Friday, January 28, 2005
|Kenneth Shoquist||Steve Wallace||Chris Uranga|
|Chris Douglas||Carlos Luquis||John Cavazos|
The investigation into these personal enrichment schemes and complex interrelated business dealings resulted in indictments today against:
Ken Shoquist, chief information officer (two indictments, over $100,000 misappropriated)
Steve Wallace, program development director (two indictments, $800,000 misappropriated)
Chris Uranga, director of information technology operations and corporate security (six indictments, over $300,000 misappropriated)
Chris Douglas, senior manager, Data Warehouse (six indictments, over $300,000 misappropriated)
Carlos Luquis, physical security manager (six indictments, over $100,000 misappropriated)
John Cavazos, a nonemployee contractor and a shell company security director (one indictment, nearly $9,000 misappropriated)
Members of the ERCOT board of directors have not been under investigation and have since conducted a top-to-bottom review of the organization’s security apparatus and its employees.
The indicted managers conspired to set up multiple shell companies with puppet presidents to provide security and computer services to ERCOT. Each of them then billed the state’s non-profit electricity grid administrator hundreds of thousands of dollars on contracts for equipment, time and work, much of which was not provided.
For example, a company known as DSS Group allegedly provided security consulting services to ERCOT. The company sent ERCOT 13 invoices totaling $951,000 for work supposedly performed by four consultants, when only one consultant ever did any work for the organization.
The indicted men established four companies in like manner, some of which billed for employees who did no work for ERCOT, and in one case billed for a man who was deceased. In addition to DSS, the businesses were: ECT Global, Cyberensics Inc. and Tri Force Security. (A list of the shell companies with links to the above-listed managers is attached to this news release.)
While the integrity of the ERCOT grid system statewide was never compromised, the organization paid about $2 million to the managers’ shell companies as a result of illegal billings for nonexistent services. The men often lavished themselves with high-end homes and expensive boats. The Attorney General is working with the DPS and local authorities to seize bank accounts, luxury automobiles, motorcycles and other assets.
The indicted employees all signed ethics agreements with ERCOT upon accepting employment, including promises to never gain personally from an ERCOT business decision and to immediately report any possible conflicts of interest.
According to the Public Utility Commission of Texas, ERCOT is funded through a charge of 42 cents per 1,000 kilowatts. For the average residential customer, this amounts to about 50 cents per month on an electricity bill. The fee generates about $125 million a year for ERCOT. The total ERCOT budget for 2004 of $174 million also includes revenue gathered from membership fees by electricity market participants.