Feds Allege Pricing Conspiracy at El Paso Corp.

From Reuters

A federal prosecutor said Monday that an El Paso Corp. trader charged with reporting fake gas trades was just one of several employees involved in a 2-year-old "conspiracy" to manipulate pricing indexes.

The revelation came during a pretrial hearing for Todd Geiger, 38, who has pleaded not guilty to charges of wire fraud and filing a false commodity report. He is accused of allegedly fabricating 48 natural gas trades.

"He is not charged in a conspiracy, but we believe he is part of a conspiracy that goes back over the past two years," assistant U.S. Atty. John Lewis told U.S. District Judge Nancy Atlas in Houston.

George Murphy, Geiger's attorney, objected to Lewis' characterizations, and reiterated his client's innocence. Geiger, who is free on $250,000 bond and faces up to five years in prison on each count if convicted, is set to go to trial on March 24.

Houston-based El Paso, the largest U.S. natural gas pipeline operator, Monday said it had uncovered more evidence that its employees had given false trade data to the same industry publication that Geiger allegedly spoke to, Platt's Inside FERC Gas Market Report. None of the employees are still working for El Paso, the company said.

El Paso said it is giving whatever evidence it finds to prosecutors and investigators at the Federal Energy Regulatory Commission and Commodity Futures Trading Commission.

The material includes compact discs with recordings of 140 phone calls among El Paso employees in which plans to provide false data are discussed, Lewis said. Another includes a conversation in which Geiger, a vice president on El Paso's Canadian natural gas trading desk, allegedly defends the nonexistent trades to an Inside FERC editor, he said.

Inside FERC, which is owned by McGraw-Hill Cos., ultimately rejected Geiger's submissions. Murphy has said that his client's alleged actions would have had no effect on prices paid for natural gas, but prosecutors argue that the attempt to manipulate prices is illegal on its face.

Lewis declined to say whether charges against others were forthcoming, or whether he would file a new indictment with additional charges against Geiger. He also would not discuss how many other employees were involved, nor whether Ralph Eads, the former head of El Paso's merchant energy and trading unit, was implicated. Eads, who could not be reached for comment, stepped down last month after the company announced plans to eliminate its trading business.

Norma Dunn, a spokeswoman for El Paso, declined to say how many employees were involved or whether Eads was among those involved.

"This was not company-condoned. This was not something that the company thinks anyone should be doing," Dunn said.

Inside FERC, like other similar publications, uses submissions of trading data to calculate indexes of volume and pricing for commodities. The indexes are used by buyers and sellers to determine prices for such commodities as natural gas.

At least four other companies -- Williams Cos., Dynegy Inc., American Electric Power Co. and CMS Energy Corp. -- have admitted their employees provided inaccurate trade date to industry publications.

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