Ex-Enron Trader Faces Charges
A former Enron Corp. executive was charged in a superseding indictment Thursday with 11 counts of conspiracy and fraud in connection with the company’s manipulation of energy markets during California’s power crisis.
John Forney, 41, of Ohio, is the third former Enron executive to be charged with illegally manipulating California’s electricity prices from the company’s Portland, Ore., office. His attorney said Forney was not guilty and would fight the charges at trial.
Two other former Enron energy traders have pleaded guilty and are cooperating in the federal investigation into Enron’s role in the energy debacle, which pushed Pacific Gas & Electric Co. into bankruptcy protection and left California consumers paying abnormally high electricity prices for years.
Forney allegedly concocted a scheme known as “Ping Pong,” designed to evade federal price caps on California energy. The scheme involved buying energy from California and later selling it back to the state at inflated prices, making it appear the energy was generated elsewhere, prosecutors said.
The indictment, filed in federal court in San Francisco, also alleges that Forney was responsible for “Death Star,” a scheme known inside Enron as “Forney’s Perpetual Loop,” which attempted to generate revenue by fraudulently charging fees for services Enron did not provide.
From Forney’s trading desk in Portland, Enron charged California for electricity that wasn’t delivered, thus failing to alleviate backlogged transmission lines in 2000, at a time when some parts of the state suffered rolling blackouts, prosecutors said.
Forney’s attorney, Robert Blakestone, said his client would enter a plea of not guilty today.
Former Enron executives Timothy N. Belden and Jeffrey S. Richter have pleaded guilty and cooperated with the FBI. Belden is expected to testify against Forney.
In related developments, U.S. Bankruptcy Court Judge Arthur Gonzalez ruled Thursday that Enron can auction its Portland General Electric unit, Oregon’s largest utility, and that a $1.25-billion cash offer from Oregon Electric Utility Co., a new company backed by investment firm Texas Pacific Group, is the bid to beat.
Bidders would have to pay at least $50 million more than Oregon Electric, which also offered to assume $1.1 billion of Portland General’s debt, Gonzalez said. The auction is set for Feb. 2.
