John M. Forney, architect of the “Death Star” power trading scheme and manager of the real-time trading on Enron’s West Desk in Portland, OR, pleaded guilty Thursday to conspiracy to commit wire fraud for the purpose of manipulating California’s energy markets, according to an announcement by the United States Attorney for the Northern District of California.
“With the guilty plea of John Forney, we have now obtained convictions of the top three Enron executives most directly responsible for manipulating the energy markets in California at a time unique in our history, when the lights were going off and the grid was in danger of shutting down,” said U.S. Attorney Kevin V. Ryan. “These executives will now be required to help obtain restitution for the same victims they defrauded, namely the citizens of California and the other western states.”
According to the U.S. attorney, Forney’s boss at Enron was Timothy Belden, who pleaded guilty in 2002 to a charge of conspiracy to commit wire fraud relating to electricity trading schemes. Former Enron trader Jeffrey Richter also pleaded guilty to conspiracy to commit fraud.
In addition to these three convictions as part of the criminal investigation into the illegal manipulation of California’s energy markets from 1999 to 2001, the U.S. attorney’s office is prosecuting Reliant Corp. and four officers and employees of that company on charges that it deliberately shut down power plants in order to affect the price of electricity in California.
Forney, who was arrested in June 2003, has admitted that Death Star, Get Shorty, Ricochet and other schemes enabled him and others at Enron to engage in various improper trading activities that were intended to maximize Enron’s electricity trading profits, and that ultimately affected the price of electricity in California.
Forney, for example, admitted that as part of the conspiracy, he and others at Enron fictitiously relieved congestion on California transmission lines and otherwise improperly collected congestion management fees; misrepresented the origin of energy; misrepresented that Enron intended to supply types of energy it did not have; and did so for the purpose of maximizing the profit Enron would receive from its energy trading operations, Ryan’s office said.
As part of his guilty plea, Forney and two other convicted Enron executives will be required to assist the citizens of California in obtaining restitution for the losses they suffered during the energy crisis. Forney also agreed to cooperate in the government’s ongoing investigation into Enron and other companies’ actions during the energy crisis.
He and the other convicted defendants will be required to assist the government in determining whether other individuals at Enron should be charged in connection with the illegal manipulation of the energy markets in California and the Western states. They also will assist the government in determining whether other companies carried out schemes similar to Enron’s for the purpose of manipulating the energy markets.
“Today’s guilty plea is one of many important steps into uncovering the criminal actions perpetrated by Enron against the people of California,” said Mark Mershon, the special agent in charge of the San Francisco Division of the FBI, in announcing Forney’s guilty plea. “Mr. Forney’s decision further illustrates that we have not and will not allow the passing of time to limit our determination in the pursuit of justice in this matter.” No date has been set for Forney’s sentencing.
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