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MIRANT
ENERGY TRADING LLC TO PAY $11 MILLION PENALTY TO RESOLVE CRIMINAL ALLEGATIONS
WASHINGTON
- Mirant Energy Trading LLC has entered into an agreement with the U.S.
government resolving an ongoing federal investigation into the submission
of knowingly inaccurate reports by former traders of former subsidiary
Mirant Americas Energy Marketing, LP (MAEM), concerning the commodities
market for natural gas, Assistant Attorney General Alice S. Fisher of
the Criminal Division and U.S. Attorney Scott Schools of the Northern
District of California announced today.
Mirant
Energy Trading - a Delaware corporation that is a wholly owned subsidiary
of Mirant Corporation and successor to MAEM - will pay an $11 million
penalty to the U.S. Treasury under the terms of the deferred prosecution
agreement.
Mirant
Energy Trading has accepted and acknowledged responsibility for the actions
of MAEM's former employees, and is required by the agreement to cooperate
fully with the government's investigation. The Department of Justice has
agreed not to file criminal charges stemming from the investigation for
a 15-month period due, in part, to the bankruptcy reorganization of the
company, the company's cooperation and the payment of fines to the U.S.
government. The Department of Justice can charge Mirant Energy Trading
with delivering knowingly inaccurate reports concerning the commodities
market for natural gas if Mirant Energy Trading fails to comply fully
with the terms of the agreement during that 15-month period.
According to a statement of facts that accompanied the agreement, between
February 2000 and December 2000, traders at MAEM's natural gas trading
desks submitted knowingly inaccurate trade data, including fictitious
trades, incorrect volumes and/or prices, and incomplete trade reports
to industry publications, for the purpose of benefiting MAEM's natural
gas trading positions. Natural gas traders use the published index prices
to price and settle certain physical and over-the-counter financial derivative
natural gas transactions. Certain MAEM traders also attempted to conceal
the false nature of these submissions by providing misleading and inaccurate
information to industry publications in response to requests to confirm
reported trade information. Mirant management alerted government authorities
after discovering the false reporting.
Three former MAEM traders - Christopher McDonald, Michael Whalen and Paul
Atha - pleaded guilty in the Northern District of California last year
to conspiracy to violate the Commodity Exchange Act.
"The Justice Department's efforts to combat corporate fraud are focused
on ensuring honesty and integrity in the marketplace, in this case in
the natural gas markets," said Assistant Attorney General Fisher.
"This agreement properly recognizes the company's comprehensive disclosure
of violations and its written commitment to deterring illegal conduct
in the future. I thank the criminal and antitrust prosecutors who worked
on this case, along with agents of the FBI and representatives of the
Commodity Futures Trading Commission."
"The provision of false information by Mirant employees in the natural
gas trading markets gave an unfair and illegal advantage to the company
and disrupted the appropriate functioning of those markets," said
U.S. Attorney Schools. "This deferred prosecution agreement, with
an $11 million fine and a mechanism for future cooperation with authorities,
promotes a culture of compliance within the corporation and hopefully
deters other corporations from engaging in similar illegal conduct that
disrupts essential energy markets."
The Justice Department's investigation into the Mirant matter is being
conducted by the Fraud Section of the Criminal Division, the United States
Attorney's Office for the Northern District of California, and the Federal
Bureau of Investigation. The investigation was also supported by the Antitrust
Division of the Department of Justice and the Commodity Futures Trading
Commission.
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