Judge delays one of two retrials in Enron-related case
Two of three former Merrill Lynch & Co. executives will be retried as scheduled next month on fraud and conspiracy charges linked to a 1999 deal with Enron, but the third will go it alone at a later date, a federal judge ruled today.Lawyers for all three had asked U.S. District Judge Ewing Werlein to delay the Jan. 28 trial so they could pursue efforts to resolve the matter out of court.
On Friday Werlein granted earlier requests that two of the men — Daniel Bayly, former head of investment banking for the brokerage, and Robert Furst, former liaison with Enron — be tried separately from the third, James Brown, former head of Merrill's asset lease group.
But the judge refused to delay the Jan. 28 trial for Bayly and Furst. He didn't set a date for Brown's trial.
The three men were convicted by a jury in 2004 of helping push through what prosecutors said was a loan disguised as an asset sale to help Enron, a lucrative Merrill client, book bogus profits.
The deal involved Merrill's year-end 1999 purchase from Enron of three power barges that the energy company hadn't been able to sell to other buyers. The government's case centered on an alleged promise from then-Enron finance chief Andrew Fastow that Enron would buy back or resell the barges within six months, guaranteeing that the brokerage would regain its investment plus a premium.
Jurors rejected the defendants' arguments that the deal was legitimate. But an appeals panel last year threw out their fraud and conspiracy convictions, saying prosecutors wrongly said they deprived Enron of their "honest services." That theory was faulty, the court said, because the defendants didn't take money or property from the company or its shareholders.
The appeals panel upheld Brown's convictions of perjury and obstruction of justice. Brown served a year in prison, and the other two served nearly as long. All three now are free on bond awaiting retrials.
Prosecutors want Werlein to order Brown to serve the full three-year, 10-month sentence he received for all five convictions.
His lawyers have suggested in court filings that the government is pushing for the full sentence because Brown refused to plead guilty to another felony and pressure his co-defendants to do the same with the threat of testifying against them.
Defense lawyers have tried to strike a civil settlement to resolve the case.
On Friday two of the defense lawyers expressed doubt that settlement talks would be fruitful, and said their clients have no intention of pleading guilty to crimes.
All three maintain their innocence.
Brown's lawyer, Dan Cogdell, said his client aims to fight.
"I'm not having any talks with the government to avoid trial," Cogdell said after the hearing.
Furst's lawyer, Paul Coggins, said settlement talks have been "minimal," but Bayly attorney Thomas Hagemann said he remains hopeful that the case can be resolved without a criminal trial.
Werlein hasn't ruled on the government's request to revoke Brown's bond and incarcerate him.
Federal prosecutor Arnold Spencer argued in an August filing that Brown should serve the entire sentence even though the year he served would suffice, under federal sentencing guidelines, for the convictions the appeals court upheld.
Brown's lawyers counter that his year behind bars was enough and he should be re-sentenced to time served.
Spencer brought up the issue during Friday's hearing, noting that Brown is unlikely to be retried "for some extended period of time" while his prison sentence "continues to go unserved."
"I haven't reached that one yet," Werlein replied.
posted by allinsurance @ 3:43 PM
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