This Chronicle article reports that the hearing on the re-sentencing of former Dynegy executive Jamie Olis will take place on Thursday January 5, 2006 before U.S. District Judge Sim Lake, with briefs due on the resentencing issues on December 20 and 27. The resentencing hearing follows the Fifth Circuit overturning Olis’ 24 year sentence last month in a widely-anticipated ruling.
Interestingly, the docket entry regarding Olis’ resentencing indicates that two other former Dynegy executives ó Olis’ former boss, Gene Foster, and former in-house accountant Helen Sharkey ó will also be sentenced with Olis on January 5. Both Foster and Sharkey pleaded guilty to conspiracy in August 2003 for their roles in the allegedly fraudulent Project Alpha deal that also ensnared Olis. Foster testified against Olis during Olis’ trial and implicated other former Dynegy executives ó including former finance chief Rob Doty ó but no one else has been charged to date. Under their plea deals, Foster and Sharkey face maximum sentences of five years.
According to the Chronicle article, Judge Lake declined Olis counsel’s request on Friday to have Olis released from prison pending the resentencing hearing. In so doing, Judge Lake signaled his intent on resentencing by commenting that, despite the 5th Circuit’s objection to the government’s damages figure, Olis still “has a number of years to serve even under the most liberal interpretation of laws.”

Beyond the human element, the Olis resentencing will be particularly interesting because of the disingenuous manner in which the Justice Department prosecutors asserted an outrageously high “market loss’ figure to procure the egregious sentence against Olis in the first place. What was not well-known at the time was the fact that the Justice Department’s market loss position during the first Olis sentencing hearing was contrary to the position that the Justice Department was advocating at the same time in another case before the Supreme Court, Dura Pharmaceuticals v. Broudo. In Dura, the Supreme Court adopted the position that the Justice Department advocated in that case — i.e., that plaintiffs who claim securities fraud must prove a connection between a misrepresentation and the corresponding investment’s subsequent decline in price. In contrast, the prosecutors in the first Olis sentencing hearing used a price inflation theory of causation — which the Justice Department and the Supreme Court both expressly rejected in Dura — in asserting an absurdly high market loss figure allegedly resulting from Olis’ acts.