Former Enron trader Jeffrey Richter pleaded guilty to wire fraud and making false statements to the FBI in connection with the federal investigation into Enron's manipulation of the California energy market, the Justice Department said Wednesday.
Richter, 33, of Houston, is the second person to plead guilty to fraudulent trading in California's energy markets during the state's energy crisis two years ago. He entered his plea in San Francisco federal court.
According to the Justice Department, Richter, former head Enron's (ENRNQ: news, chart, profile) short-term trading desk in California, admitted his participation in illegal schemes known internally at Enron as "Load Shift" and "Get Shorty."
Richter faces a maximum penalty on each of the two counts of five years in jail and up to a $250,000 fine, plus restitution. His sentence could be lowered depending on his cooperation with the Justice Department in the case.
Last fall, Timothy Belden, who headed Enron's West Coast trading operations in Portland, Ore., pleaded guilty in San Francisco to one charge of conspiracy to commit wire fraud.
Enron designed "Load Shift" to create the appearance of congestion on California's transmission lines. It allowed the Houston-based firm the chance to unclog the congestion at higher prices, the Justice Department said.
In "Get Shorty," Enron traders fabricated and sold emergency back-up power to the California Independent Service Provider. After they received the payment, the traders would cancel the delivery schedule and later cover their commitments by purchasing the energy through a cheaper channel closer to the time of delivery.
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