Statement of Deputy Attorney General
LARRY D. THOMPSON
Belden Plea Press Conference
October 17, 2002
I am here with Corporate Fraud Task Force members Kevin Ryan, U.S. Attorney in the Northern District of California, FBI Deputy Director Bruce Gebhardt, Assistant Attorney General Michael Chertoff, Commodities Futures Trading Commission Chairman James Newsome, and Federal Energy Regulatory Commission Chairman Patrick Wood to announce that the former chief of Enrons California energy trading operation, Timothy Belden has been charged in an information with conspiring to submit false information to the California power authorities that fraudulently benefitted Enron at the expense of energy customers. Belden will appear before U.S. District Judge Martin Jenkins at Noon Pacific Time to offer his plea pursuant to his agreement with the Department.
Todays charges demonstrate our significant progress on the energy trading front in this investigation. In the course of only four months, the Department has achieved todays charges against a central actor in the Enron energy trading scheme. The Information charges Belden with Conspiracy to Commit Wire Fraud. That conspiracy ran from 1997 to 2001 while Belden was first Director of Enrons California energy trading desk and then Vice President and Managing Director in charge of Enrons West Power Trading Division. In that position, Belden oversaw Enrons marketing and supply of electricity to wholesale energy consumers throughout the Western United States.
The Conspiracy charged in the Information was aimed at exploiting the changes in Californias wholesale energy market that followed its restructuring in 1996. Those changes created statewide power authorities intended to manage a free marketplace for Californias energy supply. As a transition measure, California put price caps on energy produced within the state and paid fees to electricity generators and marketers (such as Enron) for eliminating congestion on Californias power grid. When Californias energy market fell into a crisis in 2000, the power authorities were forced to turn to out-of-state suppliers, including Enron, to purchase additional electricity.
The information charges that Belden and others conspired to defraud California electricity customers through a variety of schemes designed to artificially increase payments from the California power manager to Enron. As charged in the Information, Belden and his co-conspirators took advantage of Californias system by submitting false schedules, bid and other information that made it appear that certain parts of the energy grid were congested when in fact they were not and then took payment for relieving that congestion. The Information further charges that Belden and his co-conspirators exploited Californias pricing rules to falsely represent electricity generated within California as more expensive out-of-state energy. The schemes charged also include misrepresenting the nature and amount of energy that Enron proposed to supply.
While Enron benefitted from the overall rise in electricity prices, the information charges that a portion of these increased revenues was due to the execution of these schemes. The conspiracy charged in this information allowed Enron to exploit and intensify the California energy crisis and prey on energy consumers at their most vulnerable moment.
In addition to his agreement to plead guilty, Belden has agreed to forfeit $2.1 million in compensation from Enron, and agreed to cooperate with the investigations into this matter by the Department, as well those undertaken by Corporate Fraud Task Force members the Commodities Futures Trading Commission and the Federal Energy Regulatory Commission. The Departments investigation into this matter is active and ongoing.
I want to commend U.S. Attorney Kevin Ryan, and Assistant U.S. Attorney Patrick Robbins of the Norther District of California for outstanding work on this case. I also wish to thank Assistant Attorney General Michael Chertoff of the Criminal Division, FBI Deputy Director Bruce Gebhardt, the head of the Enron Task Force, Leslie Caldwell, and the entire task force including the Antitrust Division and the San Francisco FBI agents for their work on this matter to date. I also want to extend the thanks of the entire Department of Justice to our Corporate Fraud Task Force colleagues at the CFTC and the FERC, for their great cooperation and successful efforts in this investigation.
Deputy Director Gebhardt will now give a brief statement, after which we will try to answer any questions you may have.
*NOTE: Mr. Thompson frequently speaks from notes and may depart from the speech as prepared. However, he stands behind the speech as presented in written format.