Three former Merrill Lynch employees seem likely to be retried in the so-called Nigerian barge case, tied to an alleged Enron bogus-profits scheme.
Their initial convictions were overturned on appeal last year, and U.S. District Judge Ewing Werlein had hoped prosecutors and defense lawyers would resolve the case without a trial. When no deal was reached, however, the judge set a new trial date for next Jan. 28, according to Reuters.
At the same time, he urged lawyers to come up with a solution without a trial. “I certainly encourage you on that,” he told lawyers on Wednesday, the wire service said.
The three former Merrill employees are Daniel Bayly, former head of investment banking; James Brown, former head of the asset lease group; and Robert Furst, Merrill’s former Enron liaison. They were convicted in 2004 of fraud and conspiracy.
Prosecutors claimed in that trial that the Merrill employees pretended to buy three power plants mounted on barges from Enron in a 1999 deal between the two companies. The energy concern then would book bogus profits, according to a report in Houston Chronicle. In the allegedly sham arrangement, Enron promised to resell or buy back the barges by mid-2000. The government claimed this made the deal, in effect, a disguised loan.
The Merrill executives claim the deal was proper.
Furst and Bayly, sentenced at the time to three years and one month and to two years and six months in prison, respectively, had served nearly a year of their terms, the Chronicle said, when they were released last June pending the outcome of their appeal. Brown had served one year of his three-year, 10-month term when he was released after the appeals court ruling last August, the paper noted.
Prosecutors and defense attorneys now seem divided on how to retry the three. Their lawyer wants the case to be tried in a civil forum, while the government apparently still wants to bring a criminal case. “We’re not looking for a civil resolution,” lead prosecutor Arnold Spencer said, according to Reuters.
Talks between the defense and prosecutors “have been ongoing,” defense attorney Paul Coggins, who represents Robert Furst, told the Chronicle, adding, “I would say the parties are pretty far apart now.”
In the first trial, in addition to Bayly, Furst, and Brown, former Merrill executive William Fuhs and former Enron finance executive Dan Boyle were convicted of conspiracy and fraud. Brown also was convicted of perjury and obstruction of justice for lying about the deal to a grand jury, the Chronicle pointed out. Boyle was convicted of lying to congressional investigators. Former Enron accountant Sheila Kahanek was acquitted.
According to the paper, the 5th Circuit Court of Appeals threw out the fraud and conspiracy convictions against Bayly, Furst and Brown last August because prosecutors had argued improperly that actions of the men robbed Enron of their honest services. In addition, Fuhs’ convictions were thrown out for lack of evidence.
Boyle did not appeal and is serving a three-year, 10-month prison term, the paper said.
Earlier this week CFO.com pointed out that another Enron-related case could be impacted by the appeals court ruling.
Christopher Calger, former vice president in charge of the West Power Origination Group of Enron North America, pleaded guilty in 2005 to wire fraud stemming from the sale of a project called Coyote Springs II, which involved an interest in a power plant, according to the Chronicle. The paper noted that Calger admitted using that deal to help Enron record profits that hadn’t yet been earned.
Prosecutors last week, however, filed papers asking U.S. District Judge Lee Rosenthal to withdraw Calger’s guilty plea and to dismiss the case. Calger’s attorneys were said to be buoyed by the appeals court decision reversgarding the three Merrill employees.
