Risk Management

Enron’s Causey Reports to Prison

Only Jeffrey Skilling and Andrew Fastow received tougher sentences for their roles in the collapse of the former energy giant.
Stephen TaubJanuary 3, 2007

Onetime Enron chief accountant Richard Causey reported on Wednesday to the Bastrop Federal Correctional Institution, about 30 miles southeast of Austin, Texas, according to published accounts.

Causey’s sentence at the low-security prison — five-and-a-half years — is exceeded among former Enron executives only by the 24-plus years handed down to ex-CEO Jeffrey Skilling and the six years for onetime CFO Andrew Fastow.

He will also serve two years’ probation and pay a $25,000 fine that will be distributed to Enron’s victims, according to the Associated Press. Causey had already agreed to pay another $1.25 million to the victims’ funds, noted the wire service, and forfeited a claim to about $250,000 in deferred compensation.

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Causey was the last of 16 former Enron executives to plead guilty to a crime, noted the Houston Chronicle. He had reportedly faced 36 criminal counts and was initially scheduled to stand trial with Skilling and former chairman Kenneth Lay early in 2006. Two weeks before the trial was scheduled to begin, however, he accepted a deal with prosecutors and pleaded guilty to a single charge of securities fraud.

The newspaper pointed out that David Delainey, former CEO of Enron North America, testified at the trial that he, Skilling, Causey, and other executives decided to move the trading function of one Enron retail unit into the company’s larger trading franchise to hide $200 million in losses. Causey did not testify at that trial, noted the Chronicle, but reportedly testified in a sworn statement that “I and others in senior management believed that had these losses been disclosed to Enron’s shareholders and the analyst community, the reaction would have been severely negative and the stock price would have declined.”

Two more former Enron executives are awaiting orders from a judge to begin their prison terms, according to the Chronicle. Michael Kopper, Fastow’s former top lieutenant, was sentenced in November to three years and a month after pleading guilty in 2002 to two counts of conspiracy, and former investor relations chief Mark Koenig was sentenced to 18 months after pleading guilty in 2004 to aiding and abetting securities fraud.