By Kristen Hays, Associated Press
HOUSTON (AP) - Four former Merrill Lynch & Co. executives and a former midlevel Enron Corp. finance executive have been convicted of conspiracy and fraud in first criminal trial of Enron and Wall Street executives for their role in the energy company's 2001 collapse.
Five men were convicted Wednesday of helping push through a bogus year-end 1999 sale of interest in floating power plant barges to the brokerage firm so Enron could appear to have met earnings targets.
But the jury acquitted a former in-house Enron accountant, Sheila Kahanek, who testified she consistently opposed a verbal promise that the government contended made the deal a loan - that Enron would resell or buy back Merrill's interest within six months.
"You can only hope and pray that the jury saw the truth and that's what they did," said Kahanek, who was indicted more than a year ago. "I can't tell you how wonderful that is."
The verdict came after 21 hours of deliberations in the six-week trial. The jury returned Thursday for a sentencing phase, where experts for the prosecution and defense are expected to testify regarding financial loss tied to the barge deal.
All the convicted defendants declined comment Wednesday, appearing stunned and emotional as they embraced their tearful wives. Most of their lawyers also declined comment, though some said they would appeal.
Christopher Wray, assistant attorney general in Washington D.C., said the verdict "signals that executives committing corporate fraud will be vigorously investigated and prosecuted" and "those who aid such fraud will meet the same fate."
The barge case marked the first time Wall Street bankers were charged with active participation in a criminal Enron scheme. While Enron's former auditor, Arthur Andersen LLP, was convicted more than two years ago of obstruction of justice for destroying Enron documents before the collapse, the barge case was the first to involve former Enron employees as defendants.
Those convicted of conspiracy and two counts of wire fraud were: Daniel Bayly, Merrill's former head of investment banking; James A. Brown, former head of Merrill's asset lease and finance group; William Fuhs, a vice president who reported to Brown; Robert S. Furst, a former manager of Merrill's relationship with Enron; and Dan O. Boyle, a former Enron finance executive.
Brown also was convicted of perjury and obstructing a special grand jury in Houston for testifying that he didn't know of a verbal buyback promise. Boyle was convicted of lying to investigators for a Senate subcommittee for saying the same thing.
The five men face between a few months in prison to up to 30 years, depending on how many counts they were convicted of.
They were each given different 2005 sentencing dates: Bayly, March 4; Boyle, March 10; Brown, March 17; Fuhs, March 18; and Furst, March 24. All remain free on bail.
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