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Former Trader at Enron Is Indicted

June 06, 2003|Nancy Rivera Brooks | Times Staff Writer

A federal grand jury indicted former Enron Corp. trader John M. Forney late Thursday, as his lawyers complained that the government improperly hyped Forney's alleged role in the California energy crisis to "garner media fanfare."

The jury in San Francisco charged Forney with a single count of conspiracy to commit wire fraud related to an alleged criminal manipulation of California electricity markets from 1999 to 2001, according to federal prosecutors Patrick D. Robbins and Matthew J. Jacobs.

Forney, on leave from his job at American Electric Power Co. in Columbus, Ohio, was arrested Tuesday on wire fraud and conspiracy charges leveled in a criminal complaint unsealed the same day. Brian Murphy, one of the attorneys representing Forney, said the energy trader did nothing illegal and would fight the government's charges.

Robbins and Jacobs, assistant U.S. attorneys in San Francisco, declined to discuss the absence of a wire fraud charge in the indictment. "We can't comment on our charging decisions," Jacobs said.

Earlier Thursday, Forney's attorneys complained in a court filing that the government miscast their client as an architect of the energy crisis, with "the apparent objective of gathering a media lynch mob."

The government's news release announcing the arrest and accusations trumpeted Forney as "one of Enron's former top energy executives." But defense attorneys said Forney, who ran an Enron power trading desk, "could at best be described as a low- to mid-level manager."

Forney's lawyers also dubbed as "outrageous" statements in the news release that implied Forney's conduct contributed to blackouts in California during the energy crisis and was a "criminal activity that affected millions of Californians and their families."

Robbins and Jacobs declined to comment on the defense filing.

The prosecution and defense also tussled over when to have a preliminary hearing for Forney. Forney's lawyers sought a quick hearing, but the Justice Department asked a federal magistrate in Columbus to delay the proceeding, citing the complexities of the case and "the logistical problems inherent in travel from California."

Forney's lawyers scoffed at that notion, saying in their filing that "while Columbus, Ohio, may not be considered an international travel hub, it is easily accessible via numerous airlines, with multiple daily flights between San Francisco and Columbus."

Now that Forney has been indicted, a preliminary hearing isn't necessary. An identity hearing is set for Monday to establish that Forney is the same John Forney who traded electricity for Enron in California markets.

Forney was arrested by three FBI agents early Tuesday at his office and taken away in handcuffs; he was later released on bond. He he had been cooperating with government investigators, according to the filing by Forney attorneys Murphy and Geoffrey J. Moul.

"In September 2002, as a convenience to the government, Mr. Forney and his counsel traveled two hours to Cleveland, Ohio, to meet for an entire day with several assistant United States attorneys" and an FBI agent, the document said. "Despite numerous telephone contacts between the parties over the next several months, counsel's last communication with the government prior to the arrest was in December 2002."

The government contends that Forney devised some of the trading schemes, including one dubbed Forney's Perpetual Loop, that worsened California's energy crisis of 2000 and 2001.

Two other Enron traders, including Forney's boss Timothy N. Belden, have reached plea agreements with federal prosecutors and provided information against Forney, according to the government's complaint.

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