FROM: U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON – The former chief executive officer of Fair Financial Company, an Ohio financial services business, was sentenced today to serve 50 years in prison for his role in a scheme to defraud approximately 5,000 investors of more than $200 million, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division and U.S. Attorney for the Southern District of Indiana Joseph H. Hogsett.
Timothy S. Durham, 50, of Fortville, Ind., was sentenced today by U.S. District Judge Jane Magnus-Stinson. In addition to his prison term, Durham was sentenced to serve two years supervised release.
James F. Cochran, the former chairman of the board of Fair, was sentenced today by Judge Magnus-Stinson to serve 25 years in prison and three years of supervised release.
Rick D. Snow, the former chief financial officer of Fair, was sentenced today by Judge Magnus-Stinson to ten years in prison and two years of supervised release.
Judge Snow also ordered Durham, Cochran and Snow to pay restitution in the amount of $208 million.
"The lengthy prison sentences handed down today are just punishment for a group of executives who built a business on smoke and mirrors," said Assistant Attorney General Breuer. "By deliberately misleading their investors and state regulators, Mr. Durham and his co-conspirators were able defraud thousands of innocent investors. The Justice Department will continue to devote considerable time and resources to ensure that fraudsters like Mr. Durham, Mr. Cochran and Mr . Snow are brought to justice for their crimes."
"This ordeal is truly a tragedy for all families involved," said U.S. Attorney Hogsett. "All we can do is ask that today's decision send a warning to others in Indiana that if you sacrifice truth in the name of greed, if you steal from another's American dream to enhance your own, you will be caught and you will pay a significant price."
"The FBI will continue to aggressively pursue financial crimes investigations," said Special Agent in Charge Robert A. Jones of the FBI Indianapolis Division. "Today’s sentencing represents a significant step toward justice. We must remain mindful that the victims of this crime still suffer."
On June 20, 2012, following an eight-day trial, a federal jury in the Southern District of Indiana convicted Durham and two co-conspirators for their roles in this scheme. Durham was convicted of one count of conspiracy to commit wire and securities fraud, 10 counts of wire fraud and one count of securities fraud. James F. Cochran, 57, of McCordsville, Ind., was convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud and six counts of wire fraud. Rick D. Snow, 49, Fishers, Ind., was convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud and three counts of wire fraud.
Durham and Cochran purchased Fair, whose headquarters was in Akron, Ohio, in 2002. According to evidence presented at trial, between approximately February 2005 through November 2009, Durham, Cochran and Snow executed a scheme to defraud Fair’s investors by making and causing others to make false and misleading statements about Fair’s financial condition and about the manner in which they were using Fair investor money. The evidence also established that Durham, Cochran and Snow executed the scheme to enrich themselves, to obtain millions of dollars of investors’ funds through false representations and promises and to conceal from the investing public Fair’s true financial condition and the manner in which Fair was using investor money.
When Durham and Cochran purchased Fair in 2002, Fair reported debts to investors from the sale of investment certificates of approximately $37 million and income producing assets in the form of finance receivables of approximately $48 million. By November 2009, after Durham and Cochran had owned the company for seven years, Fair’s debts to investors from the sale of investment certificates had grown to more than $200 million, while Fair’s income producing assets consisted only of the loans to Durham and Cochran, their associates and the businesses they owned or controlled.
Durham, Cochran and Snow terminated Fair’s independent accountants who, at various points during 2005 and 2006, told the defendants that many of Fair’s loans were impaired or did not have sufficient collateral. After firing the accountants, the defendants never released audited financial statements for 2005, and never obtained or released audited financial statements for 2006 through September 2009. With independent accountants no longer auditing Fair’s financial statements, the defendants were able to conceal from investors Fair’s true financial condition.
Evidence introduced at trial showed that the defendants engaged in a variety of other fraudulent activities to conceal from the State of Ohio Division of Securities and from investors Fair’s true financial health and cash flow problems. Evidence showed that the defendants made false and misleading statements to concerned investors who either had not received principal or interest payments on their certificates from Fair or who were worried about Fair’s financial health. The defendants also directed employees of Fair not to pay investors who were owed interest or principal payments on their certificates.
Even though Fair’s financial condition had deteriorated and Fair was experiencing severe cash flow problems, Durham and Cochran continued to funnel Fair investor money to themselves for their personal expenses, to their family, friends and acquaintances, and to the struggling businesses that they owned or controlled.
This case is being prosecuted by Trial Attorney Henry P. Van Dyck and Senior Deputy Chief for Litigation Kathleen McGovern of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Winfield D. Ong and Nicholas E. Surmacz of the Southern District of Indiana. The investigation was led by the FBI in Indianapolis.
Saturday, December 1, 2012
Thursday, November 29, 2012
BP TEMPORAILY SUSPENDED FROM RECEIVING NEW U.S. GOVERNMENT CONTRACTS
FROM: U.S. ENVIRONMENTAL PROTECTION AGENCY
BP Temporarily Suspended from New Contracts with the Federal Government
WASHINGTON - The U.S. Environmental Protection Agency (EPA) announced that it has temporarily suspended BP Exploration and Production, Inc., BP PLC and named affiliated companies (BP) from new contracts with the federal government. EPA is taking this action due to BP’s lack of business integrity as demonstrated by the company's conduct with regard to the Deepwater Horizon blowout, explosion, oil spill, and response, as reflected by the filing of a criminal information. On November 15, 2012, BP agreed to plead guilty to eleven counts of Misconduct or Neglect of Ship Officers, one count of Obstruction of Congress, one misdemeanor count of a violation of the Clean Water Act, and one misdemeanor count of a violation of the Migratory Bird Treaty Act, all arising from its conduct leading to the 2010 Deepwater Horizon disaster that killed 11 people and caused the largest environmental disaster in U.S. history.
For the Deepwater Horizon investigation, EPA was designated as the lead agency for suspension and debarment actions. Federal executive branch agencies take these actions to ensure the integrity of Federal programs by conducting business only with responsible individuals or companies. Suspensions are a standard practice when a responsibility question is raised by action in a criminal case.
The BP suspension will temporarily prevent the company and the named affiliates from getting new federal government contracts, grants or other covered transactions until the company can provide sufficient evidence to EPA demonstrating that it meets Federal business standards. The suspension does not affect existing agreements BP may have with the government.
BP Temporarily Suspended from New Contracts with the Federal Government
WASHINGTON - The U.S. Environmental Protection Agency (EPA) announced that it has temporarily suspended BP Exploration and Production, Inc., BP PLC and named affiliated companies (BP) from new contracts with the federal government. EPA is taking this action due to BP’s lack of business integrity as demonstrated by the company's conduct with regard to the Deepwater Horizon blowout, explosion, oil spill, and response, as reflected by the filing of a criminal information. On November 15, 2012, BP agreed to plead guilty to eleven counts of Misconduct or Neglect of Ship Officers, one count of Obstruction of Congress, one misdemeanor count of a violation of the Clean Water Act, and one misdemeanor count of a violation of the Migratory Bird Treaty Act, all arising from its conduct leading to the 2010 Deepwater Horizon disaster that killed 11 people and caused the largest environmental disaster in U.S. history.
For the Deepwater Horizon investigation, EPA was designated as the lead agency for suspension and debarment actions. Federal executive branch agencies take these actions to ensure the integrity of Federal programs by conducting business only with responsible individuals or companies. Suspensions are a standard practice when a responsibility question is raised by action in a criminal case.
The BP suspension will temporarily prevent the company and the named affiliates from getting new federal government contracts, grants or other covered transactions until the company can provide sufficient evidence to EPA demonstrating that it meets Federal business standards. The suspension does not affect existing agreements BP may have with the government.
Wednesday, November 28, 2012
U.S. DOL SUES ANIMAL HIDE COMPANY FOR EMPLOYEE BACK WAGES
FROM: U.S. DEPARTMENT OF LABOR
US Labor Department sues Boston Hides & Furs Ltd., seeking at least $1 million in back wages and damages for underpaid, wrongfully fired workers
Chelsea, Mass., business also assessed $100,000 penalty for willful labor violations
BOSTON — Citing "knowing, deliberate and intentional" violations of federal wage and hour law, the U.S. Department of Labor has filed a lawsuit against Boston Hides & Furs Ltd. and company officials seeking at least $500,000 in back wages and an equal amount in liquidated damages for underpaid employees of the Chelsea wholesale animal hide business.
The department filed the lawsuit in federal court following an investigation by its Wage and Hour Division that found the employer committed willful and repeated violations of the minimum wage, overtime and record-keeping provisions of the federal Fair Labor Standards Act, including offering for shipment or sale "hot goods" produced in violation of the law during a period spanning at least three years. The suit also asserts that the company unlawfully retaliated against several workers by firing them after they cooperated with the federal investigation.
"The violations uncovered by this investigation reveal a disturbing disregard for the law," said Secretary of Labor Hilda L. Solis. "Such unacceptable behavior not only harms the workers involved, it also undercuts employers who obey the law."
The investigation found that 14 Boston Hides & Furs employees worked approximately 10 hours per day, six days per week processing hides and furs for shipping to tanneries. These workers were paid a daily cash wage of $50 to $70, which amounted to an hourly pay rate far below the federal minimum wage of $7.25 per hour. The employees also were not paid time and one-half the required state minimum wage of $8 applicable for those hours worked above 40 in a week. Additionally, the defendants failed to keep adequate records of the workers' employment, work hours and pay rates, and a representative of the defendants falsely told investigators that the company's payroll records included all employees.
Further, the defendants ordered employees to hide in a nearby house when Wage and Hour Division investigators first arrived at Boston Hides & Furs so they could not be interviewed. Investigators subsequently interviewed the workers. Two days later, the defendants fired the workers. During their employment, the workers were threatened and subjected to verbally abusive treatment on an ongoing basis, particularly when they asked about their pay rates.
"If you work, you are entitled to be paid the wages you earn — at a rate no less than the applicable minimum wage, with proper overtime pay — and to seek those wages without fear of retaliation or termination. It's that simple and it's the law," said Michael Felsen, the Labor Department's regional solicitor for New England. "If you're an employer, understand that if you cheat your workers on their pay, the U.S. Department of Labor will seek not only the withheld wages but an equal amount in liquidated damages for those workers. And if you fire your workers or otherwise retaliate against them because they cooperated with a Labor Department investigation, we will seek appropriate redress for that violation too."
In addition to back wages and liquidated damages, the department's suit seeks to permanently prohibit the defendants from future FLSA violations — including a prohibition against shipping any goods handled by workers who were paid in violation of the law — and compensatory and punitive damages for the workers on account of their unlawful firing. The Wage and Hour Division also has assessed $100,000 in civil money penalties against Boston Hides & Furs Ltd. for willful violations of the FLSA.
The suit has been filed in the U.S. District Court for the District of Massachusetts by the Labor Department's Regional Office of the Solicitor in Boston. The original investigation was conducted by the Wage and Hour Division's Boston District Office.
The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour as well as time and one-half their regular rates for every hour they work beyond 40 per week. When the state minimum wage is higher than the federally mandated wage, and employees work more than 40 hours in a week, employees paid at the minimum permissible level are entitled to overtime compensation based on the higher state minimum wage.
The law also requires employers to maintain accurate records of employees' wages, hours and other conditions of employment, and prohibits employers from retaliating against employees who exercise their rights under the law. The FLSA provides that employers who violate the law are, as a general rule, liable to employees for back wages and an equal amount in liquidated damages.
US Labor Department sues Boston Hides & Furs Ltd., seeking at least $1 million in back wages and damages for underpaid, wrongfully fired workers
Chelsea, Mass., business also assessed $100,000 penalty for willful labor violations
BOSTON — Citing "knowing, deliberate and intentional" violations of federal wage and hour law, the U.S. Department of Labor has filed a lawsuit against Boston Hides & Furs Ltd. and company officials seeking at least $500,000 in back wages and an equal amount in liquidated damages for underpaid employees of the Chelsea wholesale animal hide business.
The department filed the lawsuit in federal court following an investigation by its Wage and Hour Division that found the employer committed willful and repeated violations of the minimum wage, overtime and record-keeping provisions of the federal Fair Labor Standards Act, including offering for shipment or sale "hot goods" produced in violation of the law during a period spanning at least three years. The suit also asserts that the company unlawfully retaliated against several workers by firing them after they cooperated with the federal investigation.
"The violations uncovered by this investigation reveal a disturbing disregard for the law," said Secretary of Labor Hilda L. Solis. "Such unacceptable behavior not only harms the workers involved, it also undercuts employers who obey the law."
The investigation found that 14 Boston Hides & Furs employees worked approximately 10 hours per day, six days per week processing hides and furs for shipping to tanneries. These workers were paid a daily cash wage of $50 to $70, which amounted to an hourly pay rate far below the federal minimum wage of $7.25 per hour. The employees also were not paid time and one-half the required state minimum wage of $8 applicable for those hours worked above 40 in a week. Additionally, the defendants failed to keep adequate records of the workers' employment, work hours and pay rates, and a representative of the defendants falsely told investigators that the company's payroll records included all employees.
Further, the defendants ordered employees to hide in a nearby house when Wage and Hour Division investigators first arrived at Boston Hides & Furs so they could not be interviewed. Investigators subsequently interviewed the workers. Two days later, the defendants fired the workers. During their employment, the workers were threatened and subjected to verbally abusive treatment on an ongoing basis, particularly when they asked about their pay rates.
"If you work, you are entitled to be paid the wages you earn — at a rate no less than the applicable minimum wage, with proper overtime pay — and to seek those wages without fear of retaliation or termination. It's that simple and it's the law," said Michael Felsen, the Labor Department's regional solicitor for New England. "If you're an employer, understand that if you cheat your workers on their pay, the U.S. Department of Labor will seek not only the withheld wages but an equal amount in liquidated damages for those workers. And if you fire your workers or otherwise retaliate against them because they cooperated with a Labor Department investigation, we will seek appropriate redress for that violation too."
In addition to back wages and liquidated damages, the department's suit seeks to permanently prohibit the defendants from future FLSA violations — including a prohibition against shipping any goods handled by workers who were paid in violation of the law — and compensatory and punitive damages for the workers on account of their unlawful firing. The Wage and Hour Division also has assessed $100,000 in civil money penalties against Boston Hides & Furs Ltd. for willful violations of the FLSA.
The suit has been filed in the U.S. District Court for the District of Massachusetts by the Labor Department's Regional Office of the Solicitor in Boston. The original investigation was conducted by the Wage and Hour Division's Boston District Office.
The FLSA requires that covered employees be paid at least the federal minimum wage of $7.25 per hour as well as time and one-half their regular rates for every hour they work beyond 40 per week. When the state minimum wage is higher than the federally mandated wage, and employees work more than 40 hours in a week, employees paid at the minimum permissible level are entitled to overtime compensation based on the higher state minimum wage.
The law also requires employers to maintain accurate records of employees' wages, hours and other conditions of employment, and prohibits employers from retaliating against employees who exercise their rights under the law. The FLSA provides that employers who violate the law are, as a general rule, liable to employees for back wages and an equal amount in liquidated damages.
U.S. GOVERNMENT SUSPENDS FUTURE CONTRACTS FOR BP EXPLORATION AND PRODUCTION, INC.
FROM: U.S. ENVIRONMENTAL PROTECTION AGENCY
BP Temporarily Suspended from New Contracts with the Federal Government
WASHINGTON - The U.S. Environmental Protection Agency (EPA) today announced that it has temporarily suspended BP Exploration and Production, Inc., BP PLC and named affiliated companies (BP) from new contracts with the federal government. EPA is taking this action due to BP’s lack of business integrity as demonstrated by the company's conduct with regard to the Deepwater Horizon blowout, explosion, oil spill, and response, as reflected by the filing of a criminal information. On November 15, 2012, BP agreed to plead guilty to eleven counts of Misconduct or Neglect of Ship Officers, one count of Obstruction of Congress, one misdemeanor count of a violation of the Clean Water Act, and one misdemeanor count of a violation of the Migratory Bird Treaty Act, all arising from its conduct leading to the 2010 Deepwater Horizon disaster that killed 11 people and caused the largest environmental disaster in U.S. history.
For the Deepwater Horizon investigation, EPA was designated as the lead agency for suspension and debarment actions. Federal executive branch agencies take these actions to ensure the integrity of Federal programs by conducting business only with responsible individuals or companies. Suspensions are a standard practice when a responsibility question is raised by action in a criminal case.
The BP suspension will temporarily prevent the company and the named affiliates from getting new federal government contracts, grants or other covered transactions until the company can provide sufficient evidence to EPA demonstrating that it meets Federal business standards. The suspension does not affect existing agreements BP may have with the government.
BP Temporarily Suspended from New Contracts with the Federal Government
WASHINGTON - The U.S. Environmental Protection Agency (EPA) today announced that it has temporarily suspended BP Exploration and Production, Inc., BP PLC and named affiliated companies (BP) from new contracts with the federal government. EPA is taking this action due to BP’s lack of business integrity as demonstrated by the company's conduct with regard to the Deepwater Horizon blowout, explosion, oil spill, and response, as reflected by the filing of a criminal information. On November 15, 2012, BP agreed to plead guilty to eleven counts of Misconduct or Neglect of Ship Officers, one count of Obstruction of Congress, one misdemeanor count of a violation of the Clean Water Act, and one misdemeanor count of a violation of the Migratory Bird Treaty Act, all arising from its conduct leading to the 2010 Deepwater Horizon disaster that killed 11 people and caused the largest environmental disaster in U.S. history.
For the Deepwater Horizon investigation, EPA was designated as the lead agency for suspension and debarment actions. Federal executive branch agencies take these actions to ensure the integrity of Federal programs by conducting business only with responsible individuals or companies. Suspensions are a standard practice when a responsibility question is raised by action in a criminal case.
The BP suspension will temporarily prevent the company and the named affiliates from getting new federal government contracts, grants or other covered transactions until the company can provide sufficient evidence to EPA demonstrating that it meets Federal business standards. The suspension does not affect existing agreements BP may have with the government.
FIRM IN IRELAND CHARGED BY CFTC WITH VIOLATION OF BAN ON OFF-EXCHANGE OPTIONS TRADING
FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
CFTC Charges Ireland-based "Prediction Market" Proprietors Intrade and TEN with Violating the CFTC’s Off-Exchange Options Trading Ban and Filing False Forms with the CFTC
CFTC also charges TEN with violating a 2005 CFTC cease and desist order
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil complaint in federal district court in Washington, DC, charging Intrade The Prediction Market Limited (Intrade) and Trade Exchange Network Limited (TEN), Irish companies based in Dublin, Ireland, with offering commodity option contracts to U.S. customers for trading, as well as soliciting, accepting, and confirming the execution of orders from U.S. customers, all in violation of the CFTC’s ban on off-exchange options trading. The CFTC’s complaint also charges Intrade and TEN with making false statements concerning their options trading website in documents filed with the CFTC, and charges TEN with violating a 2005 CFTC cease and desist order (see CFTC Press Release 5124-05, October 4, 2005).
Intrade and TEN jointly operate an online "prediction market" trading website, through which customers buy or sell binary options which allow them to predict ("yes" or "no") whether a specific future event will occur, according to the CFTC’s complaint.
Specifically, according to the complaint, from September 2007 to June 25, 2012, Intrade and TEN operated an online "prediction market" trading website, which allowed U.S. customers to trade options products prohibited by the CFTC’s ban on off-exchange options trading. Through the website, Intrade and TEN allegedly unlawfully solicited and permitted U.S. customers to buy and sell options predicting whether specific future events would occur, including whether certain U.S. economic numbers or the prices of gold and currencies would reach a certain level by a certain future date, and whether specific acts of war would occur by a certain future date.
The CFTC’s complaint also charges Intrade and TEN with knowingly filing false "Annual Certification" forms with the CFTC stating that Intrade limited its options offerings to eligible market participants. Contrary to these representations, the complaint alleges that Intrade unlawfully solicited and permitted retail U.S. customers to buy and sell off-exchange options on the website.
In addition, the complaint alleges that TEN violated an order issued by the CFTC in 2005 that found that TEN had previously engaged in similar conduct and ordered TEN to cease and desist from violating the Commodity Exchange Act and CFTC regulations, as charged.
David Meister, the Director of the CFTC’s Division of Enforcement, stated: "It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called ‘prediction’ contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt. The requirement for on-exchange trading is important for a number of reasons, including that it enables the CFTC to police market activity and protect market integrity. Today’s action should make it clear that we will intervene in the ‘prediction’ markets, wherever they may be based, when their U.S. activities violate the Commodity Exchange Act or the CFTC’s regulations."
In its continuing litigation the CFTC seeks civil monetary penalties, disgorgement of ill-gotten gains, and permanent injunctions against further violations of federal commodities law, as charged, among other relief.
The CFTC acknowledges the Central Bank of Ireland for its assistance in the CFTC’s investigation of Intrade and TEN.
CFTC Division of Enforcement staff members responsible for this case are Kathleen Banar, David Slovick, Jessica Harris, Erica Bodin, Girum Tesfaye, Elizabeth Padgett, Rick Glaser, and Richard Wagner.
CFTC Charges Ireland-based "Prediction Market" Proprietors Intrade and TEN with Violating the CFTC’s Off-Exchange Options Trading Ban and Filing False Forms with the CFTC
CFTC also charges TEN with violating a 2005 CFTC cease and desist order
Washington, DC – The U.S. Commodity Futures Trading Commission (CFTC) today filed a civil complaint in federal district court in Washington, DC, charging Intrade The Prediction Market Limited (Intrade) and Trade Exchange Network Limited (TEN), Irish companies based in Dublin, Ireland, with offering commodity option contracts to U.S. customers for trading, as well as soliciting, accepting, and confirming the execution of orders from U.S. customers, all in violation of the CFTC’s ban on off-exchange options trading. The CFTC’s complaint also charges Intrade and TEN with making false statements concerning their options trading website in documents filed with the CFTC, and charges TEN with violating a 2005 CFTC cease and desist order (see CFTC Press Release 5124-05, October 4, 2005).
Intrade and TEN jointly operate an online "prediction market" trading website, through which customers buy or sell binary options which allow them to predict ("yes" or "no") whether a specific future event will occur, according to the CFTC’s complaint.
Specifically, according to the complaint, from September 2007 to June 25, 2012, Intrade and TEN operated an online "prediction market" trading website, which allowed U.S. customers to trade options products prohibited by the CFTC’s ban on off-exchange options trading. Through the website, Intrade and TEN allegedly unlawfully solicited and permitted U.S. customers to buy and sell options predicting whether specific future events would occur, including whether certain U.S. economic numbers or the prices of gold and currencies would reach a certain level by a certain future date, and whether specific acts of war would occur by a certain future date.
The CFTC’s complaint also charges Intrade and TEN with knowingly filing false "Annual Certification" forms with the CFTC stating that Intrade limited its options offerings to eligible market participants. Contrary to these representations, the complaint alleges that Intrade unlawfully solicited and permitted retail U.S. customers to buy and sell off-exchange options on the website.
In addition, the complaint alleges that TEN violated an order issued by the CFTC in 2005 that found that TEN had previously engaged in similar conduct and ordered TEN to cease and desist from violating the Commodity Exchange Act and CFTC regulations, as charged.
David Meister, the Director of the CFTC’s Division of Enforcement, stated: "It is against the law to solicit U.S. persons to buy and sell commodity options, even if they are called ‘prediction’ contracts, unless they are listed for trading and traded on a CFTC-registered exchange or unless legally exempt. The requirement for on-exchange trading is important for a number of reasons, including that it enables the CFTC to police market activity and protect market integrity. Today’s action should make it clear that we will intervene in the ‘prediction’ markets, wherever they may be based, when their U.S. activities violate the Commodity Exchange Act or the CFTC’s regulations."
In its continuing litigation the CFTC seeks civil monetary penalties, disgorgement of ill-gotten gains, and permanent injunctions against further violations of federal commodities law, as charged, among other relief.
The CFTC acknowledges the Central Bank of Ireland for its assistance in the CFTC’s investigation of Intrade and TEN.
CFTC Division of Enforcement staff members responsible for this case are Kathleen Banar, David Slovick, Jessica Harris, Erica Bodin, Girum Tesfaye, Elizabeth Padgett, Rick Glaser, and Richard Wagner.
Tuesday, November 27, 2012
JUSTICE DEPARTMENT STATEMENT ON ENTERGY CORPORATION
FROM: U.S. DEPARTMENT OF JUSTICE
Department Will Not Challenge Entergy’s Proposed Acquisitions of Hinds and Hot Spring Power Plants; Investigation into Alleged Exclusionary Conduct Remains Open
WASHINGTON — The Department of Justice’s Antitrust Division issued the following statement today regarding Entergy Corp.’s commitments to join a regional transmission organization (RTO) and divest its transmission system; Entergy’s proposed acquisitions of the Hinds and Hot Spring generating facilities in Mississippi and Arkansas, respectively, from KGen Power Corporation; and the division’s open investigation into Entergy’s alleged anticompetitive conduct:
"After a thorough review, and in light of the forthcoming changes in Entergy’s service area, the Antitrust Division has determined that Entergy’s acquisitions of KGen’s power plants in Jackson, Miss., and Hot Spring County, Ark., are unlikely to substantially lessen competition, and is closing its investigation into the proposed transactions.
"In addition to the merger investigation of the KGen transactions, the division has been examining allegations that Entergy has engaged in exclusionary conduct in its four-state utility service area spanning parts of Arkansas, Louisiana, Mississippi and Texas. That investigation remains open. The conduct investigation has focused on whether certain of Entergy’s power generation dispatch, transmission planning and power procurement practices constitute exclusionary conduct under Section 2 of the Sherman Act.
"If Entergy follows through on its transmission system commitments, the Antitrust Division’s concerns will be resolved.
"The division has been investigating the effect of several of Entergy’s practices on competition and barriers to entry. The division has also evaluated professed efficiency and regulatory justifications, which have not been persuasive.
"Specifically, the division has been exploring whether Entergy has harmed consumers by exercising its control over its transmission system and dominant fleet of gas-fired power plants to exclude rival operators of low-cost combined-cycle gas turbine (CCGT) power plants from competing to sell long-term power. In particular, the division has been evaluating whether Entergy’s practices have effectively foreclosed these more efficient rivals from obtaining long-term firm transmission service, a necessary input for selling long-term power products to wholesale customers in the Entergy service area. As part of the conduct investigation, the division has also been reviewing the competitive impact of, and circumstances surrounding, Entergy’s serial acquisition of rivals’ CCGT power plants, including the KGen plants.
"Since the division began its investigation, Entergy announced that it intends to join the Midwest Independent Transmission System Operator (MISO) RTO and has entered into an agreement to divest its electric transmission business to ITC Holdings Corp. (ITC), an independent transmission company. In recent months, Entergy has initiated the state and federal regulatory processes in support of these significant structural changes, secured conditional MISO approval from several state regulators, and committed its utilities to a target MISO integration date of December 2013.
"Entergy’s commitments to obtain membership in an RTO and divest its transmission system to a third party with the incentive to make efficient transmission investments are significant steps towards restoring competition in the Entergy service area. If Entergy follows through on its commitments, these measures will address the Antitrust Division’s concerns by eliminating Entergy’s ability to maintain barriers to wholesale power markets, ensuring that all Entergy service area generation is dispatched independently and at lowest cost, increasing market transparency and oversight, and properly aligning incentives for the construction of transmission. Such measures will also directly benefit consumers, who will ultimately enjoy lower electricity prices and improved reliability as a result of RTO integration and the transmission system divestiture. The division does not endorse any particular RTO or independent transmission company.
"The division will closely monitor developments, and in the event that Entergy does not make meaningful and timely progress, the division can and will take appropriate enforcement action, if warranted."
Department Will Not Challenge Entergy’s Proposed Acquisitions of Hinds and Hot Spring Power Plants; Investigation into Alleged Exclusionary Conduct Remains Open
WASHINGTON — The Department of Justice’s Antitrust Division issued the following statement today regarding Entergy Corp.’s commitments to join a regional transmission organization (RTO) and divest its transmission system; Entergy’s proposed acquisitions of the Hinds and Hot Spring generating facilities in Mississippi and Arkansas, respectively, from KGen Power Corporation; and the division’s open investigation into Entergy’s alleged anticompetitive conduct:
"After a thorough review, and in light of the forthcoming changes in Entergy’s service area, the Antitrust Division has determined that Entergy’s acquisitions of KGen’s power plants in Jackson, Miss., and Hot Spring County, Ark., are unlikely to substantially lessen competition, and is closing its investigation into the proposed transactions.
"In addition to the merger investigation of the KGen transactions, the division has been examining allegations that Entergy has engaged in exclusionary conduct in its four-state utility service area spanning parts of Arkansas, Louisiana, Mississippi and Texas. That investigation remains open. The conduct investigation has focused on whether certain of Entergy’s power generation dispatch, transmission planning and power procurement practices constitute exclusionary conduct under Section 2 of the Sherman Act.
"If Entergy follows through on its transmission system commitments, the Antitrust Division’s concerns will be resolved.
"The division has been investigating the effect of several of Entergy’s practices on competition and barriers to entry. The division has also evaluated professed efficiency and regulatory justifications, which have not been persuasive.
"Specifically, the division has been exploring whether Entergy has harmed consumers by exercising its control over its transmission system and dominant fleet of gas-fired power plants to exclude rival operators of low-cost combined-cycle gas turbine (CCGT) power plants from competing to sell long-term power. In particular, the division has been evaluating whether Entergy’s practices have effectively foreclosed these more efficient rivals from obtaining long-term firm transmission service, a necessary input for selling long-term power products to wholesale customers in the Entergy service area. As part of the conduct investigation, the division has also been reviewing the competitive impact of, and circumstances surrounding, Entergy’s serial acquisition of rivals’ CCGT power plants, including the KGen plants.
"Since the division began its investigation, Entergy announced that it intends to join the Midwest Independent Transmission System Operator (MISO) RTO and has entered into an agreement to divest its electric transmission business to ITC Holdings Corp. (ITC), an independent transmission company. In recent months, Entergy has initiated the state and federal regulatory processes in support of these significant structural changes, secured conditional MISO approval from several state regulators, and committed its utilities to a target MISO integration date of December 2013.
"Entergy’s commitments to obtain membership in an RTO and divest its transmission system to a third party with the incentive to make efficient transmission investments are significant steps towards restoring competition in the Entergy service area. If Entergy follows through on its commitments, these measures will address the Antitrust Division’s concerns by eliminating Entergy’s ability to maintain barriers to wholesale power markets, ensuring that all Entergy service area generation is dispatched independently and at lowest cost, increasing market transparency and oversight, and properly aligning incentives for the construction of transmission. Such measures will also directly benefit consumers, who will ultimately enjoy lower electricity prices and improved reliability as a result of RTO integration and the transmission system divestiture. The division does not endorse any particular RTO or independent transmission company.
"The division will closely monitor developments, and in the event that Entergy does not make meaningful and timely progress, the division can and will take appropriate enforcement action, if warranted."
Monday, November 26, 2012
FUTURES COMMISSION MERCHANT GETS FINED BY CFTC FOR LAX SUPERVISION OF TRADERS
FROM: U.S. COMMODITY FUTURES TRADING COMMISSION
CFTC Orders Eagle Market Makers Inc. to Pay over $223,000 in Penalties and Disgorgement to Settle Charges of Violating Corn Futures Speculative Position Limits and Failing to Supervise Traders
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that Eagle Market Makers Inc. (Eagle) of Chicago, Illinois, agreed to pay a $220,000 civil monetary penalty and $3,475 in disgorgement to settle CFTC charges that it exceeded spot-month position limits in corn futures and failed to diligently supervise its traders. Eagle is currently registered with the CFTC as a Futures Commission Merchant, a Commodity Pool Operator, and a Commodity Trading Advisor, according to the order.
The CFTC order finds that on April 29, 2009, Eagle exceeded spot-month corn futures speculative position limits by having a net short position of 878 May 2009 Chicago Board of Trade (CBOT) corn futures, which exceeded the speculative position limit by 278 contracts. Eagle’s profits from the corn futures contacts that exceeded position limits were $3,475.
The order also finds that Eagle failed to diligently supervise its traders with respect to compliance with speculative position limits. According to the order, Eagle never conducted any training of its traders with respect to speculative position limits, notwithstanding the fact that Eagle had received two CBOT warning letters for spot-month corn futures position limit violations prior to the violations found in the CFTC order. Eagle also received a CBOT cease and desist order for violating wheat futures speculative position limits.
In addition to ordering disgorgement and imposing a civil monetary penalty, the CFTC order requires Eagle to cease and desist from further violations of Section 4a(b)(2) of the Commodity Exchange Act and CFTC regulations 150.2 and 166.3, as charged.
The CFTC acknowledges the assistance of the Chicago Mercantile Exchange (CME) in this matter.
CFTC Orders Eagle Market Makers Inc. to Pay over $223,000 in Penalties and Disgorgement to Settle Charges of Violating Corn Futures Speculative Position Limits and Failing to Supervise Traders
Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today announced that Eagle Market Makers Inc. (Eagle) of Chicago, Illinois, agreed to pay a $220,000 civil monetary penalty and $3,475 in disgorgement to settle CFTC charges that it exceeded spot-month position limits in corn futures and failed to diligently supervise its traders. Eagle is currently registered with the CFTC as a Futures Commission Merchant, a Commodity Pool Operator, and a Commodity Trading Advisor, according to the order.
The CFTC order finds that on April 29, 2009, Eagle exceeded spot-month corn futures speculative position limits by having a net short position of 878 May 2009 Chicago Board of Trade (CBOT) corn futures, which exceeded the speculative position limit by 278 contracts. Eagle’s profits from the corn futures contacts that exceeded position limits were $3,475.
The order also finds that Eagle failed to diligently supervise its traders with respect to compliance with speculative position limits. According to the order, Eagle never conducted any training of its traders with respect to speculative position limits, notwithstanding the fact that Eagle had received two CBOT warning letters for spot-month corn futures position limit violations prior to the violations found in the CFTC order. Eagle also received a CBOT cease and desist order for violating wheat futures speculative position limits.
In addition to ordering disgorgement and imposing a civil monetary penalty, the CFTC order requires Eagle to cease and desist from further violations of Section 4a(b)(2) of the Commodity Exchange Act and CFTC regulations 150.2 and 166.3, as charged.
The CFTC acknowledges the assistance of the Chicago Mercantile Exchange (CME) in this matter.
Sunday, November 25, 2012
A STEP FORWARD ON CLEANING UP QUANTA RESOURCES SUPERFUND SITE IN NEW JERSEY
FROM: U.S. DEPARTMENT OF JUSTICE
Monday, November 19, 2012
Agreement Furthers Cleanup of the Quanta Resources Superfund Site in Edgewater, New Jersey
Another important step toward cleaning up the Quanta Resources Superfund site in Edgewater, N.J., was announced today by the Department of Justice and the U.S. Environmental Protection Agency (EPA). The agreement with Honeywell International Inc. and 23 other parties, embodied in a consent decree lodged today in federal court, requires the performance of pre-construction project design work and requires Honeywell to carry out the actual cleanup work under the EPA’s oversight. The cleanup of the Quanta Site is expected to result in its redevelopment.
After the design is completed and approved by EPA, the cleanup will proceed at the Quanta Site, which is located adjacent to the Hudson River. The work is expected to take approximately two to three years and cost $78 million.
Currently, soil and ground water at the site are contaminated with arsenic, lead, polycyclic aromatic hydrocarbons and volatile organic compounds resulting from over 100 years of industrial activities in the area. Exposure to these pollutants can have serious health effects, and in some cases, increase the risk of cancer.
"This agreement marks a major milestone toward finally cleaning up the industrial pollution legacy at the Quanta Site," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "The settlement holds those responsible for the pollution accountable for the cleanup, and brings us closer to the future redevelopment of this site for the benefit of the people of New Jersey."
"The Superfund program operates on the principle that polluters should pay for the cleanups, rather than passing the costs to taxpayers," said EPA Regional Administrator Judith A. Enck. "The EPA searches for parties responsible for the contamination and holds them accountable. This agreement is an important part of that process and a step in the right direction."
The Quanta site, located on River Road at the intersection of Gorge Road in Edgewater, was built as a coal tar facility beginning in the 1880s. In the 1970s, the site’s "tank farm" was used to store waste oil prior to reprocessing. The state of New Jersey closed the facility in 1981 when some storage tanks were found to contain waste oil contaminated with polychlorinated biphenyls. The EPA supervised a series of emergency actions at the site that included safely removing and disposing of millions of gallons of waste oil, sludge and contaminated water from the tanks, and cleaning and dismantling the emptied tanks and piping.
Because of the nature and complexity of the contamination, the EPA divided the investigation and cleanup into two phases – one addressing the contaminated soil and ground water, and the other focused on contamination in the river and sediment. The plan to address the contaminated soil and ground water was finalized in July 2010. The EPA took public comment for 60 days and considered public input before selecting a cleanup plan. This phase of the cleanup is addressed in the consent decree lodged today. A separate study of the Hudson River and sediment contamination will lead to a subsequent cleanup plan for the next phase.
The site contains an estimated 150,000 cubic yards of contaminated soil requiring treatment to protect people that may come into contact with it. Among other steps, the EPA will solidify and stabilize areas of soil contaminated with oily liquid and arsenic by turning them into leak-proof blocks underground. Throughout the cleanup, monitoring, testing and further studies will be conducted to ensure the effectiveness of the remedy.
Aside from Honeywell International Inc., the other parties that have agreed to the consent decree are, for the most part, waste oil generators whose wastes were disposed of at the Quanta site. They include: BASF Corporation; Beazer East Inc.; BFI Waste Systems of New Jersey Inc.; BorgWarner Inc.; Buckeye Pipe Line Co. LP; Chemical Leaman Tank Lines Inc. (now Quality Carriers); Colonial Pipeline Co.; Consolidated Rail Corp.; Exxon Mobil Corp; Ford Motor Company; General Dynamics Land Systems Inc.; Hess Corp.; Miller Brewing Co.; NEAPCO Inc.; Northrup Grumman Systems Corp.; Petroleum Tank Cleaners Inc.; Rome Strip Steel Co. Inc.; Quanta Resources Corp.; Stanley Black & Decker Inc.; Textron Inc.; and United Technologies Corp.
Monday, November 19, 2012
Agreement Furthers Cleanup of the Quanta Resources Superfund Site in Edgewater, New Jersey
Another important step toward cleaning up the Quanta Resources Superfund site in Edgewater, N.J., was announced today by the Department of Justice and the U.S. Environmental Protection Agency (EPA). The agreement with Honeywell International Inc. and 23 other parties, embodied in a consent decree lodged today in federal court, requires the performance of pre-construction project design work and requires Honeywell to carry out the actual cleanup work under the EPA’s oversight. The cleanup of the Quanta Site is expected to result in its redevelopment.
After the design is completed and approved by EPA, the cleanup will proceed at the Quanta Site, which is located adjacent to the Hudson River. The work is expected to take approximately two to three years and cost $78 million.
Currently, soil and ground water at the site are contaminated with arsenic, lead, polycyclic aromatic hydrocarbons and volatile organic compounds resulting from over 100 years of industrial activities in the area. Exposure to these pollutants can have serious health effects, and in some cases, increase the risk of cancer.
"This agreement marks a major milestone toward finally cleaning up the industrial pollution legacy at the Quanta Site," said Ignacia S. Moreno, Assistant Attorney General for the Justice Department’s Environment and Natural Resources Division. "The settlement holds those responsible for the pollution accountable for the cleanup, and brings us closer to the future redevelopment of this site for the benefit of the people of New Jersey."
"The Superfund program operates on the principle that polluters should pay for the cleanups, rather than passing the costs to taxpayers," said EPA Regional Administrator Judith A. Enck. "The EPA searches for parties responsible for the contamination and holds them accountable. This agreement is an important part of that process and a step in the right direction."
The Quanta site, located on River Road at the intersection of Gorge Road in Edgewater, was built as a coal tar facility beginning in the 1880s. In the 1970s, the site’s "tank farm" was used to store waste oil prior to reprocessing. The state of New Jersey closed the facility in 1981 when some storage tanks were found to contain waste oil contaminated with polychlorinated biphenyls. The EPA supervised a series of emergency actions at the site that included safely removing and disposing of millions of gallons of waste oil, sludge and contaminated water from the tanks, and cleaning and dismantling the emptied tanks and piping.
Because of the nature and complexity of the contamination, the EPA divided the investigation and cleanup into two phases – one addressing the contaminated soil and ground water, and the other focused on contamination in the river and sediment. The plan to address the contaminated soil and ground water was finalized in July 2010. The EPA took public comment for 60 days and considered public input before selecting a cleanup plan. This phase of the cleanup is addressed in the consent decree lodged today. A separate study of the Hudson River and sediment contamination will lead to a subsequent cleanup plan for the next phase.
The site contains an estimated 150,000 cubic yards of contaminated soil requiring treatment to protect people that may come into contact with it. Among other steps, the EPA will solidify and stabilize areas of soil contaminated with oily liquid and arsenic by turning them into leak-proof blocks underground. Throughout the cleanup, monitoring, testing and further studies will be conducted to ensure the effectiveness of the remedy.
Aside from Honeywell International Inc., the other parties that have agreed to the consent decree are, for the most part, waste oil generators whose wastes were disposed of at the Quanta site. They include: BASF Corporation; Beazer East Inc.; BFI Waste Systems of New Jersey Inc.; BorgWarner Inc.; Buckeye Pipe Line Co. LP; Chemical Leaman Tank Lines Inc. (now Quality Carriers); Colonial Pipeline Co.; Consolidated Rail Corp.; Exxon Mobil Corp; Ford Motor Company; General Dynamics Land Systems Inc.; Hess Corp.; Miller Brewing Co.; NEAPCO Inc.; Northrup Grumman Systems Corp.; Petroleum Tank Cleaners Inc.; Rome Strip Steel Co. Inc.; Quanta Resources Corp.; Stanley Black & Decker Inc.; Textron Inc.; and United Technologies Corp.
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