Congressman Dan Kildee (MI-05) today wrote a letter to the U.S. Department of Justice asking Attorney General Eric Holder to investigate JPMorgan Chase, the nation's largest bank, for alleged fraudulent schemes that resulted in $83 million in overcharges to Michigan and California for energy purchases.
Congressman Kildee's letter comes after an article in The New York Times cited an unreleased Federal Energy Regulatory Commission (FERC) report alleging that JPMorgan, "under pressure to generate large profits," deliberately used "manipulative schemes" to fraudulently overcharge both states in 2010 and 2011.
"The people of Michigan, and the American people generally, deserve a marketplace where all participants play by the same rules. I urge the U.S. Justice Department to resolve this matter by investigating these potentially illegal practices," the letter reads.
"These latest allegations of JPMorgan Chase allegedly cheating Michigan taxpayers out of millions of dollars are disturbing," Congressman Kildee said. "Irresponsible behavior in our financial markets is unacceptable, especially when it negatively impacts taxpayers. As we continue to recover from the greatest crisis since the Great Depression, the health of our economy depends on transparency and accountability in our markets."
According to the unreleased FERC report, the alleged schemes had "harmful effects" on financial markets. Government investigators also said the bank "planned and executed a systematic cover-up" of the trading scheme and that top bank executives allegedly obstructed the investigation and lied under oath.
"It is important that the Justice Department send a strong signal to the markets that all bad actors, are held accountable for their irresponsible actions," the letter continues.
A copy of the letter is attached and below.
May 29, 2013
Attorney General Holder:
A May 2, 2013, article in The New York Times quoted an unreleased Federal Energy Regulatory Commission (FERC) report alleging that JPMorgan Chase fraudulently charged Michigan and California nearly $83 million in "excessive" payments for energy purchases by using deliberate "manipulative schemes." I ask that the U.S. Department of Justice investigate this matter as well.
The article described how such trading schemes, eight in total, offered energy at prices "calculated to appear attractive and transferred previously "money-losing power plants into powerful profit centers.'" In response to this alleged manipulation, state energy authorities may have made superfluous payments to JPMorgan, which negatively impacted the financial markets. The article also quoted the report detailing a senior JPMorgan executive obstructing the investigation into these allegations.
This article comes shortly after the FERC voted to suspend JPMorgan's Ventures Energy Corp authority to sell energy for six months beginning April 1, 2013, because the company made "factual misrepresentations" and omitted material information regarding communications with a power grid operator. This action by the FERC is the first time the regulator has suspended an active market participant.
These allegations are serious charges, including traders devising deliberate schemes to manipulate energy prices and top bank executives lying under oath. It is important that the Justice Department send a strong signal to the markets that all bad actors are held accountable for their irresponsible actions.
The people of Michigan, and the American public generally, deserve a marketplace where all participants play by the same rules. I urge the Justice Department to resolve this matter by investigating these potentially illegal practices.
MEMBER OF CONGRESS