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A jury convicted four former Merrill Lynch & Co. executives and a former midlevel Enron Corp. finance executive of conspiracy and fraud Wednesday in the first criminal trial of Enron and Wall Street executives for their role in the energy company’s 2001 collapse. The deal at the center of the charges involved a bogus sale of interest in power plants mounted on barges to the brokerage at the end of 1999 so the company could appear to have met earnings targets. 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. Among those convicted of conspiracy and two counts of wire fraud was Merrill’s former head of investment banking, Daniel Bayly. The others were 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. A sixth defendant, a former in-house Enron accountant, was acquitted. Sheila Kahanek testified she consistently opposed a verbal promise that the government contended made the deal a loan, which Enron would resell or buy back Merrill’s interest within six months. The verdict came after 21 hours of deliberations that began at the close of six weeks of testimony. The jury was instructed to return Thursday to begin the sentencing phase of the trial, which is complicated by a challenge to federal sentencing guidelines that is before the U.S. Supreme Court. The defendants are not set to be sentenced until early next year. All remain free on bond. Bayly, Furst and Fuhs face a few months to 15 years in prison. Brown, who 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, faces up to 30 years in prison. Boyle, who also was convicted of lying to investigators for a Senate subcommittee for saying the same thing, faces up to 20 years. All five men declined to comment, appearing stunned and emotional. Most of their lawyers also declined to comment, though some said they would appeal the verdicts. The barge deal isn’t among the numerous alleged financial machinations that pushed one-time Wall Street darling Enron into bankruptcy in December 2001, as a web of accounting maneuvers to prop up its books unraveled. But the government contends the barge deal was an example of many illegal accounting schemes Enron used to pump up its appearance of financial success. Witnesses said the defendants — and others not charged — agreed to participate as a favor in hopes of gaining more business from Enron, then a lucrative client courted by banking titans. Merrill avoided prosecution last year by acknowledging that some employees may have broken the law, cooperating with investigators and implementing reforms to prohibit dubious year-end deals. In March 2003, Merrill paid the SEC $80 million to settle civil allegations that involved the barge deal without admitting or denying wrongdoing. After her acquittal, Kahaneck said, “The jury got to see who I was. “Now I get to do something other than think about, talk about and sleep Enron.” 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.” Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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