Jurors began deliberations in the trial of six former Enron Corp. and Merrill Lynch & Co. executives accused of fraud and conspiracy in the energy trader's 1999 sale of three power-generating barges.
In closing arguments, a lawyer for former Merrill Lynch executive James A. Brown said his client was wrongly caught up in a financial "snake pit" at Enron after Merrill Lynch, the world's largest securities firm, paid $7 million for a stake in the barges. A former strategic financial group chief, Brown didn't know that Enron sold the barges as part of a plan to fraudulently book a $12 million profit, said attorney Lawrence Zweifach.
"There is a world of difference between the image Enron presented to the world and the dark reality," Zweifach told the jury in Houston federal court. "Enron was nothing more than a snake pit."
His statement, coming at the end of a six-week trial, mirrored efforts by three other Merrill Lynch defendants to distance themselves from the two former Enron employees on trial.
After a rebuttal argument by prosecutors, U.S. District Judge Ewing Werlein Jr. told the 12-member jury to pick a foreman and begin deliberations.
Enron secretly promised to buy back Merrill Lynch's investment, with interest, six months after the sale, prosecutors claim. The promise made the deal a loan under accounting rules, and Enron's subsequent booking of a profit fraudulent, they said.
Enron used the profit to meet earnings estimates while Merrill Lynch agreed to the deal to curry favor with Enron and gain investment-banking business, prosecutors claimed.
One e-mail introduced at trial described an attempt by Brown to obtain a similar buyback guarantee from Continental Airlines in 2000, less than a year after the Enron transaction.
Today, Zweifach sought to distance his client from the e-mail, saying that Brown's wide distribution of deal documents at the time of the transaction showed he didn't think there was any buyback promise that needed to be kept secret.
"Mr. Brown's life should not be based on a single e-mail viewed in isolation." Zweifach said. The Continental e-mail "mischaracterized his understanding of the deal."
Thomas Hagemann, lawyer for former Merrill Lynch investment banking chief Daniel Bayly, said Oct. 12 that the e-mail was "the most troubling evidence against us." He unsuccessfully sought to separate his client's case from Brown's case.
In addition to Brown and Bayly, the defendants are Dan Boyle, a former Enron International finance executive; Sheila Kahanek, the ex-Enron accountant in charge of the transaction; former Merrill Lynch vice president William Fuhs; and former managing director Robert Furst.
The trial is the first stemming from Enron's December 2001 bankruptcy. It is also the government's first chance to test strategies that may be used in the March 1 conspiracy trial of Enron Broadband executives, and the currently unscheduled trials of ex-Enron chief executives Jeffrey K. Skilling and Kenneth L. Lay.