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Jury convicts five in Enron barge case By Matt Andrejczak, CBS.MarketWatch.com Four former Merrill Lynch executives and one former Enron finance executive were found guilty of conspiracy and two counts of fraud for orchestrating a 1999 deal that inflated Enron's earnings. However, a sixth defendant, Sheila Kahanek, a one-time Enron in-house accountant, was acquitted, according to media reports. The six-week trial focused on Enron's bogus sale to Merrill Lynch of an interest in three power plants mounted on barges off the coast of Nigeria. Enron (ENRNQ: news, chart, profile) booked a $12 million profit from the deal, which helped it meet Wall Street earnings targets. Federal prosecutors argued the deal violated accounting rules because Enron promised Merrill Lynch a guaranteed return. The brokerage firm invested $7 million in the deal and reaped a 22 percent return. For the transaction to be proper under accounting rules, Merrill Lynch (MER: news, chart, profile) would have had to assume some risk, meaning it could not have known whether its stake would ever be bought. The verdict came after 21 hours of deliberation. Those convicted were: Dan Boyle, a mid-level Enron exec; James Brown, the former head of Merrill Lynch's asset lease and finance group; William Fuhs, a Merrill Lynch vice president; Robert Furst, a former Merrill Lynch manager; and Daniel Bayly, former head of Merrill Lynch's investment bank. "Today's verdict signals that executives committing corporate fraud will be vigorously investigated and prosecuted," Justice Department criminal chief Christopher Wray said in a statement. "Those who aid such fraud will meet the same fate." Other Enron executives, including former Chairman Ken Lay and former CEO Jeff Skilling, are awaiting trial. Former CFO Andrew Fastow has pleaded guilty and agreed to serve 10 years in prison. He has yet to be sentenced and is cooperating with prosecutors.
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