Securities Fraud—Enron

As the much-anticipated federal criminal trial of Enron is set to begin on January 17, there are rumors that one of the defendants may be negotiating a plea.^[1] According to the Wall Street Journal, former Chief Accounting Officer Richard Causey “has for months been the subject of a quiet tug of war between” the government and the defense.^[2]

Mr. Causey is facing charges that he was part of a conspiracy and that he committed wire and securities fraud, money laundering, insider trading, and made false statements. Because most of the accusations facing Enron focus on purported fraudulent accounting activities inside the company, Mr. Causey is seen as a major player.^[3]

There is a lot of speculation that Mr. Causey might make a plea, and if he does, “he would be a valuable government witness and change the trajectory of the trial.”^[4]

Fifteen other individuals have already agreed to plead guilty, with several expected to be witnesses at the trial.^[5] One of those potential witnesses is former Chief Financial Officer Andrew Fastow, who is seen as less sympathetic than Mr. Causey.^[6]

If a plea is tendered to Mr. Causey, the US Attorneys will have to take the following factors into consideration:

1. The defendant's willingness to cooperate in the investigation or prosecution of others;
2. The defendant's history with respect to criminal activity;
3. The nature and seriousness of the offense or offenses charged;
4. The defendant's remorse or contrition and his/her willingness to assume responsibility for his/her conduct;
5. The desirability of prompt and certain disposition of the case;
6. The likelihood of obtaining a conviction at trial;
7. The probable effect on witnesses;
8. The probable sentence or other consequences if the defendant is convicted;
9. The public interest in having the case tried rather than disposed of by a guilty plea;
10. The expense of trial and appeal;
11. The need to avoid delay in the disposition of other pending cases; and
12. The effect upon the victim's right to restitution.^[7]

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[1] John R. Emshwiller, Enron’s Causey Steps Into the Trial Limelight, Wall St. J., Dec. 23, 2005. (subscription only)
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Id.
[7] US Attorney’s Manual, Plea Agreements – Considerations to be Weighed, 9-27.420, Aug. 2002.