A former Dynegy trader has been indicted on federal charges of reporting bogus data to a publication that puts out a benchmark widely used to set natural gas prices.
Michelle Marie Valencia, 32, who was recently fired by Dynegy, was arrested by FBI agents this morning [1/27/03] at her Houston home.
The indictment cites three separate times -- November 2000, January 2001 and February 2001 -- that Valencia allegedly fabricated natural gas trades for submission to a trade publication called Inside FERC's Gas Market Report.
All told, the indictment alleges, she made up 43 natural gas trades. Those trades were said to have been done in the western United States, including New Mexico and California.
When she was called before U.S. Magistrate Calvin Botley, her hands were handcuffed to a thick chain that wrapped around her waist.
Outside the courtroom, Valencia's attorney, Chris Flood, said his client was the "victim of a political prosecution by the current administration trying to do something to rid itself of the stain they have from the energy industry."
Stains, stains, everywhere stains. There is an unintentional stain theme in today's posts. Go figure. More:
"Our markets are the bedrock of the U.S. economy," [U.S. Attorney Michael] Shelby said this morning.
"The market works only when there is a free flow of truthful information among its members and we intend to hold criminally accountable any person who attempts to manipulate the market by knowingly disseminating false information."
Inside FERC's is one of several publications that compile so-called indexes, which are used as benchmarks to price billions of dollars in natural gas contracts in this country.
Manipulating indexes can skew the prices consumers ultimately pay for their natural gas or electricity. But because of the energy market's complexity, it's difficult, if not impossible, to quantify potential consumer harm.
The consumer harm may be difficult, if not impossible, to quantify, but the plunder is not. One measure might be the net worths of energy markets geniuses Lay and Skilling and Fastow of Enron and others of their River Oaks McMansion class. The value, if not the location, of those assets can be calculated with considerable precision.
In November 2002 we wrote about Dynegy and the travails of whistleblower Ted Beatty, who reported Dynegy's bogus round-trip trades, here. And over here is the case against the Dynegy 401(k) plan, yet another breach of duty by yet another upper management cabal in yet another Texas energy company.