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Three former Dynegy Inc. employees were indicted by a federal grand jury in Houston on June 10 on charges of conspiracy, securities fraud, mail fraud and three counts of wire fraud. On June 12, the indictments were unsealed. The U.S. Attorney’s Office was involved in the investigation of the former Dynegy employees, along with representatives of the FBI, Securities and Exchange Commission and U.S. Postal Inspection Service as part of the President’s Corporate Fraud Task Force. The defendants are Jamie Olis, formerly Dynegy’s senior director of tax planning/international tax and vice president of finance; Gene Shannon Foster, formerly Dynegy’s vice president of tax; and Helen Christine Sharkey, formerly a member of Dynegy’s risk control and deal structure groups. Two of the defendants, Sharkey and Foster, turned themselves in to the FBI. Sharkey and Foster appeared before U.S. Magistrate Judge Nancy Johnson of Houston the morning of June 12. Olis was taken into custody by the FBI in San Antonio, where he has a second home, says U.S. Attorney Michael Shelby of the Southern District of Texas. Kyle Sampson, a partner in Zimmermann and Levine in Houston, who, along with partner Jim Levine, represents Sharkey, says he is reviewing the indictment and is not ready to comment on the case. Ed McDonough, a partner in McDonough & Associates in Houston, represents Foster, and reserves comment until he can review the indictment. McDonough, however, says he’s disappointed the investigation resulted in criminal charges for his client. “We have been trying to work with the government on their investigation and are distressed that it had to come to this,” he says of the indictment. Olis did not return a message left on an answering machine at a Houston listing for him, seeking comment. As alleged in the indictment, the defendants conceived and executed a plan to borrow money from CitiBank/Solomon Smith Barney, Duetsche Bank and Credit Suisse First Boston, but made it appear that the loan was cash flow from operations rather than debt. Reporting such funds as income instead of debt violates SEC reporting regulations. In effect, their alleged actions led the public to believe the company was better off financially than they were, according to the indictment. “This was an act by clever people attempting, through deceit, that loans were cash flows and red ink was actually black,” Shelby alleges. “This case is about truth in the marketplace. These defendants are accused of withholding the truth about Dynegy’s fiscal condition from the SEC, shareholders and the public.” Shelby says that Dynegy CEO Bruce Williamson worked with his agency during the investigation. Williamson did not return phone calls placed to his office on June 12. However, in a statement, Dynegy officials say they are committed to continue cooperating with the U.S. Attorney’s Office and other government agencies in their investigation. “Dynegy has been, and will continue to be, committed to restoring the confidence of all stakeholders.”

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