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The Honolulu Advertiser
Posted on: Friday, October 18, 2002

Enron executive pleads guilty to criminal fraud

By Carrie Johnson and Peter Behr
The Washington Post

Enron Corp.'s former chief energy trader pleaded guilty yesterday to conspiring with others at the company to manipulate California electricity prices, the first criminal charges stemming from the power crisis there two years ago.

In federal court in San Francisco, Timothy Belden, 35, pleaded guilty to one count of conspiracy to commit wire fraud and agreed to hand over $2.1 million in salary and bonuses traceable to the alleged scheme. He was released on a $500,000 bond.

Court papers didn't identify other Enron officials who allegedly joined Belden in the conspiracy and prosecutors declined to pinpoint where they'll focus their attention next. But the energy trading accusations open a second front in multi-agency pursuit of Enron executives.

The company's former chief financial officer, Andrew Fastow, and a deputy, Michael Kopper, have been charged with stealing millions of dollars from the company though complex financial transactions that led to its bankruptcy last December.

Belden headed Enron's marketing operation and supervised the company's sales of electricity to West Coast states from 1997 to February 2002. He and others at Enron used a series of schemes with such names as "Death Star" and "Fat Boy" to reap unjustified payments and hike prices in California and adjoining states, according to court papers and Enron documents.

In his plea agreement, Belden said his trading unit lied to California authorities, exaggerating the amount of power it planned to ship, and then collecting state payments not to send the power, to avoid overloading transmission lines. On other occasions Enron shipped electricity out of the state and then back in, Belden said, to get around the state's price controls.

Senior Enron executives at the company's Houston headquarters were told late in 2000 about the deceptive trading, and the practices were stopped shortly after Enron lawyers and outside counsel uncovered the practices, the lawyers told a congressional committee this spring. One lawyer testified that he told Enron's former chief executive Jeffrey Skilling about the trading abuses in June 2001.

The government complaint said the conspiracy continued into 2001, but didn't make clear when it stopped. It said that revenues from Belden's trading unit soared from $50 million in 1999 to $500 million in 2000 and continued to climb, totaling $800 million in 2001.

Belden received a corporate bonus of $5.5 million for his work in 2001. It was awarded by Enron's top management after the trading abuses had surfaced.

Belden's lawyer, Cristina Arguedas, said her client would "make amends" by cooperating with prosecutors. "Tim Belden was not a high-ranking Enron executive lining his pockets for his own greed. He was an employee who was trained how to do his job by Enron."

California State Sen. Joe Dunn, a Democrat who headed a legislative investigation of the power crisis, said in an interview yesterday that Belden "is the first of many dominos that are likely to fall."

Belden faces as much as five years in prison and a $250,000 fine.