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Lay Got Off Easy, Indictment Should Include Manipulation of the California Energy Market Yesterday's eleven-count indictment by the Justice Department's Enron Task Force against Ken Lay for bank fraud, securities fraud, wire fraud, making false and misleading statements to banks, and conspiracy to commit securities fraud should be expanded to include inquiries into Lay's role in Enron's manipulation of the western states' energy markets, according to a political watchdog group. Despite the recent release of documents which demonstrate that Enron's upper management was aware of the Enron practices which precipitated the western energy crisis and cost energy consumers billions of dollars, yesterday's indictment included no charges against Lay in relation to these schemes. "Ken Lay spent millions of dollars on lobbying and political candidates to ensure that his company and the electricity markets had the least amount of oversight possible, then sent his trading goons to shake down American consumers like it was the Wild West," said Ned Wigglesworth, researcher at TheRestofUs.org. "Americans need to keep a careful eye on this case to make sure that Lay's dollars don't buy him his own personal brand of justice as well." TheRestOfUs.org called for four steps that the government should take to assure the American people that it is vigorously enforcing the law. 1) The Justice Department should expand its investigation of Enron and Ken Lay to include Enron's illegal manipulation of the California energy market and Ken Lay's knowledge thereof. Former Enron energy traders Timothy N. Belden and Jeffrey Richter have already pled guilty to conspiracy to commit fraud by manipulating energy prices in the California market. Recently released transcripts of phone conversations show that in August 2000, Belden informed Richard Shapiro, vice president of government affairs at Enron, of the manipulative practices used by Enron traders to game the California markets. Belden's attorney told the court that he "did what was expected of him and his actions were in accordance with Enron's policy, expectations and training." The DOJ should pursue whether Ken Lay knew of the fraudulent practices used by Enron traders in California and whether he encouraged them. 2) The DOJ should also investigate Richard Shapiro's role in the activities of Enron's Western Power Trading Division. As of August 2000, Shapiro knew that Belden and his gang were playing loose with the rules, and yet he continued to lobby members of Congress and the Administration to avoid setting price caps that would have stopped the gouging. Did he lie to decision-makers about the true cause of the energy crisis as he and Ken Lay and other lobbyists lobbied hard for deregulation throughout the winter of 2000-2001? As a vice-president of Enron, he may well have had a legal responsibility to its shareholders and management to inform his superiors of the possibly illegal actions being done by Enron traders. The DOJ should thoroughly investigate Shapiro, who is now a lobbyist for Sempra Energy, another energy company. 3) In 2000, the Ashcroft Victory Committee, one of current Attorney General John Ashcroft's Political Action Committees, received $25,000 from Ken Lay and $25,000 from Enron. Ashcroft used this money to further his campaign for Senate and status within his party. Even though he recused himself from the Enron investigation, the inadequacy and extremely limited scope of today's indictment suggest that Mr. Ashcroft's Enron Task Force has miles to go before they exhaust the range of possible crimes and civil wrongs committed by Enron and its officials, including Ken Lay and Jeff Skilling. In light of this shortcoming and the contributions Mr. Ashcroft's PAC received from Ken Lay and Enron, Mr. Ashcroft should reaffirm to the American people that he as played no role in the investigation of Ken Lay and other Enron officials, and should reveal the content of and parties to any discussions he has had relating to possible charges against Enron 4) The transcripts that were recently released also demonstrate the importance of providing the public with a complete and transparent picture of how the people of California were gouged for billions of dollars by the deregulation of electricity markets. American consumers and the fifty states should have full access to all documents relating to the California energy crisis and to Enron so that we may learn why the crisis happened and what we may do to better avoid a crisis in the future. To this end, the Federal Energy Regulatory Commission (FERC) should release all documents related to Enron and the California energy crisis. "As long as big money continues to pay the way for candidates with policies that are not good for average Americans, we can't be sure that justice is being done," said Derek Cressman, Director of TheRestofUs.org, who noted that between 1994 and 2002, Enron and its executives donated more than $5 million to political campaigns. "Right now, with the big money Lay and Enron threw around, it's tough to believe that they're telling us the whole story," he concluded. The RestofUs.org is a nonpartisan watchdog group working to alert citizens to the problems of big money in politics.
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