A federal jury convicted a former Dynegy Inc. executive of fraud and conspiracy stemming from a 2001 natural gas deal prosecutors said helped the company improperly boost cash flow and reduce its taxes.
Jurors deliberated less than two hours on Thursday before finding Jamie Olis guilty. Two other former executives of the Houston-based energy company previously pleaded guilty to conspiracy in the deal.
Olis, 37, was charged with conspiracy and five counts of fraud. He could receive anywhere from probation to 35 years in prison.
U.S. District Judge Sim Lake scheduled his sentencing for Feb. 19 and allowed Olis to remain free on bond until then.
One of the defendants, Olis’ former boss, Gene Shannon Foster, identified Olis among others as knowing the arrangement — “Project Alpha” — was illegal.
“This verdict is going to ring around this country,” U.S. Attorney Michael Shelby said outside court. The speedy verdict, he said, “shows that juries are not going to tolerate this kind of deception in the marketplace.”
Olis and his attorneys left without comment, and Olis’ lead lawyer, Terry Yates, did not return a telephone message. Jurors also declined a request to speak to reporters.
Olis’ lawyers rested their case Thursday morning without calling any witnesses, saying they believed the government did not prove guilt. That came a day after prosecutors abruptly rested their case.
Foster testified that a total of seven Dynegy employees and two outside attorneys were involved in crafting Alpha, a five-year deal involving Dynegy’s buying natural gas from an entity backed by several banks at a $300 million discount, reselling it at market prices, and booking the $300 million as cash flow in 2001.
However, Project Alpha also contained a secret agreement to repay the $300 million, so it should have been recorded as debt, and a $79 million tax benefit for the company was invalid.
Foster testified Olis was part of Project Alpha along with former chief financial officer Rob Doty, who has not been charged. Doty’s attorney, who has monitored the trial, declined to address the accusation.
In February, Dynegy fired Olis, Foster and the third former executive to plead guilty, one-time in-house accountant Helen Christine Sharkey. The company said it continues to cooperate with investigators and “respects the judicial process and the jury’s decision in this matter.”
Foster and Sharkey have pleaded guilty to conspiracy in exchange for their cooperation with prosecutors. Yates said Foster — the father of seven children — did as prosecutors instructed because of his desire for leniency.
Assistant prosecutor John Lewis said mounds of e-mails, presented to jurors with days of technical testimony regarding the hugely complex deal, show efforts by Olis, Foster, Sharkey and others to hide crucial information from Andersen so Dynegy could treat debt as cash flow.
“This case is not about accounting. It’s about accountability,” Lewis said.
According to testimony, the impetus for Alpha came in fall 2000 when analysts noticed cash flow lagged behind recorded earnings from Dynegy’s trading unit. Tax experts at Andersen had pitched an Alpha-like deal to create cash flow to fill the gap.