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In the first federal criminal charges brought against a corporation in connection with California’s power crisis, a San Francisco grand jury on Thursday indicted Reliant Energy Services Inc. Four corporate officials of the Houston-based company — two former and two current — were also indicted. The defendants are scheduled to appear this morning in front of U.S. Magistrate Judge James Larson. The charges are the result of a four-year investigation into the worst power emergency in state history. Local, state and federal investigators have alleged that several companies manipulated California’s gas and electricity markets in order to swindle ratepayers out of millions of dollars. At its worst, the emergency caused black-outs across California as state officials struggled to find energy. “A market controlled by fraud is not a free market. By shutting off power plants to boost the cost of electricity, Reliant’s conduct is alleged to have left millions of consumers vulnerable to the higher costs and potential blackouts,” Northern District U.S. Attorney Kevin Ryan said in a statement. “Faced with evidence of widespread fraud within the company, Reliant chose to be uncooperative during the federal investigation. As a result � the Justice Department [sends] an important message today to corporate America.” Ryan is a member of President Bush’s corporate fraud task force. He made the announcement Thursday along with Attorney General John Ashcroft, FBI Director Robert Mueller III and Federal Energy Regulatory Commission Chairman Pat Wood III. The company and the individual defendants face six counts, including wire fraud and commodities manipulation and attempted manipulation of a commodity in interstate commerce. Reliant Resources, parent of Reliant Energy Services, announced last month that the indictments were coming. Thursday, the company emphasized it would mount a “vigorous” defense. “During the week in question, electricity was plentiful in California, there was no supply shortage, no [Independent Service Operator]-declared emergency and no blackouts, and prices were relatively low. There is absolutely no basis to contend that this conduct contributed to the energy shortage that occurred in California later that year,” Reliant Resources General Counsel Mike Jines said in a statement. “Moreover, any suggestion that Reliant did not fully cooperate with the … investigation is inaccurate and unfair.” Reliant is represented by Baker Botts in Houston and Topel & Goodman in San Francisco. The defendants are Jackie Thomas, 49, a former vice president in the company’s power trading division; Reggie Howard, 37, a former director in the west power trading division; Lisa Flowers, 37, a term trader in the west division; and Kevin Frankeny, 42, Reliant’s manager of western operations.

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