A former Reliant Energy natural gas trader, who pleaded guilty last year to filing a false natural gas price data report to an industry publication, has asked the court to throw out his indictment. Jerry Futch, who faced up to five years in prison, was originally charged with four criminal counts for filing false data (see NGI, Dec. 6, 2004).
According to an emergency motion filed in U.S. District Court in Houston, Futch wants the court to dismiss the false reporting charge he pleaded guilty to because, he argues, his rights to due process and counsel were violated (USA v. Jerry Afred Futch Jr., No. H-04-511). Futch's attorney Philip Hilder argued that his client was denied his right to due process because he was not made aware he was likely under criminal investigation and that statements he gave in a civil investigation could be used in a criminal case.
"The government by its own admission used the Commodities Futures Trading Commission (CFTC) civil proceedings to 'jump start' its prosecution," the motion argues. "Mr. Futch's due process rights were violated because he was not advised that the prosecutors and the FBI were using the CFTC to gather evidence for a criminal prosecution. Mr. Futch was prejudiced because his Fifth Amendment right not to be compelled to testify was removed and during the deposition he provided to the prosecution defenses he may have had to the subsequent instant criminal charges."
The 20-page motion also states Futch was individually represented by the same counsel, Baker & Botts, as his former employer. Reliant entered into a settlement agreement with the CFTC in November 2003 that required cooperation with the government into its investigation of index trading practices (see NGI, Dec. 1, 2003). During the period of dual representation, Futch's attorneys were providing the government with information adverse to Futch, the motion states.
"Accordingly, the government exploited what they knew to be a blatant conflict of interest in having Mr. Futch's attorney, who is the same as Reliant's, assisting the prosecution in building a criminal case against him."
In a response filed last week, the government said Futch's claim to be surprised he was involved in a criminal investigation was "completely unsupported." The response notes that the criminal investigation into false natural gas reports was widely known long before Futch was interviewed by the CFTC in April 2003 for the civil investigation.
Futch was one of many former energy traders who have been criminally charged with reporting false price information to industry publications. So far, eight of 12 charged have pleaded guilty, while the others continue to fight the charges.
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