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US: Dynegy Re-Sentencing Could Give Insight

The Associated Press
June 21st, 2006

The new sentence a federal judge imposes on a former Dynegy Inc. executive could provide some insight into how he'll approach the October sentencings of Enron Corp. founder Kenneth Lay and former Chief Executive Jeffrey Skilling.

U.S. District Judge Sim Lake had intended to re-sentence former Dynegy finance executive Jamie Olis, 40, before Lay and Skilling's four-month fraud and conspiracy trial began in late January.

But the judge put it off until this summer to allow prosecutors and defense attorneys to solicit experts who would hash out how long Olis should remain behind bars. Late Wednesday Lake was slated to consider dates for a hearing on the issue.

Olis has served two years of his 24-year sentence for fraud and conspiracy stemming from his help in pushing through a bogus 2001 deal that disguised debt as cash flow.

At issue is how much of investors' losses can be tied to Olis' crimes. The revelations of the deal, dubbed Project Alpha, caused Dynegy's stock to plunge. A jury convicted him of six counts of conspiracy and wire, securities and mail fraud in November 2003 after a three-week trial in Lake's court.

Prosecutors and defense teams in the Lay-Skilling case also aim to gather experts to opine on how much, if any, investor losses in Enron's 2001 crash into bankruptcy proceedings can be deemed their responsibility.

Enron's collapse obliterated more than $60 billion in market value.

Under federal sentencing guidelines that were mandatory when Lake sentenced Olis in March 2004, losses of more than $100 million tied to a defendant's crimes call for 20-plus-year prison terms. Guidelines that would apply to the Lay-Skilling convictions would call for similar prison terms if losses tied to their actions exceed $80 million or $100 million, depending on the date of the crime.

Lay, 64, was convicted of six counts of fraud and conspiracy while Skilling, 52, was convicted of 19 of 28 counts of fraud, conspiracy, insider trading and lying to auditors. Both aim to appeal, and are slated to be sentenced Oct. 23.

In January 2005 the U.S. Supreme Court ruled that sentencing guidelines were advisory. But Lake has indicated he will rely on them in determining sentences for Olis as well as Lay and Skilling.

Last fall, the 5th U.S. Circuit Court of Appeals threw out Olis' 24-year sentence, saying it was unreasonable to hold him responsible for more than $100 million in losses.

Olis prosecutors say Olis still deserves a double-digit sentence. But his lawyer, David Gerger, counters that he should serve no more than five years because Dynegy announced other bad news when Project Alpha was disclosed in 2002 and no one can tie a specific figure to Project Alpha alone.

Olis' prison term was the stiffest white-collar prison sentence in recent corporate scandals until July last year, when former WorldCom Inc. chief Bernard Ebbers was given a 25-year term for overseeing the $11 billion accounting fraud that sent the telecommunications giant into bankruptcy.

The only others charged in the Alpha scheme -- former Olis boss Gene Foster and former in-house Dynegy accountant Helen Sharkey -- pleaded guilty to conspiracy in August 2003. Foster is serving a 15-month prison term. Sharkey, who gave birth to twins in December, is slated to report to prison in October to serve a 30-day term.





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