HOUSTON -- Enron Corp.'s former top accountant was led away in handcuffs yesterday to face allegations he was a principal architect of the accounting scandal that caused the energy giant to collapse.
Richard Causey, 44, pleaded not-guilty to federal conspiracy and fraud charges in an indictment that accused him of being a key participant in widespread schemes to mislead government regulators and investors about the company's earnings.
His arrest could bring prosecutors closer to Enron's executive suite. The indictment noted Causey reported to Enron's chairman and chief executive officer but did not name former Enron Chairman Kenneth Lay or former CEO Jeffrey Skilling.
Causey, who surrendered to the FBI before daybreak, entered his plea before U.S. Magistrate Judge Frances Stacy. He was released on $1 million bond, secured by $500,000 in cash provided by a brother-in-law.
Rick Causey is a decent
honorable and innocent man his attorney, Mark Hulkower, said. He has done nothing absolutely nothing
wrong. We will vigorously contest these charges
and we look forward to the day when Mr. Causey's vindicated in this courthouse.
The indictment alleged the schemes included inflated asset values, hidden debt, sham asset sales, use of energy trading profits to make the company's money-losing energy retail unit appear healthy and faking earnings in Enron's sickly broadband unit.
It also alleged Causey had secret agreements with former Enron finance chief Andrew Fastow that the finance chief would not lose money when his shady partnerships did deals with Enron.
The scheme extended into every major business at Enron
prosecutor Sam Buell said.
Causey's handcuffs were removed after he sat down in the Houston courtroom. When Stacy asked if he was employed, he replied: I am not.
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 Fastow's partnerships.
Causey is charged with one count of conspiracy and five counts of securities fraud. If convicted of all six charges, he faces a maximum sentence of 55 years in prison and a $5.25 million in fines.
His indictment, handed up Wednesday and unsealed Thursday, came on the heels of guilty pleas last week from Fastow and Fastow's wife, Lea.
Fastow pleaded guilty to two counts of conspiracy, admitting he and others in Enron's senior management manipulated Enron's books while skimming millions of dollars for himself, his family and selected friends.
His wife admitted to helping hide ill-gotten income on a false tax return.
Like Andrew Fastow, Causey reported directly to Lay and his successor, Skilling. Causey and Fastow split financial duties at Enron and were at the same management level.
Neither Lay nor Skilling has been charged with any crime, and both maintain their innocence.
Causey became the 27th person charged in the aftermath of Enron's 2001 collapse amid revelations of hidden debt, inflated profits and accounting tricks. Nine of them, including the Fastows, have pleaded guilty.
According to the indictment, the scheme's objectives, among other things, were to produce earnings that grew by 15 to 20 percent annually, meet or exceed without fail Wall Street expectations and avoid public reporting of large write-downs or losses.
The Securities and Exchange Commission also filed civil charges Thursday accusing Causey of helping Enron file fraudulent results with the agency.
Stacy set Causey's trial for March 8 before U.S. District Court Judge Sim Lake.
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