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Another Enron Executive Pleads Guilty

August 06, 2004|From Associated Press

A former Enron Corp. trading executive pleaded guilty Thursday to charges he manipulated energy markets during California's power crisis.

John M. Forney, 42, of Ohio is the third Enron executive to plead guilty to manipulating electricity prices from Enron's now-defunct trading office in Portland, Ore. The crisis played a role in Pacific Gas & Electric Co.'s bankruptcy filing and will leave California consumers paying abnormally high electricity prices for years.

He faces a maximum of five years in prison. He remains free on $500,000 bail. A sentencing date has not been set.

"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," U.S. Atty. Kevin Ryan said.

Ryan said that as part of the guilty plea, Forney was expected to cooperate with the ongoing investigation into Houston-based Enron, as well as reveal details about how other energy firms may have played a role. Four employees of Reliant Corp. have already been charged with deliberately shutting down power plants to increase the price of California electricity.

Forney's attorney, Edwin Prater, said his client admitted guilt "to accept responsibility for his actions."

"It was a good opportunity for John and his family at this time to certainly right the wrong he had a part in and for them to move on with their lives," Prater said.

A federal grand jury in San Francisco had charged him with 11 counts; through a plea agreement, Forney admitted to one count in exchange for the government dropping the others. As part of the deal, he must assist California and other public entities in their lawsuits accusing the industry of inflating energy prices.

Any bonuses Forney earned from Enron as part of its illegal activity were reinvested in the company and lost when Enron filed for bankruptcy protection, Prater said.

Former Enron executives Timothy N. Belden and Jeffrey S. Richter also have pleaded guilty and cooperated with the FBI. Belden was expected to testify against Forney at his trial, which was scheduled for later this year.

Forney, the manager of Enron's trading desk, pleaded guilty to one count of wire fraud -- specifically, that he promised to supply energy Enron did not have and that he improperly collected electrical grid management fees for Enron.

Enron's scheme to charge fees for services it did not provide was known inside the company as Forney's Perpetual Loop, the indictment said.

Forney also took part in other schemes -- known within Enron as Death Star, Get Shorty, Ricochet and others -- that had the effect of inflating consumer prices.

Prosecutors also accuse Forney of concocting a scheme that involved buying energy from California and later selling it back to the state at inflated prices, making it appear the energy was generated elsewhere.

The guilty plea comes two months after transcripts of Enron energy traders showed them openly discussing manipulating California's power market during profanity-laced telephone conversations in which they gloated about ripping off "those poor grandmothers" during the state's energy crunch in 2000-01.

They also joked about Enron's hefty political contributions -- particularly to President Bush's campaign -- and how that could translate into more opportunity for profit in California.

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