Watch CBSN Live

5 Convictions In Enron Case

A jury convicted four former Merrill Lynch & Co. executives and a former midlevel Enron Corp. finance executive of conspiracy and fraud Wednesday for helping push through a sham deal to pad the energy company's earnings.

The deal 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.

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 — that Enron would resell or buy back Merrill's interest within six months.

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.

The verdict came after 21 hours of deliberations that began at the close of six weeks of testimony.

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.

The barge case marked the first time Wall Street bankers were charged with active participation in a criminal Enron scheme.

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.