AUGUST 21, 2006

FOR IMMEDIATE RELEASE

 

THREE FORMER AQUILA MANAGERS PLEAD GUILTY

KANSAS CITY, Mo. – Bradley J. Schlozman, United States Attorney for the Western District of Missouri, announced that three former managers of Aquila, Inc., pleaded guilty in federal court today to misprision of a felony.

Luke J. Larsen, 38, Joseph Patrick Kennedy, 40, and David Todd Bandy, 42, all formerly of Kansas City, Mo., each waived his right to indictment and pleaded guilty before U.S. Magistrate Judge John T. Maughmer to a federal information that charges them with misprision of a felony. Each of the defendants was employed by Aquila as the manager of a regional trading desk and as a natural gas trader. Their duties included selling and trading natural gas, and supervising others who traded natural gas, for the geographic region to which they were assigned. They were also responsible for accurately reporting the sales volume and price of natural gas sold.

By pleading guilty today, the co-defendants admitted that they had knowledge of false reports of natural gas trades being submitted to trade publications, which could have affected market prices, which is a felony. Those reports are significant, Schlozman explained, because they affect index prices and thereby the price of natural gas in countless transactions throughout the country. False information could affect the price of natural gas by pushing the index prices up or down, which potentially could cost consumers of electricity and natural gas great sums of money.

However, the co-defendants failed to report their knowledge of those false reports during interviews with a law firm that was retained by Aquila to represent the company in connection with an investigation by the Federal Energy Regulatory Commission. During interviews conducted in the course of that internal investigation, the co-defendants failed to report that false reports of natural gas trades had been submitted to the trade publications Inside FERC Gas Market Report and Natural Gas Intelligence by natural gas traders at Aquila, despite the fact that they knew false reports had routinely been submitted during the period from December 1999 and April 20, 2005. The co-defendants also failed to report the false reports of natural gas trades in interviews with federal law enforcement agents.

Under federal statutes, each of the defendants could be subject to a sentence of up to three years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being prosecuted by Assistant U.S. Attorney Linda Parker Marshall. It was investigated by the Federal Bureau of Investigation.