Two former Merrill Lynch & Co. executives involved in a sham transaction with Enron Corp. were sentenced Thursday, according to published reports.
Daniel Bayly, who was head of investment banking, received 30 months in prison plus six months of supervised release, according to Bloomberg. James Brown, who led the strategic asset lease and finance group, received a prison sentence of 46 months followed by a year of supervised release. Each was fined $840,000.
Prosecutors had sought prison terms of more than 14 years for Bayly and more than 32 years for Brown. But Judge Ewing Werlein Jr. of U.S. District Court in Houston said he wanted these sentences to be commensurate with those of other Enron-related defendants. Judge Werlein reportedly noted that former Enron chief financial officer Andrew Fastow received a sentence of 10 years after pleading guilty and agreeing to cooperate with prosecutors.
Indeed, Bayly received the minimum sentence possible. According to the Associated Press, the judge said that “in the constellation of the Enron frauds,” the barge deal was “rather small and relatively benign.” Bloomberg added that according to defense attorneys, Bayly’s only involvement with Enron and the barge deal was “one brief conference call with Andrew Fastow.” Brown got more prison time, the wire service noted, because he also was convicted of lying to a grand jury and obstructing the investigation, and because the jury believed he played a leadership role.
In November, Bayly, Brown, and three other defendants were convicted for their roles in a $12 million sale of three electricity-generating barges off the coast of Nigeria in 1999. The government alleged that former Enron chief financial officer Andrew Fastow orally promised Merrill Lynch that if it pretended to buy the barges so Enron could fraudulently pump up its bottom line, then Fastow would guarantee the property would be bought back and Merrill Lynch would make a profit, the Houston Chronicle explained at the time.
Former Enron accountant Sheila Kahanek was acquitted in that trial. The other three defendants who were convicted — former Merrill managing director Robert Furst, former Merrill vice president William Fuhs, and former Enron finance executive Dan Boyle — will be sentenced next month.
In other Enron litigation news, former chairman Kenneth Lay’s trial on charges related to his personal finances will be held next year, as U.S. District Judge Sim Lake had suggested, reported the AP. Lay is accused of lying to banks about his plans to use the loans to buy Enron stock on margin before the company collapsed in late 2001, the wire service added.
The personal-finances case will now be heard by Judge Lake while jurors deliberate the fraud and conspiracy case against Lay, former Enron chief executive officer Jeffrey Skilling, and former Enron chief accounting officer Richard Causey. That trial is scheduled to begin in January.
And in the Houston courtroom of U.S. District Judge Vanessa Gilmore, jury selection began this week in the trial of five former employees of Enron Broadband Services on charges of wire fraud, securities fraud, and conspiracy to commit fraud.