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For the first time since Enron Corp. collapsed in 2001, federalprosecutors investigating the tragic fall of the Houston energy companywill venture into a courtroom today to try to win criminalconvictions against former Enron employees. But defense attorneys filed motions on Thursday that could delay thetrial. The defense attorneys allege prosecutors waited too long — untilWednesday — to turn over exculpatory information from Andrew Fastow, theone-time Enron chief financial officer who is now cooperating with thegovernment. Defense attorney William G. Rosch III filed a motion on Thursday askingU.S. District Judge Ewing Werlein of Houston to determine if prosecutorsengaged in “prosecutorial negligence, bad faith or motivation to obtaina tactical advantage” after they waited until five days before voir direto provide defense attorneys with information from Fastow that couldhelp prove the innocence of his client, Dan O. Boyle, a former Enronemployee. Rosch asks Werlein to consider dismissing charges against thedefendants, or to continue the trial. “It is difficult to imagine why a prosecutor would not immediatelydisclose such important and particularized evidence unless the ultimategoal or motive of nondisclosure is to sandbag a defendant,” Rosch wrotein “Defendant Boyle’s Motion for Findings of Fact, and Motion to Dismissor Alternatively Continuance and Order Regarding Disclosure of BradyMaterial as to Andrew Fastow.” Defense attorneys say the Fastow information is vitally important andundercuts the prosecution’s case. “The recent disclosure concerning Mr. Fastow’s statement to thegovernment raises serious issues that go to the very heart of thiscase,” says Lawrence Zweifach, a partner in Heller Ehrman White &McAuliffe in New York who represents defendant James A. Brown. In a related motion also filed on Thursday, defense attorneys for all sixdefendants allege the government failed to timely provide them with theexculpatory information from Fastow. In the “Defendants’ EmergencyMotion and Request for Immediate Disclosure and/or Hearing Due toGovernment’s Violation of Brady v. Maryland as to Andrew Fastow andOther Exculpatory Witnesses,” the defense lawyers want prosecutors toturn over an FBI report of conversations between Fastow and FBI agents,known as a 302, and to “conduct a searching inquiry” of prosecutorsabout their compliance with the constitutional obligations under Bradyv. Maryland, a 1963 U.S. Supreme Court opinion. Brady holds that thesuppression of evidence favorable to the accused violates due processwhen the evidence is material to either guilt or punishment. “Obviously, the concern at this stage is that the government has notmerely ‘missed’ or ‘omitted’ Brady material concerning Mr. Fastow.Indeed, the conduct demonstrated by this belated ‘compliance’ by thegovernment leads to the inescapable conclusion that similar exculpatorymaterial has not been provided for others as well,” attorneys fordefendant Daniel Bayly wrote in a motion joined by the other defensecounsel. Bayly lawyers Thomas Hagemann, a partner in Gardere Wynne Sewell inHouston, and Richard Schaeffer, a partner in Dornbush Mensch Mandelstam& Schaeffer in New York, ask Werlein to order prosecutors to providedefense attorneys with all of their Brady material. Hagemann andSchaeffer filed the motion, but it was on behalf of all the defenseteam. Hagemann declines comment. Assistant U.S. Attorney Andrew Weissmann, director of the Enron TaskForce, did not return a telephone message left at his office inWashington, D.C., before presstime on Thursday, and a call to the EnronTask Force office in Houston was referred to Department of Justicespokesman Bryan Sierra. Sierra says prosecutors do not consider theFastow information to be Brady material, but turned it over to defenseattorneys on Wednesday “in an abundance of caution.” He declines to saywhen the prosecutors obtained the information. In United States of America v. Daniel Bayly, et al., the governmentbrings criminal charges in connection with a December 1999 deal in whichMerrill Lynch bought some electricity-producing Nigerian barges fromEnron. The indictment alleges Enron parked the barge assets withMerrill, promising to buy them back within six months at a profit, to”enhance fraudulently” its 1999 financial reports. The indictment alleges that Merrill Lynch’s purchase of the bargesallowed Enron improperly to record $12 million in earnings and $28million in funds flow during the fourth quarter of 1999. The defendants are former Enron employees Boyle and Sheila Kahanek andformer Merrill Lynch employees Bayly, Brown, William R. Fuhs and RobertS. Furst. All have pleaded not guilty and are out on bond. The trialwould be only the second since the Enron Task Force began investigatingthe Enron debacle in 2002. The first trial ended two years ago with aguilty verdict for former Enron accounting firm Arthur Andersen on acharge of obstruction of justice for destroying Enron financial records. In October 2003, a grand jury indicted all six defendants in U.S. v.Bayly on charges of conspiracy to commit wire fraud and falsify booksand records. Two defendants face additional charges. The indictment also chargesBrown with perjury for statements he made to the Enron grand jury inSeptember 2002 and charges him with obstruction of the grand juryinvestigation by giving “false and misleading testimony.” Also, Fuhs ischarged with making false statements to the FBI, and obstruction of thegrand jury investigation by making “false and misleading declarations”to special agents of the FBI on the Enron Task Force. EXCULPATORY INFO? According to the motion filed by Rosch, exculpatory information thegovernment provided on Wednesday indicates that Fastow did not recall thatBoyle participated in the barge deal. Other exculpatory information,Rosch alleges in the motion, includes statements from Fastow that hedoes not recall using the word “promise” when talking to Merrill Lynchexecutives about the barge deal during a telephone call on Dec. 23,1999, and he deliberately avoided using the word “guarantee” whendiscussing when a third party would buy the barges back from MerrillLynch. The indictment alleges that during that call, “Fastow promised Baylythat Enron would take Merrill Lynch out of the deal within six months.” In June 2000, as alleged in the indictment, Fastow and others arrangedfor LJM2, an off-the-books partnership controlled by Fastow, to buyMerrill Lynch’s investment in the barges, and Merrrill Lynch made aprofit from the deal. Prosecutors informed defense attorneys on June 1 that they do not expectto call Fastow as a prosecution witness. In January, Fastow pleadedguilty to two conspiracy charges and agreed to spend 10 years in prisonand forfeit $23.8 million in assets. He is cooperating with thegovernment. Rosch, a partner in Rosch & Ross in Houston, believes the conduct of theprosecutors is “egregious,” particularly if they have had theexculpatory information from Fastow for some time. “It’s one of the most intellectually dishonest moves I’ve seen occur ina case in years,” Rosch alleges. Houston attorney Dan Cogdell, who represents Kahanek, says the Fastowinformation he received on Wednesday provides him with “absolutely nocomfort” that the Enron Task Force has turned over all Brady material. “They are under an obligation to disclose this information as quickly asit comes into their possession,” says Cogdell, of Cogdell & Goodling. Werlein arranged for a panel of 100 potential jurors to report to theBob Casey U.S. Courthouse in Houston today to fill out aquestionnaire prior to voir dire. He wants the trial to end by July 9.

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