Power Engineering - Former Westar Executives Sentenced to Federal Prison

4 April 2006 - Former Westar executive David C. Wittig will serve 18 years in federal prison, while co-defendant Douglas Lake serves 15 years, a U.S. District Judge in Topeka ruled yesterday.

Wittig and Lake, convicted in September of defrauding Westar, Kansas's largest electric utility, were sentenced Monday during a hearing before U.S. District Judge Julie A. Robinson. Both men were ordered to pay millions in restitution and penalties. Wittig will remain in custody. His request for bond pending an appeal was denied. Lake will be allowed to remain free until the U.S. Marshal Service orders him to surrender, probably within 60 days. Although federal guidelines would have allowed Robinson to sentence Wittig and Lake to as long as life in prison, the sentences she gave the two former top executives will send a clear message about the risks of committing corporate fraud, said U.S. Attorney Eric Melgren.

"Crime will be found out and punished, whether that crime involves violence, narcotics, or complex financial schemes," Melgren said.

"Mr. Wittig and Mr. Lake may have been blinded to that simple fact by their high-profile and highly compensated leadership positions at Westar. Because they managed to avoid or suppress any challenges to their schemes within the corporation, they may have thought they would not be required to answer for their activities. They were wrong. Now they and their families must suffer the consequences."

Judge Robinson ordered Wittig to pay a total of $14.8 million in restitution. She ordered Lake to pay $2.7 million in restitution. Wittig and Lake also were fined $5 million each.

At the end of an 11-week trial, a jury found Wittig guilty on all counts, including:

• One count of conspiracy to defraud Westar
• 14 counts of circumventing internal controls and falsifying books
• 7 counts of wire fraud
• 17 counts of money laundering

• One count of conspiracy to defraud Westar
• 13 counts of circumventing internal financial controls
• 6 counts of wire fraud
• 10 counts of money laundering

This trial was the second for Wittig and Lake. An earlier trial that began Oct. 12, 2004, ended 11 weeks later -- Dec. 20, 2004 -- when a jury failed to reach a verdict and Judge Robinson declared a mistrial. The second trial began June 14, 2005, and the jury started deliberations Aug. 25, 2005.

Melgren said the case reflects goals that President George Bush set in July 2002 when he signed new laws aimed at attacking corporate corruption.

"I repeat what the President has said many times," Melgren said. "No boardroom is above the law."

In the broadest charge on which Wittig and Lake were convicted, the jury found the two men guilty of conspiring to systematically loot Westar of money and assets. The scheme included falsifying company records, circumventing internal controls, perverting corporate programs for personal profit, structuring a subsidiary with intent to loot company assets and leave debt behind in the utility for ratepayers, using corporate aircraft for personal business, misusing corporate counsel to assist in removing directors who were critical of management; depleting company assets through lavish spending, making false statements in Director and Officer Annual Questionnaires, making false statements in reports to the Securities and Exchange Commission and other violations.

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