SAN FRANCISCO — Federal authorities on Tuesday arrested a third former Enron executive for allegedly manipulating California's energy market, leading to rolling blackouts across the state two years ago.
The U.S. attorney's office said John M. Forney, 41, was the architect behind several illegal schemes Enron used to drive up California's energy prices between 1999 and 2001. He was arrested at the headquarters of American Electric Power in Columbus, Ohio.
"While California consumers were suffering through blackouts and Stage 3 alerts, Enron was manipulating Western energy markets for profit through illegal, fraudulent means," U.S. Attorney Kevin V. Ryan said in a statement. "Our investigation of illegal activities during the energy crisis is active and continuing."
Forney, who lives in Upper Arlington, Ohio, is the third energy trader who worked at Enron's power trading office in Portland, Ore., to be charged with crimes related to California's energy crisis. He worked at the now-bankrupt company from 1993 to 2002 and was transferred to its West Power Trading Center in 1997.
Forney concocted a scheme known as "Ping Pong" designed to evade federal price caps on California energy, according to a complaint filed in a San Francisco federal court last Friday.
The complaint also alleged that Forney was responsible for a strategy known as "Death Star" that sought to generate revenue by exploiting weaknesses in California's energy management system.
Forney was released shortly after his arrest; a hearing was set for Monday. His lawyer, Brian Murphy, said Forney looks forward to clearing his name.
"We and Mr. Forney think these criminal charges are utterly without merit," Murphy said. "He's intent on vindicating himself in front of a jury."
In October, Timothy N. Belden was the first Enron executive to plead guilty to participating in what federal officials have described as a conspiracy to squeeze California as state officials desperately sought power to stave off the rolling blackouts.
In February, Jeffrey S. Richter, 33, pleaded guilty to two federal felonies based on charges he helped defraud California through a scheme to drive up energy prices during the state's power crisis.
The two former traders have cooperated in the FBI's investigation into the role that other traders played in the energy debacle that bankrupted a major utility and will leave consumers paying abnormally high electricity prices for years.