr. Lay that forms the basis for one charge against the former Enron chairman. With his legal liability established through a plea agreement, Mr. Causey could now be compelled to testify about his recollection of that meeting and other events.

While Mr. Lay and Mr. Skilling have attracted the most public attention, the government's case against Mr. Causey appeared to be supported by the strongest evidence. It included not only witnesses like Enron's former chief financial officer, Andrew S. Fastow, but also written documents that appeared to be part of illegal conspiracies, including what prosecutors contend was an illicit agreement with Mr. Fastow that allowed Enron to manipulate its financial statements.


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