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Former El Paso Trader Pleads Guilty to Knowingly Transmitting False Gas Trades

Donald Burwell, an ex-El Paso Corp. natural gas trader, pleaded guilty last week in U.S. District Court in Houston to violating a provision of the Commodity Exchange Act for his involvement in providing inaccurate trading information to industry publications. Burwell, whose trial was scheduled to begin Tuesday, agreed to cooperate with the government in similar cases.

U.S. Attorney Chuck Rosenberg said Burwell pleaded guilty to "knowingly" transmitting "inaccurate reports concerning market information about natural gas trades that affected or tended to affect the price of natural gas, a commodity in interstate commerce." A sentencing hearing is set for June 5; Burwell faces up to five years in prison without parole and a $500,000 fine. In its case, the government contended, "gas companies often buy and sell natural gas at published index prices or at prices influenced by index prices. For this reason, Burwell's false report to the trade publication affected or tended to affect the price of natural gas."

Burwell originally was indicted in November 2004 and charged with one count of conspiracy, one count of false reporting and one count of wire fraud (see NGI, Dec. 6, 2004). Two other ex-El Paso traders, a former Dynegy Inc. trader and an ex-Reliant Energy trader also were indicted on the same day.

The reports allegedly included false volume and price data for individual trades at various price hubs, including NGPL LA (Natural Gas Pipeline Co. - Louisiana), NGPL TXOK (Natural Gas Pipeline Co. - Texas/Oklahoma), PEPL (Panhandle Eastern Pipeline - Texas/Oklahoma - mainline), ANR OK (ANR Pipeline Co. - Oklahoma), NNG Ventura (Northern Natural Gas Co., Ventura, Iowa), NNG Demarc (Northern Natural Gas Co.; Demarcation), Reliant East (Reliant Energy Gas transmission company), Trunk Louisiana (Trunk Line Gas Co.), NGPL Midcon (Natural Gas Pipeline Co. of America).

In the hearing before U.S. District Judge Vanessa Gilmore, Burwell said while he was employed at El Paso in Houston, he sent an e-mail on July 28, 2000 to Platts' Inside FERC's Gas Market Report. The e-mail contained a list of fixed-price gas trades by El Paso at 11 pricing points. However, Burwell told Gilmore he knew El Paso had not entered into any of the reported baseload trades on that day at the prices and volumes reported in the e-mail.

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