Enron and Merrill Lynch staff face jail
A FIRST Enron executive to face criminal charges has been found guilty along with four former Merrill Lynch bankers in a conspiracy and fraud trial that, while a sideline to the Enron scandal, leads the way to further prosecutions.
The case concerned the 1999 sale of electricity barges by the bankrupt energy trader to Merrill Lynch in a bogus deal to pump up profits presented to unsuspecting shareholders.
The jury convicted former Enron finance director Dan Boyle and former Merrill bankers Daniel Bayly, Robert Furst, William Fuhs and James Brown of fraud and conspiracy but cleared ex-Enron accountant Sheila Kahanek.
It was the first criminal case to go to trial since Enron collapsed in December 2001. Each of the convicted men face up to 15 years in prison.
Apart from fraud, some defendants were convicted on a raft of other charges - Boyle of making false statements to a US Senate subcommittee, Brown of perjury and obstruction of justice for lying about the sale to a federal grand jury. He could face an extra 30 years in prison.
Fuhs also faces charges of making false statements to investigators and obstruction of a grand jury over the barge deal.
Lawyers for the men said they would not let the matter rest here. 'We intend to appeal. We haven't given up,' said Ira Sorkin, representing Furst.
The jury will hear submissions on sentencing today but the men won't be sentenced until next March.
While the transaction was a small one, adding just $12m (£6.5m) to Enron's bottom line, the convictions in the case have given a fillip to prosecutors seeking bigger fish to fry.
The fall of high-fliers such as Bayly, the former head of global investment banking at Merrill, and Brown, the former head of the firm's project and lease finance group, sends an uncomfortable message to Enron founder Kenneth-Lay and his protege, ex-chief executive Jeffrey Skilling, facing a joint trial on seven counts of conspiracy and fraud.
The Nigerian barge trial relied heavily on evidence from former chief financial officer Andrew Fastow, who pleaded guilty to several crimes relating to his time at Enron and is co-operating with prosecutors in a deal to reduce his sentence.
The barge deal was symptomatic of the rot throughout the energy firm as it struggled to meet Wall Street projections in the late 1990s and throughout the case prosecutors showed increasing confidence in the evidence and strategies that are likely to appear in later cases.
