A federal grand jury added charges of false reporting and wire fraud last week against two former natural gas traders, Michelle Valencia, 34, formerly with Dynegy, and Greg Singleton, 38, formerly with El Paso Merchant Energy.
U.S. Attorney Chuck Rosenberg announced July 31 the return of a superseding indictment charging the two traders, adding new charges for allegedly reporting bogus trades to industry newsletters that affected gas price indexes in July 2000. Valencia and Singleton were previously indicted in November 2004 and charged with conspiracy, and numerous counts of false reporting and wire fraud related to the transmission of allegedly inaccurate trade reports to industry newsletters in August 2000.
The U.S. attorney said the superseding indictment is the result of the continuing investigation being conducted under the auspices of the President's Corporate Fraud Task Force by the United States Postal Inspection Service and the Federal Bureau of Investigation. Valencia and Singleton will remain on bond pending trial on charges contained in the superseding indictment.
The indictment charges the two with conspiring to transmit inaccurate volume and price data to publishers for natural gas trades by Dynegy and El Paso. Valencia, originally charged with five counts of false reporting, is now charged with a total of eight counts of false reporting. She also is charged with two additional counts of wire fraud, bringing the total number of these charges to five.
Singleton, initially charged with three counts of false reporting, now is charged with a total of five counts of false reporting. The superseding indictment also adds an additional count of mail fraud, bringing the total number of such counts to three. Each count of reporting inaccurate market information affecting or tending to affect the price of natural gas carries a maximum punishment of five years in prison and a fine of $500,000. Each count of conspiracy and wire fraud carries a maximum punishment of five years in prison, and a fine of $250,000.
According to the indictment, the two traders contacted each another in July and August 2000 and agreed to transmit the false information to both Inside FERC in Washington, DC, and Natural Gas Intelligence in Portland, OR, and Virginia. The indictment alleges Valencia and Singleton knew the reports they sent to the publishers were inaccurate because a real fixed-price physical natural gas trade between Dynegy and El Paso was omitted, and because other reported trades were not fixed-price physical natural gas trades, the U.S. attorney's office said in a statement.
The false reports lowered the volume weighted average price of all Southern California baseload natural gas trades reported to the two industry newsletters in late July and August 2000, the statement said. The superseding indictment alleges that the inaccurate information transmitted by the defendants tended to affect Inside FERC's index prices and, as a result, tended to affect the price of the commodity in interstate commerce.
Valencia was indicted separately in January 2003, and charged with three counts of false price reporting and four counts of wire fraud while serving as a senior gas trader for Dynegy. That case is pending and set for trial in early 2006.
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