SAN FRANCISCO – LAWFUEL – Press Release Service – Three gas traders pleaded guilty this morning to conspiracy to manipulate the price of a commodity in interstate commerce, U.S. Attorney Kevin V. Ryan announced. This guilty plea is the result of a two-year investigation by the Fraud Section of the U.S. Department of Justice, the U.S. Attorney’s Office for the Northern District of California, the Federal Bureau of Investigation and the Commodity Futures Trading Commission.
Paul Atha, 39, Christopher Joseph McDonald, 38, and Michael Whalen, 36, admitted in their plea agreements that they conspired to report fictitious trades to an industry newsletter, Inside FERC, from approximately July 1, 2000, to November 1, 2000. They acknowledged reporting the fictitious trades in an attempt to skew the published index prices of natural gas in the direction that would benefit Mirant or Cinergy’s natural gas positions in the market.
“The false data these traders provided to an industry newsletter skewed published prices so the company could illegally profit,” said U.S. Attorney Kevin V. Ryan. “This continuing investigation should send a message to traders and companies that they can be held criminally accountable for illegally manipulating data.”
The defendants also acknowledged that they conspired with each other and other traders at Mirant and Cinergy to list their companies as counter-parties to the reported false trades in order to elude questioning by Inside FERC’s editors about the fictitious transactions. Defendant McDonald, of Atlanta, was a supervisor on the natural gas trading floor for Mirant. Defendant Atha, of Houston, was a natural gas trader for Mirant. Defendant Whalen, of Houston, was a natural gas basis trader for Cinergy, and had previously worked as a gas trader for Mirant. All three defendants are no longer employed by Mirant or Cinergy, and all three have agreed to cooperate with the government in its ongoing investigation.
Mirant is an energy company based in Atlanta, Georgia, that was involved in power generation, the marketing of energy products, and the buying and selling of natural gas. Cinergy Corporation is an energy company located in Cincinnati, Ohio, that provides natural gas and electricity to Ohio, Indiana, and Kentucky.
The defendants were charged in an information and pleaded guilty this morning before U.S. District Court Judge Marilyn Hall Patel. They are scheduled to be sentenced on October 23, 2006.
The maximum statutory penalty for each count of conspiracy to manipulate the price of a commodity in interstate commerce, in violation of 18 U.S.C. § 371, is five years in prison and a fine of $ 250,000. 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 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, Amanda Riedel, Trial Attorney with the Fraud Section, and Haywood S. Gilliam, Jr. and Keslie Stewart, Assistant United States Attorneys for the Northern District of California.
A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.
Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.
All press inquiries to the U.S. Attorney’s Office should be directed to Luke Macaulay at (415) 436-6757 or by email at [email protected]