Department of "Huh?"

A commentary on the Enron case:

White Collar Crime Prof Blog: A Hint About How Causey's Guilty Plea Affected the Skilling Defense: Count 14 charging Skilling with securities fraud... how the guilty plea of former Enron chief accounting office Richard Causey right before trial affected [Skilling's] defense. The government's evidence of fraud included the so-called "Global Galactic" memo handwritten by former Enron CFO Andrew Fastow and purportedly initialed by Richard Causey... who apparently planned to question at trial whether the initials on the document were his.

Once Causey entered a guilty plea to a single count of securities fraud, he was no longer available to dispute the authenticity of the document or question his connection to it. Right before trial, Judge Lake denied Skilling's motion to have an expert review the original of the memo to determine whether the initials really were Causey's, on the ground that the motion was untimely. At trial, Fastow testified that Skilling orally acknowledged the "Global Galactic" memo that set forth side deals (including the infamous Nigerian Barge transaction with Merrill Lynch) removing certain risks from Enron's balance sheet, the cornerstone of the government's securities fraud charge.

According to Skilling's motion, this was a material variance from the indictment that misled him as to the importance of the "Global Galactic" memo because the indictment only charged him with liability as a conspirator and not as a participant in the transaction. Therefore, the denial of the motion to have an expert examine the document meant he had no effective defense to the government's evidence to support a different theory of liability...

An interesting question is why, if Skilling's lawyers really believed the initials of Causey were forged, the defense did not call him as a witness....

It seems clear that the defense strategy before Causey's guilty plea was to make Fastow the focus of the case and raise questions about the authenticity of the only document close to being a contemporaneous "smoking gun." Once Causey switched sides, the defense was left with rebutting Fastow through cross-examination and the testimony of Skilling and Ken Lay, which did not appear to have much beneficial effect. The "Global Galactic" memo stood out as one of the few pieces of documentary evidence linking Skilling to improper accounting at Enron...

For the defense to call Causey to the stand and ask him whether the initials are in fact his would seem to be a very "effective defense"--in the counterfactual world in which Skilling is in fact innocent, in which Causey's initials are forged, and in which Skilling did not verbally OK the deals, that is.