Daily Archives: February 14, 2006

The talented Mr. Munitz’s gal from Jammin’ Salmon

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munitz10.jpgAs is often the case with tales of intrigue from California, this LA Times article reports that the final straw in the Getty Trust board’s decision last week to require embattled Barry J. Munitz‘s resignation as Getty Trust president was the unauthorized $350,000 “severance payment” to his former chief of staff, Jill Murphy. As the LA Times story notes, Murphy became Munitz’s protege’ after Munitz hired her out of a Sacramento restaurant called Jammin’ Salmon in the early 1990’s when he was chancellor of the California State University system:

Munitz met Murphy while eating at the Jammin’ Salmon, a Sacramento restaurant where she worked in the mid-1990s. Soon after, he hired her to work for him when he served as chancellor of the California State University system.
He brought her to the Getty shortly after he arrived, creating the position of chief of staff, a title more common in political circles. As the gatekeeper for Munitz, Murphy quickly became a powerful and feared figure among staff.
In her early 30s and with no background in the arts, she was perceived to have the power to make or break people’s careers at the Getty. That power increased as Munitz spent more time away from Los Angeles on trust business.
Munitz has acknowledged Murphy has “sharp elbows” but defended her as brilliant and effective.
Three years ago on a board retreat in London, Getty trustees confronted Munitz about Murphy’s increasingly divisive presence, [Getty trustee Ramon] Cortines said. Munitz promised to do something about it, but little changed, the trustee added.
Murphy announced in August she would leave the trust by the end of the year, saying she had been inspired by a book she had read about ending world poverty by 2025. “It is an inspiring goal, and I hope to find some way to contribute toward making it a reality,” she said in a statement.

During far less glamorous times, Munitz was the president of the University of Houston.

Gas Trader Attempts to Withdraw Plea Deal

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Former Reliant Energy gas trader Jerry Futch — who was arrested and charged under particularly heavy-handed circumstances — has filed a motion to withdraw his prior plea deal with the Justice Department and a motion to dismiss his indictment on four counts of reporting false transaction data to publishers that produce indexes used to value natural gas contracts.

Futch’s surprising motions were the latest developments in a series of controversial criminal cases that the U.S. Attorney’s office for the Southern District of Texas has been pursuing against former traders of natural gas who worked for various Houston-based companies.

The case against Futch is one of about a dozen that the Justice Department has been pursuing in regard to alleged manipulation of natural gas trading indexes, which are used to value billions of dollars in gas contracts and derivatives.

Industry publications such as Inside FERC Gas Market Report use data from traders to calculate the index price of natural gas, which affects the level of profits that traders can generate.

In Futch’s case and in the related trader cases, it remains unclear in what context the allegedly false information was transmitted or whether the publication even used any false information. However, the government’s theory of criminal liability is that it needs only to prove that fake trades were reported to the publications and not that the trades were actually published or affected the markets.

Eleven other former traders have been charged in similar cases, eight of whom (including Futch) have pled guilty. Four others others are currently awaiting trial, including former Dynegy trader Michelle Valencia and former El Paso trader Greg Singleton.

Futch’s motions are particularly interesting in that they assert the argument that Reliant Energy and its Houston-based counsel, Baker & Botts, effectively threw Futch to the wolves in not making him aware that he was a target of the criminal investigation into the false data reporting and that his statements in a Commodities Futures Trading Commission civil investigation could be used against him in the criminal investigation.

As has become typical in this era of the vanishing attorney-client privilege, Reliant Energy entered into a cooperation agreement with the CFTC in November 2003 in which the company agreed to give the government broad access to its employees such as Futch. Although Reliant Energy and Baker & Botts contend that Futch was advised that his statements in the civil investigation could be used against him, Reliant Energy did not provide Futch with independent counsel during the investigation.

“That you didn’t really mean it is why we want to use it”

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LaySkilling4B.jpgEven though most of the action is in the courtroom during the ongoing trial of former key Enron executives Ken Lay and Jeff Skilling, a few interesting tidbits still arise from time to time on the docket of the case.
You may recall this post from awhile back that focused on this rather odd Enron Task Force motion requesting that U.S. District Judge Sim Lake not allow the Lay-Skilling defense to use the Task Force’s own indictment during cross-examination of the Task Force’s witnesses in the trial because, among other things, to do so would risk “unfair prejudice, confusion of the issues [and] misleading the jury. . . ”
Well, as you might expect, the Lay-Skilling is having a little fun with the Task Force’s unusual request. In this opposition, the Lay-Skilling team notes that the Task Force’s motion stands due process of law on its head:

Due process considerations may keep the indictment from going to the jury where publishing it would cause defendant prejudice. . . . Invoking defendants‘ right to keep the indictment from the jury where it contains “inflammatory or pejorative language,” . . . and arguing that asking questions about the indictment may cause prejudice and confusion, the Task Force seeks to prevent defendants from showing the indictment to witnesses and questioning them about its allegations. . . The most efficient and effective means of cross-examining witnesses on certain topics includes asking them if specified allegations in the indictment are, in fact, true. To impose a blanket prohibition on such questions would interfere with defendants’ constitutional rights to present a defense and fully and effectively cross-examine their accusers.

Then, for good measure, the Lay-Skilling team tweaks the Task Force about its sudden change of opinion regarding the quality of the prose in the indictment:

The Task Force argues defendants might cross-examine witnesses about portions of the indictment that are surplusage, thereby confusing the jury. . . [However, the Task Force] previously, and successfully, argued exactly the opposite — that the indictment contained no surplusage — in opposing defendants’ motion to strike [portions of the indictment].

Meanwhile, down the hall from the relative levity of such motion sparring, the defense finished cross-examination of Mark Koenig (who may have unwittingly helped the defense) and the prosecution finished its re-direct on Monday afternoon. Judge Lake is going to allow a limited amount of re-cross of Koenig on Tuesday morning, then it’s time for the next prosecution witness — former Enron Broadband co-CEO, Ken Rice. Direct examination of Rice is expected to last at least the remainder of Tuesday, which means that cross-examination will likely take up the remainder of the week.