A former Enron Corp. trading executive pleaded guilty Thursday to charges he manipulated energy markets during California's power crisis in 2001 and promised to assist the state and other public utilities' in their lawsuits seeking to recoup billions from the energy industry.
John Forney, 42, of Ohio, is the third Enron official to plead guilty to manipulating electricity prices from Enron's now-defunct trading office in Portland, Ore. The crisis played a role in Pacific Gas & Electric Co.'s bankruptcy and will leave California consumers paying abnormally high electricity prices for years.
He faces a maximum of five years. He remains free on $500,000 bail. A sentencing date has not been set.
"With the guilty plea of John Forney, we have now obtained convictions of the top three Enron executives most directly responsible for manipulating the energy markets in California at a time unique in our history, when the lights were going off and the grid was in danger of shutting down," U.S. Attorney Kevin Ryan said.
Ryan said as part of the guilty plea, Forney is expected to cooperate with the ongoing investigation into Texas-based Enron, as well as reveal details about how other energy firms may have played a role. Four employees of Reliant Corp. have already been charged with deliberately shutting down power plants to increase the price of California electricity.
"We're interested in sitting down and having a good conversation with Mr. Forney to see what he may add to our body of evidence," said Tom Dresslar, a spokesman for California Attorney General Bill Lockyer, who is suing dozens of energy companies seeking billions in refunds.
Forney's attorney, Edwin Prather, said his client admitted guilt "to accept responsibility for his actions."
"It was a good opportunity for John and his family at this time to certainly right the wrong he had a part in and for them to move on with their lives," Prather said.
A federal grand jury in San Francisco had charged him with 11 counts, and through a plea agreement, admitted to one count in exchange for the government dropping the others. As part of the deal, Forney must assist California and other public agencies in their lawsuits accusing the industry of inflating energy prices.
Any bonuses Forney earned from Enron as part of its illegal activity were reinvested in the company and lost when Enron declared bankruptcy, Prater said.
Former Enron executives Timothy N. Belden and Jeffrey S. Richter also have pleaded guilty and cooperated with the FBI. Belden was expected to testify against Forney at his trial, which had been scheduled for later this year.
Forney, the manager of Enron's trading desk, pleaded guilty to one count of wire fraud -- specifically, that he promised to supply energy Enron did not have and that he improperly collected electrical grid management fees for Enron.
Enron's scheme to charge fees for services it did not provide was known inside the company as "Forney's Perpetual Loop," the indictment said.
Forney also took part in other schemes -- known within Enron as "Death Star," "Get Shorty," "Ricochet" and others -- that had the affect of inflating consumer prices.
Prosecutors also accuse Forney of concocting a scheme that involved buying energy from California and later selling it back to the state at inflated prices, making it appear the energy was generated elsewhere.
The guilty plea comes two months after transcripts of Enron energy traders showed them openly discussing manipulating California's power market during profanity-laced telephone conversations in which they gloated about ripping off "those poor grandmothers" during the state's energy crunch in 2000-01.
The calls were obtained from the government and transcribed by a public utility district near Seattle that wants Enron to forfeit millions of dollars in ill-gotten gains over the energy trading scandal.
On the recordings, Forney discusses trying to be an "honest camper" and expresses concern about getting caught. "... Nobody else seems to be concerned anymore about it, except for me," he said.
On the calls, traders discussed creating congestion on transmission lines, taking generating units off-line to boost electricity prices.
They also joked about Enron's hefty political contributions -- particularly to President Bush's campaign -- and how that could translate into more opportunity for profit in California.