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Former Dynegy CFO to pay settlement

Former Dynegy Inc. Chief Financial Officer Robert Doty has agreed to pay $376,650 to settle U.S. Securities and Exchange Commission allegations that he helped the energy company disguise loans to inflate its cash flow.

As part of the settlement, Doty agreed not to serve as an officer or director of a publicly traded company for five years, the SEC said Friday. He also agreed to cooperate with any further SEC investigation into the matter.

Doty was involved in the decision to proceed with a 2001 plan called Project Alpha, which Dynegy allegedly used to inflate cash from operations by $300 million through a series of natural-gas trades, the SEC said. The money was essentially a loan that Dynegy reported as gas-trading profits.

In 2002, Dynegy agreed to pay $3 million to settle SEC allegations that it used Project Alpha to deceive investors.

Doty, who left Dynegy in 2002, will pay $200,000 in disgorgement and pre-judgment interest of $56,560. He also agreed to pay $120,000 in civil penalties.

Doty couldn't be reached for comment and the name of his attorney couldn't be located.