22 May – LAWFUEL – The Law News Network – The United States Attorney’s Office for the Northern District of California announced that Brion Scott McKenna pleaded guilty today to the manipulation of natural gas prices in interstate commerce. Mr. McKenna, 36, recently of Houston, Texas, is a former natural gas trader at Williams Energy Marketing & Trading, a subsidiary of The Williams Companies based in Tulsa, Oklahoma. Mr. McKenna entered a guilty plea before U.S. District Judge Susan Illston in San Francisco.
In pleading guilty, Mr. McKenna admitted that between approximately mid-September, 2000, to June 30, 2002, he conspired with others at Williams Energy Marketing & Trading to report fictitious trades to two industry newsletters, Inside FERC’s Gas Market Report and NGI’s Bidweek Survey. McKenna submitted the fictitious trades for the purpose of manipulating the published index prices in order to increase the value or profitability of Williams’ natural gas positions.
“This is the second plea by a Williams trader to the manipulation of natural gas index prices,” said U.S. Attorney Kevin V. Ryan. “This plea confirms that Williams traders conspired to manipulate natural gas prices in the West Coast, East Coast, Gulf Coast and Rocky Mountain regions of the country.”
Mr. McKenna admitted that most of the trades he reported were deliberately fabricated and that he would routinely circulate a spreadsheet containing fictitious trades for input from other traders. Mr. McKenna also admitted that his predecessor taught him how to complete and submit the spreadsheet with fictitious trades designed to benefit the company’s positions.
Mr. McKenna admitted that he knew whether his basis positions would benefit from high or low published index prices and that, in furtherance of the conspiracy, the physical gas traders often indicated to him whether their positions would benefit from high or low published index prices. McKenna admitted that the false trades he reported in January 2001 affected the published index prices for February 1, 2001.
Mr. McKenna waived indictment and was charged by an information on Friday, May 20, 2005. He was charged with one count of manipulation of the price of a commodity in interstate commerce in violation of the Commodity Exchange Act.
Under the plea agreement, Mr. McKenna agreed to cooperate with the United States’ ongoing investigations into manipulation of natural gas index prices. Mr. McKenna’s sentencing is set for November 18, 2005.
The maximum statutory penalty for each count of manipulation of the price of a commodity, in violation of 7 U.S.C. § 13(a)(2), is five years in prison and a fine of $500,000. However, the actual sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing imposition of a sentence, 18 U.S.C. § 3553.
This guilty plea is the result of a two year investigation by agents of the Federal Bureau of Investigation with much assistance from staff at the Commodity Futures Trading Commission. This case was brought jointly by the Northern District of California and the Fraud Section of the Criminal Division of the Department of Justice. Prosecutors include Robertson Park, Assistant Chief of the Fraud Section, Eugenia Cowles, Trial Attorney with the Fraud Section, and Keslie Stewart, Special Assistant United States Attorney for the Northern District of California. Ms. Stewart is on special assignment to the U.S. Attorney’s Office from the Antitrust Division of the Department of Justice to pursue investigations related to the California energy crisis of 2000-2001. Legal technicians Kelly Michell and Katie Cannuli assisted with the investigation from the Northern District of California.
A copy of this press release and related court filings may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can. Related court documents and information may be found on the District Court website at www.cand.uscourts.gov or on .