Wednesday, April 12, 2006

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Attorney General Abbott Obtains Fourth Guilty Plea In Electric Reliability Council Of Texas White-Collar Crime Scheme

GEORGETOWN - Texas Attorney General Greg Abbott today obtained yet another guilty plea in an ongoing Williamson County case against six men under indictment for setting up an elaborate criminal enterprise in 2004 inside the Electric Reliability Council of Texas (ERCOT), the state’s electricity grid system.

Christopher Douglas, 47, of Austin, pleaded guilty to two charges, one for engaging in organized criminal activity for misapplication of fiduciary property and one for theft. They are first-degree felonies, and he will also agree to repay ERCOT over $500,000 in illegal profits he obtained. Prosecutors have agreed to recommend no more than nine years in prison upon sentencing.

ERCOT CASE

Christopher Douglas

"As our prosecutors continue to chip away at this complex case, they have revealed the true criminal scheme and obtained confessions in the form of guilty pleas from several key players, such as this man,” said Attorney General Abbott. “We now will now press forward and bring jury trials against the last two individuals standing in this case.”

Douglas served as chief financial officer for ECT Global Inc., Cyberensics Corp. and Tri-Force Security Inc., companies he formed with codefendants Christopher Uranga and Carlos Luquis. Uranga has pleaded guilty and awaits sentencing, while Luquis awaits trial.

Using their positions inside ERCOT, where Douglas was also manager of the organization’s Data Warehouse, the three men funneled contracts to their own companies and took in more than $1.2 million illegally. While they did actually provide ERCOT with some legitimate contractors, Douglas admitted that the three pocketed a significant amount of money for work never done or services not provided in the security department at ERCOT.

Douglas acknowledged owing more than $500,000 in restitution to ERCOT, and he has already tendered over $230,000 to law enforcement officers, which will be credited toward his final restitution upon sentencing. He has been cooperating since last June by briefing prosecutors about how the six conducted the illegal scheme. Douglas and Uranga have agreed to testify at the April 24 trial of codefendant Luquis.

The schemes enabled the defendants to steer contracts to their own private companies in such a way as to violate their ethical and fiduciary responsibilities to ERCOT, all without the knowledge and approval of its legal and accounting departments.

Only two defendants await trial in the coming months based upon indictments handed down in January 2005. They are:

• Steve Wallace, program development director (two indictments, $800,000 misappropriated and also indicted in Travis County on three counts of first-degree felony theft);
• Luquis, physical security manager (six indictments, over $100,000 misappropriated).

Three other indicted defendants have pleaded guilty and are awaiting sentencing, pending the outcome of the Luquis trial:

• Former chief information officer Kenneth Shoquist pleaded guilty last month to engaging in organized criminal activity for commercial bribery and acknowledged receiving $120,000 in bribes from Wallace. He will be repaying the money prior to his May 4 sentencing, where he is expected to receive eight years incarceration
• John Cavazos, a nonemployee contractor and a shell company security director (one indictment, $8,700 misappropriated), will receive four years of probation or deferred adjudication, and has already paid $8,700 in restitution to ERCOT. He will also testify at the April 24 trial of Luquis.
• Uranga, director of IT security (six indictments, over $500,000 misappropriated), has pleaded guilty to two counts of misapplication of funds and will be sentenced to up to 15 years in prison. He has agreed that his restitution amount exceeds $500,000.