The indictment alleges that Mr. Forney submitted or caused to be submitted false and fraudulent schedules to the California Independent Services Operator, in order to manipulate the price of electricity during the energy crisis.  Mr. Forney was the manager of Enron's Real Time Trading Desk in Portland, Oregon.  That facility, known as Enron's West Power Trading Division, was responsible for all of Enron's energy trading in California.

Mr. Forney, age 41 of Upper Arlington, Ohio, was first charged by criminal complaint on June 3, 2003.  He was later indicted on one count of conspiracy.  This latest indictment, which supersedes all other charges in the case, expands the charges faced by the defendant by adding 10 substantive counts of wire fraud based on transfers of money to and from Enron as a result of its illegal trading.

The indictment specifically alleges that Enron and Mr. Forney were involved in seven separate trading schemes to manipulate the California energy market during the height of the crisis.   The trading schemes were known within Enron as: Get Shorty, Death Star, Ricochet, the sale of non-firm energy as firm energy, non-firm export,, Off-Line Hubs and Load Shift.  The Death Star scheme, in which Enron is alleged to have submitted false schedules to make it appear that the company was relieving congestion on the energy lines, was also known as the Forney Loop and Forney Perpetual Loop.  According to public documents in the case, Mr. Forney is alleged to have been the creator of Death Star.

According to the indictment, it was part of the conspiracy that Mr. Forney and others at Enron misrepresented the nature and amount of electricity Enron proposed to supply and the load it intended to serve, received payments for relieving congestion on transmission lines without actually relieving any congestion, misrepresented the nature and origin of energy, and promised to provide energy to California consumers that Enron either didn't have or did not intend to provide.

Mr. Forney is the third former senior Enron energy executive to be charged with a federal crime for manipulating the California energy market.  Two other executives have pled guilty.  They are Timothy Belden and Jeffrey Richter.  According to the indictment, Mr. Forney was employed by Enron from approximately 1993 until 2002.  Near the end of 1997, Enron transferred him to Enron's West Power Trading office in Portland, Oregon.  All of Enron's California energy trading was based in Portland.  In June 1999, Mr. Forney became the manager of the Enron Real Time trading desk.  Mr. Forney remained the manager of the Real Time desk until he moved to Houston at the end of 2000.  

The case is assigned to Federal District Judge Martin J. Jenkins in San Francisco.  His next scheduled appearance is this afternoon at 2 p.m. for trial setting.   An indictment simply contains allegations against a defendant and, as with all defendants, Mr. Forney must be presumed not guilty unless an until convicted.  The maximum statutory penalty for conspiracy, in violation of 18 U.S.C. § 371, is five years in prison and a $250,000 fine.  The maximum statutory penalty for each count of wire fraud, in violation of 18 U.S.C. § 1343, is 20 years in prison and a $250,000 fine.  However, the actual sentence would be dictated by the federal sentencing guidelines and imposed in the discretion of the court.

The investigation is being led by the U.S. Attorney's Office in San Francisco along with the Enron Task Force, the Antitrust and Fraud Divisions of the Department of Justice, and the San Francisco division of the FBI.  The cases are being prosecuted by Assistant U.S. Attorney Matthew J. Jacobs and Lisa Tenorio-Kutzkey and Keslie Stewart, both trial attorneys with the Antitrust Division of the Department of Justice based in San Francisco. 

     All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Matthew J. Jacobs at (415) 436-7181.