Key Enron trader pleads guilty
SAN FRANCISCO -- A former Enron trader accused of masterminding a scheme to drive up energy prices during California's power crisis pleaded guilty Thursday to conspiracy and agreed to cooperate with prosecutors.
Timothy Belden, the former head of trading in Enron's Portland, Ore., office, admitted to one count of conspiracy to commit wire fraud.
U.S. Attorney Kevin Ryan said the guilty plea shows that that the rolling blackouts and huge price increases that rocked California last year were the result of illegal conduct.
"These charges answer the question that has long troubled California consumers: whether the energy crisis was spurred in part by criminal activity. The answer is a resounding yes," Ryan said.
Belden, 35, who now lives in Houston, could get up to five years in prison at sentencing in April. He was released on $500,000 bail.
He will also help federal prosecutors in their case against higher-ranking officials at Houston-based Enron, the energy giant whose collapse last year has roiled the energy industry, prosecutor Matthew Jacobs said.
Belden's attorney, Cristina Arguedas, said his client was following Enron's instructions when he handled his trades and will "make amends for that by cooperating with the government."
Belden is the first person to be charged in the manipulation of Western energy markets, and the third Enron figure to be prosecuted.
"Tim Belden is not a high-level executive who was lining his pockets out of greed," Arguedas said. "He did his job. Tim was always honest with others at Enron about his actions, and was never disciplined by Enron.
"He now realizes that what he was taught to do was wrong," she continued. "He's going to make amends as well as he can by cooperating fully with the government and telling the complete truth about Enron's actions in the California energy trading market."
Belden was the mastermind behind the strategies described in memos that spelled out how Enron manipulated the California market, said Chris Schreiber, an attorney working with a California Senate committee investigating alleged manipulation of the market.
"He's been on our radar for a long time," Schreiber added.
For months, federal investigators have worked with the Senate panel. A federal grand jury in San Francisco has been weighing criminal charges.
Internal company memos, first released in May, describe how Enron took power out of California at a time of rolling blackouts and shortages and sold it out of state to elude price caps.
Enron bought California power at cheap, capped prices, routed it outside the state, and then sold it back into California at vastly inflated prices, authorities said. The so-called "ricochet" deals were designed to circumvent California's price caps on wholesale energy.
The scheme "allowed Enron to exploit and intensify the California energy crisis and prey on energy consumers at their most vulnerable moment," Deputy Attorney General Larry Thompson, head of the Justice Department's Corporate Fraud Task Force, said in Washington on Thursday.
Thompson said revenue from Belden's trading unit rose from $50 million in 1999 to $500 million in 2000 to $800 million in 2001.
State Sen. Joe Dunn, a Democrat who chairs the committee on price manipulation, called Belden's plea "the first of many dominoes that will fall, not only at Enron, but within other energy companies within the wholesale energy market."