Ex-Enron Accountant Surrenders in Houston
By KRISTEN HAYS, AP Business Writer
HOUSTON - Enron Corp.'s former top accountant surrendered to federal authorities early Thursday on charges related to the disgraced energy giant's 2001 collapse.
Richard A. Causey, 44, accompanied by a pair of lawyers, walked into the Houston office of the FBI (news - web sites) just before daybreak. They had no comment as they entered the building.
Causey had been expected to turn himself in and appear in federal court in Houston two weeks ago on charges stemming from the Justice Department (news - web sites)'s two-year Enron investigation. The case involving him, however, moved to the back burner when a plea bargain package for former Enron finance chief Andrew Fastow and Fastow's wife, Lea, hit a snag.
Last week, the Fastows pleaded guilty in their separate cases — he to two counts of conspiracy, she to one count of filing a false tax return. The Fastows' guilty pleas needed to be secured before moving on to Causey, sources close to the investigation said Wednesday on condition of anonymity.
Like Andrew Fastow, Causey reported directly to former chief executives Kenneth Lay and his successor, Jeffrey Skilling. Causey and Fastow split financial duties at Enron and were at the same management level.
It was not unclear what charges Causey would face.
"Rick Causey has done absolutely nothing wrong and we will vigorously contest any charges the government may bring," Mark Hulkower, one of Causey's attorneys, said Wednesday.
Andrew Fastow admitted that he and others in Enron's senior management misled investors about Enron's finances to inflate its stock and that he schemed to enrich himself and others at shareholders' expense.
Andrew Fastow's October 2002 indictment referred to the chief accounting officer as having a secret deal with Fastow ensuring he wouldn't lose money when one of many shady partnerships he ran did business with Enron. Causey was chief accounting officer when the partnerships were operating.
Causey was one of many Enron executives who joined the energy giant after working at its former outside auditor, Arthur Andersen LLP. He started at Enron in 1991 as assistant controller and became chief accounting officer in 1999.
Enron imploded in late 2001 in a sea of hidden debt, inflated profits and accounting tricks.
Causey was fired in February 2002 after an internal probe concluded he failed in his duty to adequately look out for Enron's interests when the energy giant did deals with Andrew Fastow's partnerships. He also invoked the Fifth Amendment and declined to answer questions when he appeared before a congressional committee that year.
In a related case, lawyers for two of four former Merrill Lynch & Co. executives and two former midlevel Enron executives charged with conspiracy stemming from one of Andrew Fastow's shady deals said Wednesday their clients maintain their innocence and they intend to go to trial as scheduled in June.
The six former executives are charged with conspiracy for alleged involvement in a December 1999 deal in which a loan from Merrill Lynch was disguised as a sale of Nigerian barges so Enron could appear to have met earnings targets. Prosecutors say the executives knew the deal was a sham because Andrew Fastow secretly assured that Enron would buy back Merrill Lynch's interest in the barges within six months.
WTF? All the crap the Fastows were pulling and he only gets 2 counts of conspiracy and she gets off with a charge of filing a false tax return? She was in so deep her eyes were brown. If he wasn't the mastermind behind the illegal activities, he was certainly close enough to go down hard for it all.
Here's the gov'ts case against Lea Fastow:
here. You'll need Adobe Acrobat to read the filing. Its pretty interesting how it all played out. Lea Fastow even had her father in on the money laundering operation.
For 1997 Lea Fastow reported annual income of $1,287,543.00. That's right. Just under $1.3 million. And that's not counting the money she hid from the government.
In 1998 Lea Fastow reported annual income of $2,183,850.00. Yep. Just under $2.2 million. That's quite a raise for a girl with an MBA. And she's still not counting all of her money.
For 1999 Lea Fastow reported annual income of $9,129,602.00
and to do it she had to file an extension (I guess it takes longer to count all that money, and to hide the rest of the money she didn't report).
So what she'd get for her efforts? Five months in prison. That's all. She'll be out by June. She can get box seats for the Pepsi 400 in Daytona. She'll be sitting on her pile of money to get a better look at the 4th of July fireworks. She can throw the first pitch at the MLB All-Star Game.
Her reason for demanding a 5-month sentence in the plea deal? So she can keep the 2 Fastow children while their father does his prison time. Yeah, I'm sure she's a great role model for her children. "See kids, you don't necessarily have to follow the rules and obey your teachers if the rewards outweigh the punishment." Somehow, I don't think the children were the reason she only wanted 5 months. I think the kids just made a convenient excuse.
5 months and she's out.
Is this a great country or what?
Meanwhile, her husband gets 10 years and $20+million in fines. Read a quick synopsis
here. Looks like he's falling on the sword for the family.
