Federal prosecutors in Houston are recommending that former Dynegy Corp. executive Jamie Olis receive 15 years in prison for his role in the company's Project Alpha transaction, according to court briefs filed last week. Olis' original 24-year sentence was overturned in November by the Fifth Circuit Court of Appeals in New Orleans (see NGI, Nov. 7).
The appeals court last month upheld Olis' March 2004 conviction by a Houston district court on charges of securities fraud, mail and wire fraud and conspiracy, but it vacated and remanded the case for resentencing on the grounds that the punishment was excessive. Among other things, the appeals court cited flaws in the prosecution's calculations of how much money Dynegy investors lost because of the transaction involving Olis.
Olis was convicted in 2003, and in the original sentencing hearing a few months later, prosecutors requested the 24-year sentence under guidelines correlated to investor losses (see NGI, March 29, 2004; Nov. 17, 2003). Prosecutors said then that Olis should be held accountable for more than $100 million in stock losses, but in their new brief, Dynegy's stock losses were estimated at $20-50 million, which would call for a sentence of at least 188 months.
Project Alpha was a complex deal set up in 2001 involving natural gas transactions, under which the company borrowed $300 million and made it appear to outsiders, including then-auditor Arthur Andersen, that the money was generated by business operations. Olis was Dynegy's senior director of tax planning when the dubious deal was undertaken, and he was later promoted to vice president of finance.
Also Tuesday, prosecutors recommended that Gene Foster -- Olis' boss when Project Alpha was set up -- receive a 30-month prison sentence, and that former accountant Helen Sharkey receive an 18-month sentence. They both pleaded guilty in 2003 and were cooperating with authorities. Prosecutors said they would have further reduced the sentence recommendation for Olis if he had provided evidence against co-conspirators, if there were any. However, Olis declined to cooperate, according to the brief.
All parties have until Tuesday (Dec. 27) to file responses; sentencing is scheduled for Jan. 5.
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