Risk Management

New Math, New Sentence for Dynegy’s Olis

Appeals court had ruled that the original 24-year sentence, based in part on investor losses, had been miscalculated.
Stephen TaubDecember 21, 2005

Federal prosecutors are recommending a 15-year prison sentence for Jamie Olis — once a midlevel executive at Houston-based energy company Dynegy Inc. — for his role in the company’s accounting scandal, reported the Houston Chronicle.

Olis and his co-conspirators — his former boss, Gene Shannon Foster, and a former Dynegy accountant, Helen Christine Sharkey — were charged in June 2003 with improperly inflating the company’s cash flow through a sham natural-gas transaction. Foster and Sharkey each pleaded guilty to one count of conspiracy that August, but Olis decided to take his chances at trial — and wound up with a sentence of 24 years.

Last month, however, an appeals court ordered that Olis should be resentenced, reported the Chronicle. The court ruled that the original term, based in part on the amount of money investors were assumed to have lost because of the transaction in which Olis was involved, had been miscalculated.

When Olis was initially sentenced, noted the Chronicle, prosecutors figured he was responsible for more than $100 million in stock losses. In their re-sentencing recommendation, they reportedly calculated the estimated loss at between $20 million and $50 million.

The newspaper also reported that Olis was given an opportunity to lower his sentence further if he provided evidence against any co-conspirators, but he did not offer this information.

Prosecutors also reportedly recommended a sentence of 30 months for Foster and 18 months for Sharkey. Sentencing for the trio is scheduled for January 5.

Olis’ lawyer, David Gerger — who also represented former Enron CFO Andrew Fastow — filed a brief last week asserting that it would be incorrect to base a sentence on estimated losses, according to the Chronicle. Gerger reportedly argued that Dynegy’s stock fell for many reasons and that there is no need to impose a lengthy sentence to “send a message.”

“We will ask the court to jail Mr. Olis for a period that is sufficient but not greater than necessary,” Gerger reportedly wrote. That final number will allow for precious little wiggle room: Since there is no parole in the federal prison system, Olis will be required to serve nearly his entire term behind bars.