The Houston US Attorney’s office sent out a statement showing their accomplishments in prosecuting corporate fraud cases over the last five year. But the biggest omission on the list was the biggest corporate fraud case Houston and this country has ever seen and that’s Enron. The problem, back then, when Enron was the subject of multiple indictments Houston prosecutors recused themselves because of their connections or familiarity with Enron figures. Federal prosecutors from various parts of the country had to be flown in to handle the case. Here’s the press release from the US Attorney’s office:
Since the creation of the President’s Corporate Fraud Task Force in July 2002 by President George W. Bush, the United States Attorney for the Southern District of Texas has been one of only seven United States Attorneys appointed to serve on the President’s Task Force. Today, United States Attorney Don DeGabrielle joined U. S. Attorney General Alberto R. Gonzales, and his colleagues to commemorate the fifth anniversary of the Task Force in Washington, D. C.
The President’s Corporate Fraud Task Force was created to restore public and investor confidence in America’s corporations following a wave of major corporate scandals. Since its inception, the Task Force has compiled a strong record of combating corporate fraud and punishing those who violate the trust of employees and investors. Chaired by Deputy Attorney General Paul J. McNulty, the Task Force includes seven U.S. Attorneys’ Offices, senior Department of Justice officials, the heads of the Departments of Treasury and Labor, and the heads of the Securities and Exchange Commission, Commodity Futures Trading Commission, Federal Energy Regulatory Commission, Federal Communications Commission, United States Postal Inspection Service, and the Department of Housing and Urban Development’s Office of Federal Housing Enterprise Oversight. Since its beginnings, the Task Force’s federal prosecutors, working closely with the FBI, the Postal Inspection Service, and IRS–Criminal Investigation have achieved 1,236 total corporate fraud convictions nationwide.
Prosecuting Corporate Criminals
Prosecutors and agency attorneys nationwide who are part of the Task Force have brought charges for accounting fraud, securities fraud, insider trading, market manipulation, wire fraud, obstruction of justice, false statements, money laundering, Foreign Corrupt Practices Act violations, stock option backdating and conspiracy, among others.
The following cases highlight just a sample of the exhaustive prosecutorial efforts by the U.S. Attorney’s Office for the Southern District of Texas in helping preserve the integrity of our corporations and our financial markets:
· Dynegy: Three former executives of energy firm Dynegy were convicted of charges stemming from an accounting scheme in which they misrepresented the proceeds of $300 million in loans as revenue from operations rather than debt.
· Dynegy Gas Trader: Following a jury trial, a Dynegy gas trader was convicted of wire fraud related to the transmission of inaccurate trade reports to industry newsletters used to report trades to calculate the “index” price of natural gas. Her co-defendant, an El Paso natural gas trader, was also convicted. Both are pending sentencing in August 2007.
· El Paso: A former Vice President of energy firm El Paso Corporation, four traders of the energy firm and six traders of its Merchant Energy subsidiary have been convicted on charges relating to false reporting of natural gas trading information. In a separate case set for trial in October 2007, three additional El Paso Corporation gas traders including a vice-president and a managing director for natural gas trading are charged with false reporting and wire fraud relating to the transmission of inaccurate trade reports.
· Trafigura AG: A Swiss corporation, was convicted of falsely representing to Houston area energy companies that more than 500,000 barrels of imported Iraqi oil sold to them in 2001 had been obtained in compliance with the Oil-For-Food program. Trafigura AG paid an $8 million criminal fine; $1.9 million in civil penalties, and forfeited more than $9.9 million.
· Western Geco: A wholly-owned subsidiary of Schlumberger Seismic, Inc., and Schlumberger Technology Corporation paid $18 million in penalties for knowingly submitting 42 fraudulent applications for U.S. visa and making false statements to U.S. Consular officers for foreign workers assigned as crewmen on various U.S. owned or operated vessels on the Outer Continental Shelf in the Gulf of Mexico.
· Paul Arthur Frame: The ex-CEO of Seitel, Inc. was convicted of defrauding his former corporation of more than $750,000, laundering the proceeds and lying to the Securities and Exchange Commission. Frame was sentenced to more than five years in prison and ordered to pay the $750,000 in restitution.
· Reliant Energy: Jerry Futch, Jr., a former Reliant Energy vice President and manager of trading and natural gas at Reliant was convicted of making false trade reports He is serving 57 months in federal prison.