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.
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"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.
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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.
Okay, here's the part I don't get: "He faces a maximum of five years."
Huh?
Thanks to mandatory minimum sentencing, the average drug offender sentence is 66 months. That average is six months more than the maximum sentence that may be imposed upon Forney, who is responsible for cheating Californians out of $45 billion.
Somehow having some marijuana or even cocaine doesn't seem worse than stealing $45 billion from Grandma Millie. But that's what you get when the right-wing reflex of mandatory minimum sentencing meets its perverse preferentiality for white-collar crime.
Shares in the Wells REIT [real estate investment trust] aren't traded on any major exchange -- so their value is difficult to determine. Investors pay a total of 14% in commissions and other fees, which effectively dilutes their capital. The REIT's management structure allows other Wells companies to pocket millions of dollars in management and other fees. And despite the goal of listing in 2008, the company could simply begin to liquidate its assets then, a process that could take years depending on market conditions. In fact, Mr. Wells has never fully repaid investors in any of his funds over the last 20 years.
Most large brokerage firms -- including American Express Co. and Merrill Lynch & Co. -- won't handle Wells, despite the hefty commissions. Mutual funds that invest in REITs don't buy Wells or other nonlisted REITs, saying their high fees and illiquidity make them a poor choice for investors. "We don't bother with those," says Steven R. Brown, portfolio manager for Lehman Brothers Inc.'s Neuberger Berman Real Estate Fund. "There's really no way to make those numbers work."
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...a big drawback of the nonlisted REITs: Investors who want to sell their shares are often stuck. Mr. Wells's REIT, for instance, buys back 3% of outstanding shares a year on a first-come, first-served basis. The stock has careened around various secondary markets, trading at $5, $10.25 and $8.43 in May and June, the latest data available. At a gathering last year of real-estate executives at a posh private club in New York, Michael Fascitelli, president of Vornado Realty Trust, a giant public REIT, teased Mr. Wells on his stock's illiquidity, comparing it to a "roach motel."
"You can check in, but you can't check out," Mr. Fascitelli joked to raucous laughter, according to a person who was there. Through a spokeswoman, Mr. Fascitelli declined to comment.
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Robert Beneda, a 64-year-old retired engineer in Stone Mountain, Ga., invested in a 1984 Wells limited partnership fund. The fund, Wells Real Estate Fund I-B, has suspended its dividend; its units, which originally sold for $250, traded at $105 as of May 30, according to Direct Investments Spectrum, a Dallas-based newsletter. Mr. Beneda says he asked Mr. Wells at an investor presentation several years ago when principal would be returned. "He gave me this thing about 'the corn not being ready to harvest,' or something," Mr. Beneda says.
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Some planners refuse to sell Wells or any nonlisted REIT because of the fees and illiquidity. Indeed, one of two main financial-planning trade groups says its members mostly shun Wells and other nonlisted REITs. "What does it have? Incredibly high operating costs; lack of liquidity; and what disclosure exists makes me uncomfortable," says Gary H. Schatsky, president of the National Association of Personal Financial Advisors, an Arlington Heights, Ill., trade group of about 1,000 planners, known as fee-only planners because they don't accept commissions. "It doesn't make a lot of sense."
Sprinkled around the article above are these observations:
"In an interview at his office on the company's leafy campus in Norcross, an Atlanta suburb, Mr. Wells peered over wire-rimmed glasses, straightforwardly affirming his belief in prayer as an important part ofthe company's business practice. He compared his firm's role in investors' lives to that of the patriarch Joseph, who, the Bible says, served as steward to Potiphar, an official in Pharaonic Egypt. "His job was to run things," Mr. Wells says of Joseph. "It really is a higher calling."
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...the rush to add employees also brought problems. Earlier this year, for instance, a candidate for an executive-level job sued the Wells organization, alleging that during job interviews Wells executives pressed for information about his "spiritual background" and made "very direct inquiries" about his religious practices. In the suit, pending in Atlanta federal court, L. James Richards, a Minnesota resident, alleges that his response -- that he and his wife had been raised Baptists but had stopped attending church -- cost him the job.
You see, Leo Wells is a Christian nut who fires his employees for professing atheism or even having facial hair (so much for biblical authenticity).
Leo Wells sells transactions of impossible optimism to people who think they're getting ahead even when they're not. He does it at the most exorbitant costs on a track record of zero success in a folksy Christian style. He doesn't care whose rights he tramples on to achieve his self-proclaimed mission of divine inspiration.
Tom Lange, 18, of Waukesha said he was setting off an air horn during Kerry's remarks because "we want them to hear us and not hear what he has to say."
Lange said it's "probably not nice, but it's my beliefs."
Michael Gaspar, 18, of Waukesha used a bullhorn frequently before and during the rally to welcome Kerry supporters "to Bush-Cheney country" and to spur on the Bush supporters.
Asked why he was leading the Bush volunteers in loud chants while Kerry was speaking, he said, "I'm doing this to show my support for President George W. Bush."
"I have the right to speak also," he said. "I'm just attempting to get my voice heard."
There were several incidents of scuffling between Kerry and Bush supporters during the rally, including one in which it appeared a Kerry supporter attempted to throw a large Bush-Cheney sign into the Milwaukee River. Police and sheriff's deputies on foot and on horseback moved into the crowd several times and ordered people to move on and to break up their confrontations. No arrests were made, although one man was pinned to the ground by a sheriff's deputy at one point.
About 100 Bush supporters lined the Kilbourn Ave. sidewalk before the rally so that thousands of Kerry supporters had to slowly shuffle past them as they waited to go through security checks to get into the park. Supporters for each candidate exchanged chants of campaign slogans, mixed frequently with insults.
Wisconsin is a battleground state, and the best the GOP machinery can cough up is a few dozen insulting children (who if they were really true to their professed "beliefs" would be in Fallujah or, more likely, Abu Ghraib).
The kids' behavior is right out of the Rove/Ridge playbook: If you have nothing to say, say it with air horns.
President Bush's re-election campaign insisted on knowing the race of an Arizona Daily Star journalist assigned to photograph Vice President Dick Cheney.
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Danny Diaz, a spokesman for the president's re-election campaign, said the information was needed for security purposes.
"All the information requested of staff, volunteers and participants for the event has been done so to ensure the safety of all those involved, including the vice president of the United States," he said.
Diaz repeated that answer when asked if it is the practice of the White House to ask for racial information or if the photographer, Mamta Popat, was singled out because of her name. He referred those questions to the U.S. Secret Service, which did not respond to a call from the Star Friday afternoon.
Hayt declined to speculate on whether Popat was racially profiled, but said she is deeply concerned.
"One has to wonder what they were going to do with that information," Hayt said. "Because she has Indian ancestry, were they going to deny her access? I don't know."
Journalists covering the president or vice president must undergo a background check and are required to provide their name, date of birth and Social Security number. The Star provided that information Thursday for Popat and this reporter.
"That's all anybody has been asked to provide," said Hayt, adding that this is the first time in her 26-year career that a journalist's race was made an issue.
