A former executive at energy company Dynegy Inc. whose 24-year prison sentence for accounting fraud was thrown out by a federal appeals panel should serve no more than five years, his attorney said in court papers.
Jamie Olis, 40, was at a federal detention center in downtown Houston on Wednesday awaiting his re-sentencing hearing Thursday. The former accountant and lawyer had the stiffest white-collar prison sentence in recent corporate scandals until July, when former WorldCom Inc. chief Bernard Ebbers was given a 25-year term for overseeing the $11 billion accounting fraud that sent the telecommunications company into bankruptcy.
The 5th U.S. Circuit Court of Appeals in October upheld Olis' November 2003 conviction of fraud and conspiracy for his role in a scheme to disguise debt as cash flow.
But the panel overturned Olis' lengthy sentence imposed in March 2004, saying U.S. District Judge Sim Lake in Houston improperly applied federal sentencing guidelines.
Prosecutors said in court filings that they want Olis to serve at least 15 years. That would match the prison term imposed in June 2005 on John Rigas, former CEO of Adelphia Communications Corp., who was convicted of securities fraud for, along with his sons, siphoning more than $100 million from the company for personal use and hiding more than $2 billion in Adelphia debt.
Also to be sentenced Thursday are two other former Dynegy executives charged in the scheme -- Olis' former boss, Gene Foster, and former in-house Dynegy accountant Helen Sharkey. Both pleaded guilty to conspiracy in August 2003.
Prosecutors recommended that Foster, who testified against Olis, serve 2 1/2 years in prison and that Sharkey serve 18 months.
But lawyers for Foster and Sharkey want Lake to sentence each to probation, or a combination of probation and home confinement for Sharkey, who gave birth last month to twin boys.
In determining Olis' original sentence, Lake relied on unrefuted trial testimony that the University of California, a Dynegy investor, lost more than $100 million in 2002 when the scheme came to light. Under then-mandatory sentencing guidelines, defendants found responsible for a loss exceeding $100 million faced sentences surpassing two decades.
The appeals panel said Lake overstated the investor loss for which Olis was responsible. The U.S. Supreme Court ruled a year ago that the guidelines are no longer binding.
In court papers, prosecutors argued that Olis was responsible for stock losses of $20 million to $50 million related to the company's disclosure in April 2002 that the Securities and Exchange Commission was investigating the scheme and that Dynegy would restate cash flows.
Olis' attorney, David Gerger, countered in court papers that the announcement noted other bad news, including Dynegy's intention to write off its telecommunications business. He also said it was illogical to attribute all stock losses that day to the scheme alone.
Dynegy was among a slew of energy merchants that faced plummeting stock, fleeing investors and increased scrutiny throughout 2002 in the aftermath of Enron Corp.'s 2001 collapse.
''We suggest that a sentence exceeding five years is not 'necessary,' while less would be 'sufficient.''' Gerger said.
Olis has been in prison since May 2004.
Foster implicated several others in the scheme when he testified, including former Dynegy finance chief Rob Doty, but no one else has been charged.
Foster's lawyer, Edward McDonough, said in a court filing that Foster should receive probation because he must support his children and his wife, a homemaker who has battled depression. Foster was unemployed from the time Dynegy fired him, Olis and Sharkey in January 2003 until February last year, when he got a job as a petroleum landman negotiating oil and gas leases.
Sharkey's lawyer, Jim Lavine, said in a filing that she shouldn't be sent to prison because her husband, who works full time, can't adequately care for their newborn sons without her. Sharkey also cares for her elderly mother, who lives with her and her husband.
- 107 Energy