John Amold 56/2005 Powe ardsa Be 13 14 15 16 17 18 19 20 au 22 23 24 25 NO. 2000-42097 ENRON NORTH AMERICA CORP. ) IN THE DISTRICT COURT Plaintiff, ) ) ) ) HARRIS COUNTY, TEXAS ) ANTARA RESOURCES, INC. ) ) Defendant, ) 157th JUDICIAL DISTRICT JONI IIO SI IOIIODICI OSI IICSIOIS ISTIC ICI ICSE REE ORAL AND VIDEOTAPED DEPOSITION OF JOHN ARNOLD May 6, 2005 FOSS SIS SIE IO IOS IO SSIS ISI ISIC III IOE IOI IOI IOI RE ORAL AND VIDEOTAPED DEPOSITION of JOHN ARNOLD, produced as a witness at the instance of the Defendant, and duly sworn, was taken in the above-styled and numbered cause on the 6th of May, 2005, from 4:06 p.m. to 4:19 p.m., before Lorri Heffner, RPR, CSR, in and for the State of Texas, reported by machine shorthand, at the offices of Centauras Advisors, L.L.C., 3050 Post Oak Boulevard, Suite 850, Houston, Texas 77056 pursuant to the Texas Rules of Civil Procedure and the provisions stated on the record or attached hereto. ‘Team Litigation Company 713-802-9100 '88279989-1724-48e6-0190-2btea0bbI199John Amold l | ! l | 16/2005 Page? Pose PEARANCE 1 ‘THE VIDEOGRAPHER: We are on the record, it 3 ronmranenre 2 is May 6th, 2005, 4:06 pam. This is the beginning of tape 4 er or sermons? 3 one. Will the court reporter please swear in the 5 Robie Sa oe 100 4 4 witness? bemessg 7 5 (Teken pursuant tothe Rules) $ 6 JOHN ARNOLD, ee 7 having been frst duly sworn, testified as follows: 5 sce tteincamt 8 EXAMINATION Bo esouienet Soe 9 BY MR LUGRIN: va iu ey tas 10 Q, Please, fell us your name, 1 Bet cptstvecouend cn 11 A. John Amold. eee 12 Q. John, I've deposed you before, correct? 8 13 AL Ldonotrecall who — ve Mini Rei ee 14 Q. Okay, Well it was me. Sdstiaen 13 A. Okay. 5 Bata 7g 16 _ Q. Itakeit you were deposed by me on May 31st, 6 17 2001. Have you had your deposition taken since then? a 18 MISS RERKO: You can answer the question, BGs 19 John. 2 viene 20 A. Inthis matter or another matter? > oat 21 Q. Just any matter? 380 Kaye, Ste 0 22 A. Thave, Hew eRe 23 Q. Okay. How many times? 24 AL What was the date that — 3 25 MISS RERKO: It was just once. Page Pages 1 1 Q. May 3st, 2001, 2 2 A Twice. 3 3 Q. Twice. Can you tell me in what matters your 4 4 deposition was taken? 5 Examination by Mr. Lugrin SA. There was a matter in front of the CFTC and FERC, 6 Signature and changes. 6 aud there was a matter in regards to retention payments 7 Reporter's Certificat.n.. 7 paid by Enron 8 EXHIBITS 8 — Q. ‘The mattor in which you testified before the CFTC © NO. DESCRIPTION PAGE 9 and FERC, was that some type of combined action? 10 Exhibit No. 1. Bea WA Yes. 11 Three-page document, Enron letterhead, dated March 21, 11 Q. Woll, what was the subject matter of that action? 12 2000. Confimmstion of transaction of natural ens, 2 MISS RERKO: That's ~ Tm going to object 1B. Attention to: El Paso Merchant Energy - Gas, LP. 13 at his point. Thats public recor if you want to g0 14 Deal No. NC6B86.1, Bates stamped SRSDOOI through SRSO003 | 14 Tooktit, you may go look at it, but that's not why 15 15 wore bore today. Its not relevent 16 16 — Q. Youcan answer the question. "7 "7 MISS RERKO: Don't answer the question. 18 18 A. Lwillrefuse to answer the question and assert 19 19 my rights under the Fifth Amendment. 20 20 Q. Now, you were the head of the fixed-price natural 2 21. gas trade— uh, you wore the head fixed-price natural gas 2 22 trader at Enron in 1999 and 2001, correct? 2 B MISS RERKO: Object to form. 4 24 A. Lwill again rofuse to answer that question and 2% 25. assert my rights under the Fifth Amendment. 2 (Pages 210 ‘Team Litigation Company 713-802-9100 (60279988-1724-43e5-8188-2btea | i i ! 5) abe r3eJohn Amold 5/6/2005 Paes Pages | 1 Q Did you~ did other gas, natural gas traders 1 MISS RERKO: Don't answer the question. 2 work for you at Enron from 1999 to 2001? 2° A. Lassert my rights under the Fifth Amendment. 3A. Twill assert my rights under the Fifth 3 Q Isittruc that the former employees through an 4 Amendment. 4 employee litigation or committee, has sued you to try to SQ. Did you provide the input for —I've set a J got the $8,000,000 back? 6 document in front of you, it's marked "La Grosta No.1" | 6 ‘MISS RERKO: Don't answer the question, 7 and has a date, "5/16/01," underneath 7A. Lassert my rights under the Fifth Amendment. 8 ‘MISS RERKO: Im going to object. Asto, I BQ Are the claims in that — or do the employees, 9 mean, if he's previously given his deposition and the 9. former employees of Enron, claim in part at least that you 10. testimony you have and the documents that he testified 10 shouldn't - you're not entitled to the $8,000,000 because 11. with respect o, there is no need to go over this again. 411. you engaged in ilegal price-manipulation? E 2 ‘MR. LUGRIN: Its just — Cynthia, I want a 2 MISS RERKO: Object to form, Don't answer Hl 13. very brief background, two questions, I want to know ~ 13. the question. : 4 MISSRERKO: Wait. Theres no need for him 14 A. assert my ights under the Fih Amendment. 15 toanswer the one tha’ open right now. 15 Q. Isthatlitigation ongoing? 16 ‘MR. LUGRIN: Okiy. Read that question back 16 MISS RERKO: Doat answer the question. 17 please. 17 A. Lassertmy rights under the Fifth Amendment. 1B (Readback) 18 Q. Isn'tattempting to manipulate or actually 9 ‘MR. LUGRIN: Wel let me finish my question 19 manipulating the price of commodity, such natural 20 and then welll seo if you really have an objection here. 20. gas, a violation ofthe Commodities ~ commodity — 21 What f want to know, in the document that is set before 21 Commodities Exchange Act? 22, you~ its marked La Grosta Exhibit | ~ itepresents a 2 MISS RERKO: Object to form. Don't answer L 23. tetmination payment that Enron is secking from Antara in 23 the question. i 24 this matter; and what I want to know is: Are you the 24 &. Tassert my rights under the Fith Amendment. i 25 person at Enron that provided the gas pricing data for 25 Q, Haveyou ever written ina performancereview of | Page Pages 1 that termination payment clelation? 1 other traders at Enron, that they should or that a trader 2 ‘MISS RERKO: Asked and answered, Dont 2. should learn how to use the Enron bat to push around the 3 answer the question. 3° market? F 4 Q You ean go ahead and answer. 4 MISS RERKO: Object to form. Don't answer F 5 MISS RERKO: Dost answer. 5 the question, | 6 A. Tassert my rights under the Fifth Amendment, 6 A. Lassoit my rights under the Fit Amendment. 7 Q Now,at— during your tenure at Enron, I 7 Q. Haveyou ever written ina performance review of |, 8 understand that you traded over a biion dollars worth of | 8 other gas traders at Enron, that a particular trader was a | 9 energy futures per day s that true? 9 position taker and market manipulator? E 0 MISS RERKO: Object to form. Dont answer 10 MISS RERKO: Object to form, Don't answer i JL the question. 11 the question. i 12 A. Tassert my rights under the Fith Amendment, 12 A. [assert my righ under the Fifth Amendment, 13 Q. Did sou trade upwards of 5,000 contracts on NYMEX | 13 _ Q. Have you ever writen in a performance review at 14 alone, per day, when you were at Enron? 14 Enron that a particular trader was sil Tearning how to}, 5 MISS RERKO: Object to form. Doatt answer 15 use position to force markets when they're vulnerable? |, 16 the question. 16 MISS RERKO: Object to form. Don't answer lf 17 A. Tassert my rights under the Fifth Amendment 17 the question. : 18 — Q. Were you paid an $8,000,000 bonus, um, one 18 A. Tassert my rights under the Fifth Amendment. 19 business day before Enron filed bankruptcy? 19 Q. Have you ever actually taught traders, or did you 20 MISS RERKO: Object to form, don't answer 20. ever actually teach traders at Enron, ways in which to 21 the question, And again, to the extent that you want to 21 manipulate gas markets? 22, get ino his litigation, go read the pleadings. 2 MISS RERKO: Objectto form. Don't answer 23 A. Lassert my rights undor the Fit Amendment. 23° the question. 24 —Q. Imexchange for that $8,000,000 did you agree to 24 AL Lassert my rights under the Fifth Amendment. 25 work an additional 90 days? 25 Q. Have you ever made up spread-sheets that showed 3 (Pages 6 to 9) Team Litigation Company 713-802-9100John Amold 5/6/2005 Page 10 rage [| 1 pricing data for trades that never happened? 1 trader at Enron? } 2 ‘MISS RERKO: Object to form, Don't answer at MISS RERKO: Don't answer the question. ; 3. the question 3A. Tassert my sights under the Fifth Amendment. | 4A. Tassort my rights under the Fifh Amendment. 4 Q Letme hand you what I'm going to go ahead and |} 5 Q. Wasita common practice to exaggerate gas prices | 5 markasJ.A. Exhibit 1, 6 reported — reported to pricing indices such as Gas Daily? | 6 MISS RERKO: Whats it? i 1 MISS RERKO: Object to form. Don't answer 7 MR. LUGIN: It is a confirmation of a swap } 8 the question. B_ dated March 71, 2000, between Enron North Americaand |! 9A. Tassertmy rights under the Fifth Amendment. 9 ELPaso. } 10 Q. Have you ever reported gas prices that are false 10 Q Doyou recognize: i 11 toapricing indice? n MISS RERKO: Don't answer the question. i 2 MISS RERKO: Object to form. Don't answer 42 A. Tassert my rights under the Fifth Amendment. 13 the quastion 13 Q Isthis a faketrade? I 14 AL Lassertmy rights under the Fifth Amendment “4 MISS RERKO: I'm sorry, what? l 15. Q. Baveyon ever reported volume reported volumes | 15 Q. Isthisa fake trade? AndT'm talking about the 16 that are false toa price indice? 16 JA. Exhibit 1. ! 7 "MISS RERKO: I'm sory. I ditt hear you? MISS RERKO: Don't answer the question H 18 MR LUGRIN: Volumes that ae false toa ‘A. assert my rights under the Fith Amendment, F 19° price indice? MISS RERKO: Well, also note forthe H 20 MISS RERKO: Object to form, dont answer record: To the extent tat counse! knew I was appearing ff 21. the question. by talophong, it would have been courteous te ave Hl 22 A. [assert my rights under the Fifth Amendment. received these exhibits before the deposition. I 23 Q. Were you ever told by anyone at Enron to MR. LUGRIN: I apologize, Cynthia, And I i 24 reevaluate a deal, to give ita more optimistic outlook? will give them to you. And ifyou want to reopen the 3 MISS RERKO: Object to form, Dont answer deposition, I be glad to let you do it, okay? i Paget ages |} ; the question ‘A. Lassert my rights under the Fith Amendment. Q. Did Enron maintain different sets of forward MISS RERKO: Object to form. Don't answer the question, ‘A Lasser my Fifth Amendment Q What is "wash trading"? MISS RERKO: Don't answer the question. ‘A, Lassert my rights under the Fifth Amendment Q. Have you ever engaged in "wash trading” while you ‘were at Enron? MISS RERKO: Don't answer the question. ‘A. assert my sight under the Figh Amendment. Q. What is "round tripping"? MISS RERKO: Don't answer the question, A. Lassert my rights under the Fifth Amendment. Have you over engaged in "round tripping” in a gas trade at Enron? ‘MISS RERKO: Don't answer the question A. Lassert my rights under the Fifth Amendment, Q Whatis "churning"? ‘MISS RERKO: Don't answer the question, AL Lassert my rights under the Fifth Amendment. Q. Haveyou ever engaged in “churning,” as a gas MISS RERKO: Thank you, I'm going to instruct the witness not to answer any questions with respect to this exhibit. Q. Areyou going to follow those instructions? A Lill Q. Did you ever manipulate, while you were at Enron, the spot pliysical markets, profit and financial futures' markets? MISS RERKO: Don't answer the question. A. Lill assert my rights under the Fifth Amendment, Q. Doyou know of anybody else who did at Enron? MISS RERKO: Don't answer the question. A. will assert my rigbts under the Fifth ‘Amendment. Q. Are you aware that the FERC has identified approximately 73 trades that it — engaged in by you white, you were at Enron, that i considers to be wash trades? MISS RERKO: Object to form. Don't answer the question. ‘A. Iwill assert my rights under the Fifth ‘Amendment. Q. That's all the questions 1 have. MR. KEENAN: I have no questions, ‘THE VIDEOGRAPHER: Weare off the record at TeSre 4 Pages 10 to 13) ‘Team Litigation Company 713-802-9100 (08279900-1724-43e5-8100-2bteadbb!130John Amold 162008 eae ops ff 1 49, 1 LJORN ARNOLD, juve ead tbe fresning ; 2 (Witness wit read and sign) 3 laiageedooe 3 (Proceedings concluded at 4:19 pm.) 2 4 3 5 i 5 , 7 5 JOHN ARNOLD 5 ; 1 murstammor mxas i SouNnror 10 2 n 5 Hy — ont day peealy ; 14g SnD ARNE, Tao metered der B Ire houth cx 4 15 ident et oi Come Te prose : is ‘name [s subscribed to the foregoing instrument and i i 16. Slip ten cd ane re ! 6 apo id cednton es eps / 8 18 I Giaumdcrmy nd an tof he 9 as | 20 2D if a n Fa 2 eerste } 2 SoTAROBLICDAND Fon l z 2 ESTEE i 4 Bw / 3 5 / ge ree? | 1 (CHANGES AND IONATURE eS ates Cameo } 2 PAGE LINE CHANGE REASON aaa 3 ta ene . + asmaraneseincesne, | 3 Jace. 9 7 eam actan ar $ eet [ * atumvonerouornniermy svn ; 2 ns 10 $$ | reer ttre er nr crt rtd a Me eae Sine ean ky q 68 ree rrr ieee st i tu ata i 8 1 ree OL me tre 4 © Smeetneeetttedet E Ferree eee eeeeeceeet reece eee 2 J ete | 7 0 eeceerctnemrre » eee nomena | 2» _— ; a eet et eee ; 2 sect ; zB i 2 ca ao 5 (Pages 14 to 17) ‘Team Litigation Company 713-802-9100John Amold 5/6/2005 n 2 5 4 15 16 18 1» 20 Fy 2 % 3 ‘Thot pursuant io information given othe deposition ‘officer athe ie sid vestimony was taken ie fellowing inelaces counsel forall partes of records Mg. James Keenan, Attorney for Plintift (Me. George H, Lagen, Attorey for Defendant ‘Miss Cynthia Rerko, Attorney for Witness, John Amol 1 furor eorify that 1am neither counsel fr, ‘elated to, nor employed by any of the parties or storeye in he sation ia whi this procending was (okea, and further tht I sm no ally or otherwise ‘nfersted in the ouleome forthe ation, Further certification requirements pursuant to Rule 203 of TRCP willbe ceried tower hey have occurred, (Centified toby me this Sth day of May, 2005, Tanne: GR ‘Texas CSR No. 6961 Bepiration Date 1231/06 Firm Registration No, 230 ‘3605 Katy Frocwny, Suite 100 Houston, Texas 7007 (13) 02-9100 Pogo 18 FURTHER CERTIFICATION UNDER RULE 203 ‘The original deposition washes not retumed to the deposition officer on ‘retumed, the aoched Changes and Signature page contains any chnges and dhe reasoas therefor, ‘If retured, the original deposition was delivered to (Me. George H. Lugrin, Custedial Attorney; ‘ThotS_____~ is the deposition officer’ charge to the Defendant for preparing te orginal deposition transcript and any copies of exhibit; “That he deposition was delivered in accordance with Rule 2033, and tha copy ofthis eertiiete was served ‘on all parties shown herein on and files withthe Clerk. Certified toby me this day of, 2008. Toni fietiner, COR RFR ‘Texas Certification No. 6961 Expiration date: 1131/06 3605 Katy Freeway, Suite 100 Houston, Texas 77007 (713) 803-9100 a Page 19 ‘TRCP ‘Team Litigation Company 713-802-9100 6 (Pages 18 to 19) (60279389-172¢-4S05-8108-2bteadbbI129