Switching Sides

Enron's Former Top Accountant Pleads Guilty, Will Testify Against Others

(CBS/AP)  Former top Enron Corp. accountant Richard Causey pleaded guilty to securities fraud Wednesday and agreed to help pursue convictions against Enron founder Kenneth Lay and former CEO Jeffrey Skilling.

Lay, Skilling and Causey were scheduled to be tried together Jan. 17 on conspiracy, fraud and other charges related to the scandal-ridden company's collapse more than four years ago. The deal leaves Lay and Skilling with another opponent rather than an ally who has been part of their united defense front since the trio was first indicted last year.

After Causey's plea, U.S. District Judge Sim Lake granted a defense request for a two-week delay, pushing the trial for Lay and Skilling to Jan. 30.

His lawyer says Causey "will tell the truth" in the upcoming trial.

Causey will serve seven years in prison and forfeit $1.25 million to the government, according to the plea deal. However, if the government is happy with his cooperation, prosecutors can ask that his sentence be reduced to five years.

The maximum penalty for securities fraud is 10 years in prison, followed by three years of probation.

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Click here to read the plea agreement (.pdf)

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Causey, the government's 16th cooperating witness in exchange for a plea, had faced more than 30 counts of conspiracy, fraud, insider trading, lying to auditors and money laundering.

"This is devastating news for Lay and Skilling and it greatly increases the chances that they will be convicted," reports CBS News legal analyst Andrew Cohen. "This deal will give prosecutors yet another former Enron insider who presumably can and will point the finger at Ken Lay and Jeffrey Skilling and declare that they knew or should have known about the awful financial dealings going on inside that company."

Causey agreed to testify against his former bosses in exchange for a leaner prison sentence than he would have received if convicted on all counts.

Department of Justice spokesman Bryan Sierra told CBS News that the plea agreement does not legally bind Causey to cooperate, although it offers an incentive to do so — it could reduce his prison term from seven to five years.

"We have not made a determination yet whether we will call him as a witness at trial," Sierra said.

Many of the charges against Causey overlapped with the 35 counts of fraud, conspiracy, lying to auditors and insider trading pending against Skilling.

The pair is accused of conspiring with others to fool investors into believing a wobbly Enron was healthy in the years leading to its December 2001 crash.