A U.S. District Court judge has reportedly delayed the retrial of two former Merrill Lynch & Co. executives charged with taking part in the so-called Nigerian barge case. The case is tied to an alleged Enron bogus-profits scheme.
Jury selection in the retrial of Daniel Bayly, Merrill’s former head of investment banking, and Robert S. Furst, the broker’s former Enron liaison, is slated for next Monday, according to the Associated Press.
U.S. District Judge Ewing Werlein Jr. delayed the retrial because the two executives, along with James Brown, the former head of Merrill’s asset lease group, are contesting the Appeals Court’s ruling not to dismiss the case against them. In 2004, Bayly, Furst, and Brown were convicted of fraud and conspiracy. Brown’s retrial was set for another date.
In the original trial, prosecutors contended that Merrill employees pretended to buy three power plants mounted on barges from Enron in a 1999 deal between the two companies. The energy concern then would book bogus profits, according to a Houston Chronicle account. In the allegedly sham arrangement, Enron promised to resell or buy back the barges by mid-2000. The government claimed this made the deal, in effect, a disguised loan.
In 2006, 5th U.S. Circuit Court of Appeals threw out the convictions of the three Merrill executives on the grounds that did what Enron wanted them to do and didn’t profit at the company’s expense, according to the AP. The appeals court ruled that prosecutors had argued improperly that actions of the men robbed Enron of their “honest services.”
The appeals court said, however, that its opinion “should not be read to suggest that no dishonest, fraudulent, wrongful or criminal act has occurred,” the wire service reported. Prosecutors removed the “honest services” wording from their indictment, setting the stage for the retrial.