As expected, former Enron chief accountant Richard Causey pled guilty Wednesday afternoon to a single count of securities fraud while agreeing to a prison sentence of seven years and a fine of $1.250 million.

Here are the Houston Chronicle, NY Times (Eichenwald’s here), W$J, and Washington Post articles on the plea deal.

As a result of the timing of Causey’s plea deal, U.S. District Judge Sim Lake postponed the commencement of the Lay-Skilling trial for two weeks to January 30, 2006.

In agreeing to the seven-year plea deal, the 45 year-old Causey took on the second-longest prison sentence of the 16 former Enron executives who have pled guilty to date under plea bargains, less only than former Enron CFO Andrew Fastow’s minimum ten year sentence. It’s a surprisingly long sentence given that Causey, unlike Fastow, did not peel tens of millions of dollars off of Enron and various special purpose entities for his own benefit.

Causey has two years’ worth of incentive to be a compelling Task Force witness against his co-defendants Ken Lay and Jeff Skilling because the only way that he can obtain a reduced sentence (to five years from seven) is if the Task Force, in its sole discretion, determines that Causey has been a good helper.

However, unlike most other former Enron executives who have copped pleas, Causey did not sign a cooperation agreement with the Task Force and thus, is not obligated to cooperate with the government. Even though he has two years’ worth of motivation to ingratiate himself to Task Force prosecutors, Causey cannot lose his plea deal if the Task Force finds that his assistance is not particularly helpful.

During its almost four year existence, the Task Force has been much more successful in bludgeoning plea bargains out of former Enron executives than in obtaining convictions of such executives at trial — only one former Enron executive (Dan Boyle in the Nigerian Barge case) has been convicted out of the seven former Enron executives who have defended themselves at trial against a Task Force prosecution.

Causey had been facing trial on an absurd 36 counts of conspiracy, fraud, insider trading, lying to auditors and money laundering, and also faced a potential, effective life sentence if convicted on all or most of the counts. The securities fraud charge that Causey pled to has a maximum prison sentence of 10 years.

Exhibit A to Causey’s plea agreement contains his specific admissions, which reflect that the Task Force is now focusing more on non-disclosure of material facts relating to Enron’s financial performance than the allegations of fraudulent accounting that permeate the indictment against Causey.

Nevertheless, it remains unclear to what extent, if any, Causey’s testimony will be used against Lay and Skilling in their upcoming trial.

Causey’s admissions on exhibit A are limited in nature and are based on the generic statement that he participated with “others in Enron senior management” to defraud the investing public by misleading them about the company’s true financial performance.

However, the affidavit only cites two examples, and they do not involve some of the broader accounting allegations related to Fastow’s SPE’s that have been the focus of the Task Force’s case against Causey and his co-defendants to date.

Similarly, the affidavit makes no reference to secret handshake deals involving alleged oral promises (undisclosed to Enron’s auditor) to pay back money provided by third parties such as the Task Force parlayed into convictions of Boyle and four former Merrill Lynch executives in the Nigerian Barge trial.

Surprisingly, Causey’s admissions involve one-time deals that do not, in and of themselves, reflect a management team that was — as the Task Force contends — engaged in a conspiracy to hide a house of cards from investors for several years before Enron’s bankruptcy.

In one instance, Causey admitted that he and other unnamed Enron executives removed a hedge from a partnership that Enron partly owned and which held Enron stock. Inasmuch as the Enron executives knew that positive news about Enron was about to push the value of the stock upward, the value of a related investment would go down if the hedge was still in place. Once the hedge was removed, Enron reported the stock price increase as recurring profits in the first quarter of 2000, which Causey now contends was improper.

The second Causey admission involves Enron’s retail electricity business, Enron Energy Services.

Causey admitted that EES — which he contends was an important promotional tool for Enron to investors — had hundreds of millions of dollars of unexpected first quarter of 2001 trading losses, which far exceeded the unit’s projected income for the year. In order to maintain the unit’s attractiveness as a promotional tool, Causey contends that Enron shifted the unit’s trading losses into a more profitable unit and thus, avoided direct reporting of the losses that might have chilled investor fervor for Enron.

Finally, inasmuch as Causey and his counsel have participated under a joint defense agreement with the Lay and Skilling defense teams for over two years now, virtually any of Causey’s testimony would be subject to challenge as being derived from that joint defense effort. Moreover, Causey had problems in defending himself against the charges that Lay and Skilling do not, and his credibility may be subject to impeachment at trial through portrayal of the eve-of-trial plea deal as an effort to save his skin at the expense of his co-defendants.

Thus, even though Causey’s plea is disconcerting for Lay and Skilling, it remains to be seen whether it really changes the dynamics of the government’s case against the two key former Enron executives.

As the Task Force debriefs Causey, the nature of his potential testimony will likely become better known over the next couple of weeks.

Meanwhile, in the lottery that has become the criminalization of business in this country, former Qwest Communications International Inc. executive Marc Weisberg agreed yesterday to plead guilty to a single count of wire fraud and will cooperate with prosecutors in Denver who have charged Qwest’s former chief executive, Joseph Nacchio, with insider trading.

Weisberg had been scheduled to begin trial next week on eleven counts of wire fraud and money laundering for allegedly abusing his position at Qwest for personal gain by using his access to shares of Qwest vendors’ initial public offerings to benefit himself, his friends and his family to the tune of approximately $3 million. As did Causey, Weisberg faced decades in prison if convicted on all those counts.

Weisberg’s deal?

Sixty days of home detention, two years probation, a fine of $250,000 and a two-year ban on him serving as an officer or director of a public company.