Jamie Olis, 38, a former tax executive for Dynegy Inc., was sentenced Thursday to 24 years in prison for his role in disguising the company’s finances within a transaction dubbed “Project Alpha,” which hid $300 million in debt.

In Houston, U.S. District Judge Sim Lake also fined Olis $25,000. The first-time offender was convicted last year on six counts of criminal conspiracy as well as securities, wire and mail fraud in connection with the 2001 transaction (see NGI, Nov. 17, 2003).

Prosecutors had recommended Olis be sentenced from 24 to 30 years, which is five years short of the maximum punishment, based on the huge losses Dynegy shareholders suffered following Project Alpha’s repercussions.

Among other things, Dynegy had to restate its 2001 earnings and pay a $3 million fine to the Securities and Exchange Commission (see NGI, Sept. 30, 2002). The scandal also led, in part, to the resignation of many of Dynegy’s top officials, including CFO Rob Doty and founder and Chairman Chuck Watson (see NGI, July 1, 2002; June 3, 2002).

Ironically, Olis never profited directly from Project Alpha; he was awarded two annual bonuses totaling $195,000 before the dubious transaction was investigated. Olis, who also is a lawyer and accountant, worked in Dynegy’s tax department, and was considered by prosecutors to be the key engineer of Project Alpha.

Prosecutors had claimed that Olis worked with other conspirators to hide a central part of the transaction, two hedges required by the investing banks, from former auditor Arthur Andersen. According to Andersen witnesses at Olis’ trial, the auditors refused to allow the hedges, which would be counted as $300 million in cash flow.

During the trial, the government’s star witness against Olis had been Gene Shannon Foster, his former boss. Foster pleaded guilty last year to conspiracy and had cooperated with prosecutors. Another former Dynegy employee, Helen Christine Sharkey, also pleaded guilty last August for her part in the Alpha scheme and also cooperated with investigators.

In court Thursday, sources said Olis showed no reaction to the judge’s sentence. The courtroom was filled with Olis’ family, supporters and several former Dynegy colleagues.

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