February 16, 2010

FORMER CALIFORNIA POWER AUTHORITY MANAGER PLEADS GUILTY TO DEFRAUDING STATE OF OVER $660,000

SACRAMENTO, Calif.– United States Attorney Benjamin B. Wagner announced today that BENJAMIN BUSTAMANTE, 32, of West Sacramento, pleaded guilty today before United States District Judge Garland E. Burrell Jr. to wire fraud in connection with a scheme to defraud the former California Power Authority Demand Reserve Partnership Program of over $680,000.

This case is the product of an extensive investigation by the IRS-Criminal Investigation.

According to Assistant United States Attorney S. Robert Tice-Raskin, who is prosecuting the case, the California Power Authority (CPA) was established in 2000 in part to ensure reliable power at reasonable rates and encourage energy conservation. CPA established the Demand Reserves Partnership (DRP) Program in which commercial and industrial customers (known as “end users”) contracted to conserve energy during peak energy usage periods in exchange for payment. “Aggregators” contracted with the DRP to coordinate the conservation contracts with end users. The aggregators entered into subcontracts with end users, received payments from the DRP program administrator for the end users, and remitted payment back to the end users.

BUSTAMANTE was the Aggregator Billing and Settlements Coordinator for the DRP. In 2006, he created a fictional company, Advanced Energy Response, listing himself as the sole owner. He obtained an IRS Employment Identification Number and opened a bank account for the company. He created a fictional State of California contract with the CPA for Advanced Energy Response to serve as an aggregator with the DRP.

BUSTAMANTE then submitted four invoices between August and December 2006, to the CPA requesting a total of $684,216.53 as payment for “energy capacity” supposedly reserved for conservation or actually conserved by end users. In fact, BUSTAMANTE had not contracted with any end users to provide such capacity, and no end user had provided any such capacity.

BUSTAMANTE eventually received payment from the State of California for the fictional services and deposited the same into a bank account under his control. Investigation later revealed that he withdrew more than $328,000 from the account in cash and used approximately $173,000 of the funds to purchase two 2006 Porsches, a Harley Davidson motorcycle, and a Hilton Grand Vacations time share.

Sentencing for BUSTAMANTE is scheduled for April 30, 2010 at 9:00 a.m. by Judge Burrell. The maximum statutory penalty is 20 years incarceration and a fine of $1.36 million (twice the pecuniary gain/loss). The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

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