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US: Two Linked to Dynegy Scheme Are Given Shorter Prison Terms

Associated Press
January 6th, 2006

The two people who helped a former Dynegy Inc. executive hatch a fraudulent accounting scheme that landed him two dozen years behind bars will serve dramatically shorter prison terms.

Former Dynegy finance executive Gene Shannon Foster, 47 years old, will serve 15 months, and former in-house accountant Helen Sharkey, 34, will serve 30 days behind bars, U.S. District Judge Sim Lake ruled in Houston.

Judge Lake also hinted that Jamie Olis, the only one of the trio to take a chance with a trial, can expect to be resentenced to a minimum of nearly six years after the 5th U.S. Circuit Court of Appeals last year threw out the 24-year term.

Mr. Foster and Ms. Sharkey each guaranteed themselves no more than five years in prison when they pleaded guilty to conspiracy in 2003. They acknowledged their roles in a scheme dubbed Project Alpha to disguise debt as cash flow. Mr. Foster testified against Mr. Olis at his trial.

When Judge Lake sentenced Mr. Olis to 24 years in March 2004, then-mandatory federal sentencing guidelines required such a term for defendants held responsible for investor losses exceeding $100 million. The judge relied on unrefuted trial testimony that the University of California, a Dynegy investor, lost more than $100 million in 2002 when Alpha was exposed.

The appeals panel in October ruled Judge Lake overstated the loss. A year ago the U.S. Supreme Court ruled that judges were no longer bound by the guidelines.

In sentencing Mr. Foster and Ms. Sharkey, Judge Lake noted the guidelines say a loss of $1 million, "which is far below the probable loss from Project Alpha," would call for a prison term ranging from nearly six years to more than seven. If he deems Mr. Olis responsible for a higher loss stemming from market reaction to Alpha and adheres to the guidelines, Mr. Olis could face that range or higher when resentenced.

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