Comments on Current Events In Criminal Law from the Federal Criminal Courts in Texas

February 11, 2008

VERDICT REACHED IN EL PASO TRIAL

(HOUSTON, Texas) - James Brooks, 48, the former managing director of North American natural gas sales for El Paso Merchant Energy (El Paso), along with El Paso natural gas traders Wesley C. Walton, 45, and James Patrick Phillips, 48, have been convicted by a jury’s verdict, United States Attorney Don DeGabrielle announced today. The defendants were convicted of conspiracy, false reporting and wire fraud, Thursday, Feb. 7, 2008, after three days of deliberation.

“With these convictions, we have enforced and will continue to enforce the laws and regulations which govern the way people do business in the marketplace,” DeGabrielle said.

The jury found that between April 2000 and May 2002 the defendants submitted or aided in the submission of reports containing fictitious trades to industry publications in an attempt to influence natural gas prices in El Paso’s favor. Brooks was convicted of one count of conspiracy, 22 counts of false reporting and 22 counts of wire fraud. Walton was convicted of one count of conspiracy, 11 counts of false reporting and 11 counts of wire fraud. Phillips was convicted of one count of conspiracy, 10 counts of false reporting and 10 counts of wire fraud. Each of the wire fraud and false reporting counts carries a maximum penalty of five years in prison and a possible fine of $250,000 or twice the amount of the loss and $500,000, respectively. The conspiracy count also carries a possible five-year prison sentence. Their sentencing is scheduled for May 23, 2008, at 10:00 a.m. The defendants remain free on bond pending sentencing.

For more than five years, the United States government has worked to investigate the manipulation of natural gas prices throughout the country. The government’s success in this case is the culmination of years of work done by the United States Attorney’s Office in Houston, the United States Postal Inspection Service and the FBI. It follows the 2006 Valencia/Singleton trial in which former Dynegy, Inc. natural gas trader, Michelle Valencia, was convicted of seven counts of wire fraud and El Paso natural gas trader, Greg Singleton, was convicted of one count of wire fraud, as well as guilty pleas submitted by former El Paso traders Todd Geiger, Chris Bakkenist, Bill Ham, Don Guilbault, Dallas Dean, Don Burwell and former Reliant natural gas trader Jerry Futch.

The verdict was reached after two months of trial, in which Assistant United States Attorneys John Lewis and Belinda Beek represented the government. The Honorable Melinda Harmon presided at trial.

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