Former Enron Chief Accountant Faces Criminal, Civil Charges

Andrew Fastow’s alleged partner in Enron crime pleaded not guilty yesterday to six criminal charges handed up in an indictment by a federal grand jury looking into the collapse of what was the nation’s seventh largest company.

Richard A. Causey, 44, who was the energy giant’s chief accountant during the years in which massive fraud allegedly occurred, is accused of five counts of securities fraud and one count of conspiracy to commit securities fraud. He will be released on $1 million bail to await trial.

In conjunction with the criminal case filed by the Justice Department, Causey was charged yesterday by the Securities and Exchange Commission with violating, and aiding and abetting the violation of, the antifraud, periodic reporting, books and records, and internal controls provisions of the federal securities laws. The SEC seeks restitution of all ill-gotten gains, seeks to bar Causey from serving as a director or officer of a publicly held company and seeks an injunction against future violations of federal securities laws.

Causey shared financial duties and rank with former Chief Financial Officer Andrew Fastow, and like Fastow, reported to former Chief Executive Officer Kenneth Lay.

Fastow and his wife Lea entered into plea agreements last week with federal prosecutors with Andrew Fastow pleading guilty to two counts of conspiracy and Lea Fastow pleading guilty to filing a false tax return. He faces 10 years in prison and she will spend 5 months in prison. Anonymous sources told Dow Jones Newswires that the Fastow deal needed to be finalized before prosecutors could turn their attention to Causey.

"Rick Causey has done absolutely nothing wrong and we will vigorously contest any charges the government may bring," Mark Hulkower, one of Mr. Causey's attorneys, said Wednesday.

Last week, reporters speculated about how well others in Houston were sleeping knowing that Fastow’s deal hinged on his cooperating with prosecutors attempting to make cases against other Enron players.

As part of his deal, Fastow admitted that he and other senior Enron managers misled investigators about Enron’s finances to inflate the stock and that he participated in schemes designed to enrich himself and others at the expense of stockholders, Dow Jones reported.

Dow Jones reported that Causey was the chief accounting officer when many of Fastow’s schemes were operational. Fastow’s October 2002 indictment indicates that Causey had a secret deal with Fastow, guaranteeing that Fastow wouldn’t lose money when one of his partnerships did business with Enron, Dow Jones reported.

You may like these other stories...

With tax season in the past, it's time to think about the tax implications of decisions your clients may be making about their homes in 2014. The rules are complicated and because of the huge amounts involved, the...
IRS revokes group’s tax exemption over anti-Clinton statementsGregory Korte of the USA Today reported on Monday that the IRS has revoked the tax-exempt status of a conservative-aligned charity, the Patrick Henry Center...
Clawback policies vary by company, industry: PwCAccording to a report issued to clients by PwC on April 17, companies have instituted a wide range of so-called clawback policies – with no two exactly alike – in...

Upcoming CPE Webinars

Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.
Apr 30
During the second session of a four-part series on Individual Leadership, the focus will be on time management- a critical success factor for effective leadership. Each person has 24 hours of time to spend each day; the key is making wise investments and knowing what investments yield the greatest return.
May 1
This material focuses on the principles of accounting for non-profit organizations’ expenses. It will include discussions of functional expense categories, accounting for functional expenses and allocations of joint costs.