A former El Paso natural gas trader revealed in court testimony last week that some of the data submitted by El Paso traders and used to calculate the index price of natural gas during the heyday before Enron Corp. brought the entire industry to its knees was "all fake."
In four days on the witness stand in Houston, Dallas Dean, who had been a trader on the Gulf Coast desk for El Paso, regaled the court with stories about the way it used to be on the trading floors of what were then some of the leading gas traders in the country. Dean pleaded guilty in October 2004 to reporting false data used to calculate the index price of gas (see NGI, Oct. 18, 2004), and he has since been cooperating in a federal investigation.
Dean testified against three former colleagues -- James Brooks, Wesley Walton and Patrick Phillips -- who are charged in connection with an alleged conspiracy to manipulate index prices published by Platts' Inside FERC's Gas Market Report and Natural Gas Intelligence. The trial, expected to last four to six weeks, got under way earlier this month (see NGI, Dec. 10). It moves into its third week on Monday.
In court testimony, Dean explained the contents of a spreadsheet that he was said to have sent to Platts in late June 2000. The spreadsheet supposedly listed all of the baseload trades by El Paso at the end of June 2000 during bidweek, along with pricing points, volumes and prices. However, under questioning by the prosecution, Dean told the court that the report contained "line after line" of fake data. "They're all fake," he told federal prosecutor Belinda Beek.
To ensure the Platts editor didn't "throw them out," Dean testified that he tried to ensure the false trades were all within a price range that was "believable." He testified that Brooks, who at one time was the chief of El Paso's gas trading operation, had embarrassed him in front of his colleagues for an earlier price survey report that apparently did not have volume and price spreads "worthy of a company the size of El Paso."
Following Brooks' apparent outburst, Dean testified that a coworker told him, "I think Brooks wants you to 'biggie-size' the report."
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