Enron Guilty Plea—Richard Causey

The big news this morning is that Enron co-defendant Richard Causey has apparently struck a deal to plead guilty.^[1] This news follows the reports last week that suggested that Mr. Causey was engaged in plea negotiations with federal prosecutors. Mr. Causey is expected to plead guilty this afternoon to at least one of the many corporate fraud charges facing him, but at this time, it is unknown what charge that will be.^[2] It is also believed that Mr. Causey has agreed to cooperate with the prosecution,^[3] though some news organizations, such as Bloomberg, are hesitant to say definitively that that is the case.^[4]

However, the suggestion that Mr. Causey may be allowed to plead guilty to only one charge of the 36 conspiracy, wire fraud, securities fraud, insider trading, money laundering, and false statements charges he is facing pretty well indicates that his cooperation is secured. In the event that he will not be testifying against Ken Lay and Jeffrey Skilling, that could signal that the government’s case is weak. A former federal prosecutor interviewed by Bloomberg said “[t]ypically, you don’t see the government willing to sign on a cooperating defendant on the eve of the trial. … This is a tacit acknowledgement by the government that their case is far from overwhelming and they are willing to take all the help they can get.”^[5] Furthermore, because the three defendants have a joint defense agreement, in which information is shared for trial, some of that information could be off-limits because of attorney-client privilege.^[6]

The prosecution of Enron has been a rather interesting affair. The case has been delayed for years, and Mssrs. Lay and Skilling would now like a two-month delay because they “have all been working closely together to present a single defense, so if Mr. Causey is not with [them, they] will have to substantially regroup.”^[7] Earlier this year, the Enron defendants complained of prosecutorial misconduct, something that we covered on September 8, and again that afternoon. Just recently, Ken Lay gave a public speech deriding the prosecution, which raised concerns of a tainted jury pool;^[8] of course, in Houston, it would be rather surprising if a juror had never heard of Enron.

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[1] See, e.g., Tom Fowler, et al., Causey Will Plead Guilty, Leaving Just Skilling, Lay, Houston Chronicle, Dec. 28, 2005; Former Enron Accountant to Plead Guilty, USA Today, Dec. 28, 2005; Kristin Hays, Former Top Enron Accountant Seen Pleading Guilty, Helping Government Case, Associated Press (via ABC News), Dec. 28, 2005; Enron’s Causey to Plead Guilty, Bolstering Case Against Lay, Bloomberg, Dec. 28, 2005.
[2] Fowler, supra note 1.
[3] Id.
[4] Bloomberg, supra note 1 (“Prosecutors declined to say if he would testify against Lay, Enron's former chairman, or Skilling, the company's former chief executive officer, who were scheduled to go on trial next month as co-defendants with Causey.”)
[5] Id. But see Fowler, supra note 1 (the same source also said “To have another high ranking officer who knows the numbers but who hasn't been demonized the same way Fastow has serves the government's case very well. … From the standpoint of wanting to go into the trial from a position of strength, this is not what Skilling and Lay were hoping for on the eve of trial."
[6] See, Fowler, supra note 1.
[7] Id.
[8] See Ken Lay, Speech: Guilty, Until Proven Innocent, kenlayinfo.com, Dec. 13, 2005; Mary Flood, Ken Lay Rails at Prosecutorial “Wave of Terror,” Houston Chronicle, Dec. 13, 2005.