Release: #4965-04
For Release: August 5, 2004

U.S. COMMODITY FUTURES TRADING COMMISSION APPLAUDS SUCCESSFUL PROSECUTION OF FORMER ENRON TRADER BY CALIFORNIA FEDERAL PROSECUTORS

John M. Forney Pleads Guilty to Conspiracy to Commit Wire Fraud

WASHINGTON, D.C. - The U.S. Commodity Futures Trading Commission (CFTC) welcomed today's announcement by the Office of the United States Attorney for the Northern District of California (USAO) that John M. Forney (Forney), a former Enron electricity trader, pleaded guilty this morning to conspiracy to commit wire fraud for the purpose of manipulating California's energy markets.

The plea follows Forney's arrest in June 2003 and subsequent indictment for conspiracy and wire fraud. According to the USAO, Forney managed the Real Time Trading Desk at Enron's West Power Trading Center in Portland, Oregon, where, according to the plea, Forney invented an Enron trading scheme known as "Death Star." Forney admitted that the Death Star scheme enabled him and others at Enron to engage in various improper trading activities that were intended to maximize Enron's electricity trading profits, and that ultimately affected the price of electricity in California. According to the USAO, Forney's boss at Enron was Timothy Belden, who pleaded guilty in 2002 to a charge of conspiracy to commit wire fraud relating to electricity trading schemes.

Last month, the CFTC announced a settlement with Enron culminating in the entry by a Texas federal district court judge of a consent order permanently enjoining Enron from violating the Commodity Exchange Act, compelling it to cooperate in any further related CFTC investigations, and imposing on Enron a $35 million civil monetary penalty (see CFTC News Release 4959-04, July 19, 2004). The settlement involved violations of the Commodity Exchange Act based on activities by Enron and an Enron trader in Texas.

The CFTC appreciated the opportunity to provide assistance to the U.S. Attorney's Office in the Forney matter. CFTC staff member Kim Bruno, on detail to the USAO as a Special Assistant U.S. Attorney, contributed to the case.

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