Three former trading desk managers for Kansas City, MO, natural gas and electricity provider Aquila Inc. pleaded guilty in federal court Monday to concealing information about the reporting of false prices for natural gas trades to index publishers.

The three traders — Luke J. Larsen, 38; Joseph Patrick Kennedy, 40; and David Todd Bandy, 42, all formerly of Kansas City — each waived his right to indictment and pleaded guilty before U.S. Magistrate John T. Maughmer to a charge of concealment of a felony, said Bradley Schlozman, U.S. Attorney for the Western District of Missouri.

Each defendant worked as a manager of a regional trading desk and as a gas trader. Their duties included selling and trading natural gas and supervising others who traded natural gas for the geographic regions to which they were assigned. They also were responsible for accurately reporting the sales’ volumes and prices of natural gas sold.

By pleading guilty, the co-defendants admitted that they had knowledge of false reports of natural gas trades being submitted to trade publications that could have affected market prices, a felony. The false reports were made to Inside FERC Gas Market Report, a McGraw-Hill publication, and to Natural Gas Intelligence by gas traders at Aquila, Schlozman said.

The co-defendants failed to report their knowledge of the false reports during interviews with a law firm that was hired by Aquila to represent the company in connection with an investigation being conducted by the Federal Energy Regulatory Commission, he noted. Schlozman said the three former Aquila traders were aware false reports had routinely been submitted during the period from December 1999 through April 20, 2005.

The co-defendants also failed to report incidents of bogus gas price reporting during interviews with federal law enforcement agents, he said. Each defendant faces up to three years in federal prison without parole, plus a fine of up to $250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

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