Two former executives and a former trader for a Duke Energy Corp. unit are accused of using bogus trades to make the company appear more profitable so they would get bigger bonuses, according to a federal indictment unsealed Wednesday.
Former vice presidents Timothy Kramer, 40, and Todd Reid, 41, and former energy trader Brian Lavielle, 33, were taken into custody Wednesday. They are charged with racketeering conspiracy, wire and mail fraud, money laundering and falsifying corporate books for the Houston-based trading unit, Duke Energy North America.
The scheme was intended to make it appear on the company's books that millions of dollars in profits were generated because such profits are figured into the company's calculations for awarding bonuses, U.S. Attorney Michael Shelby said Wednesday.
"One of the principal victims of this crime is Duke Energy," Shelby said, referring to the scheme as "sophisticated fraud."
In 2001, the energy trading unit paid bonuses of cash and stock of $5 million to Reid, $4 million to Kramer and $340,000 to Lavielle.
The 18-count indictment alleges the more than 400 improper trades resulted in $50 million in fraudulent profits for Duke Energy North America.
Charlotte N.C.-based Duke Energy said in a statement Wednesday that it had notified the government of the alleged wrongdoing in 2002 and has made "appropriate financial adjustments."
Duke Energy already has paid the Commodity Futures Trading Commission multimillion-dollar fines to settle allegations of fake trade reporting and other violations.