Reliant Gets More Federal Subpoenas
Reliant Resources Inc., a power producer and energy trader accused of manipulating California electricity and natural gas markets, said Wednesday that it received more subpoenas as part of a criminal probe by the Justice Department.
California’s energy crisis of 2000-2001 spawned investigations by federal prosecutors and regulators into whether energy companies artificially boosted electricity and natural gas prices by withholding supplies, using tricky trading strategies and making bogus energy sales.
Reliant, in a regular quarterly filing with the Securities and Exchange Commission, said the U.S. attorney in San Francisco sent the Houston energy company subpoenas last month seeking testimony from current Reliant employees about energy trading, including so-called round-trip trades. In such transactions, trading partners swap energy at the same cost in an effort to increase market prices or trading volumes.
Reliant said it has received other subpoenas and informal requests for documents and employee interviews from the U.S. attorneys for the Northern District of California and the Southern District of New York.
In addition, investigations are continuing at the Federal Energy Regulatory Commission and the Commodity Futures Trading Commission. FERC investigators, in a March report on California’s energy crisis, accused a Reliant natural gas trader working out of her Long Beach apartment of helping fuel a record jump in gas prices in the winter of 2000-2001 through rapid-fire buying and selling.
“It appears to be a continuation of the effort that’s already been underway,” Reliant spokesman Richard Wheatley said of the latest subpoenas. “We are continuing to cooperate with all state and federal investigations and inquiries.”
A spokesman for the U.S. attorney’s office in San Francisco did not return telephone calls seeking comment. The office, headed by U.S. Atty. Kevin V. Ryan, has secured guilty pleas to wire-fraud conspiracy charges from two former top California electricity traders for Enron Corp., Timothy N. Belden and Jeffrey S. Richter. A third former Enron trader, John M. Forney, has been charged with wire-fraud conspiracy and pleaded not guilty at his arraignment last month.
Reliant settled an investigation in May by the SEC by promising to refrain from improper round-trip trades or accounting designed to alter the timing of when trades are reported for earnings purposes. Reliant last year restated earnings for the three previous years because of trades that artificially inflated revenue by $7.8 billion.
Reliant, which Tuesday reported its third consecutive quarter of losses and announced layoffs, saw its stock price rise 12 cents Wednesday to $4 on the New York Stock Exchange.
