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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (2696)	6/13/2003 7:19:20 AM
From: Glenn Petersen	Respond to of 3602

3 ex-Dynegy executives face conspiracy, fraud charges boston.com By Associated Press, 6/13/2003 OUSTON - Three former Dynegy Inc. executives were charged yesterday with creating an Enron-esque deal in 2001 that was used to boost cash flow and cut taxes improperly to counteract Wall Street worries about the energy company's financial health. The three, who were discharged from Dynegy in February, were not among the top executives who stepped down in 2002 as Dynegy struggled with a falling stock price, low credit ratings, and regulatory investigations in the aftermath of rival Enron's scandal-ridden collapse in 2001. US Attorney Michael Shelby and Hal Dagenhardt, director of the Securities and Exchange Commission's Fort Worth office, said more defendants could be charged as the investigation continues. ''We are going down the path of holding everyone responsible who have some role in deceiving the public,'' Shelby said. He declined to elaborate. Dynegy's founder and former chief executive, Chuck Watson, quit in May 2002. Finance chief Rob Doty resigned less than a month later, and president and chief operating officer Steve Bergstrom quit in October 2002. The indicted executives - Jamie Olis, 37, Dynegy's former senior director of tax planning and vice president of finance; Gene Shannon Foster, 44, former vice president of tax; and Helen Christine Sharkey, 31, a former member of Dynegy's risk control and deal structure groups - were charged with conspiracy, securities fraud, mail fraud, and wire fraud. Foster and Sharkey were arrested in Houston; Olis was arrested in San Antonio early yesterday. Foster and Sharkey were freed on $100,000 bond and are scheduled to return to court July 1 for arraignment. Olis was scheduled to be before a magistrate in San Antonio later yesterday. Kyle Sampson, one of the attorneys for Foster and Sharkey, declined to comment, noting they received the indictment yesterday morning and needed to review it. If convicted, they each face up to 35 years in prison and fines of up to $2.2 million. In September, Dynegy agreed to pay the SEC $3 million to settle the commission's investigation of the natural gas deal dubbed Project Alpha that is central to the indictment. The indictment alleged Alpha involved an April 2001 deal in which an outfit backed by several banks called ABG Gas Supply bought gas at market prices and sold it to Dynegy for the rest of 2001 at a $300 million discount. Dynegy then resold the gas at market prices, booking the $300 million as cash flow on financial statements for the second, third, and fourth quarters. The money should have been booked as debt because the defendants secretly promised to repay the $300 million with interest, the indictment said. The repayment guarantee was hidden from Arthur Andersen accountants who then audited Dynegy's books, the SEC and others. Dynegy shares rose 21 cents to close at $4.41 on the New York Stock Exchange. This story ran on page E2 of the Boston Globe on 6/13/2003. © Copyright 2003 Globe Newspaper Company.