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Monday marks jury selection in first Enron trial

SHARE Monday marks jury selection in first Enron trial

HOUSTON — About 100 prospective jurors arrived at the federal courthouse Monday, and a dozen are to be chosen to decide the fate of six defendants in the first Enron criminal trial.

While potential jurors fill out questionnaires, defense lawyers plan to raise questions to U.S. District Judge Ewing Werlein about statements made to investigators by former Enron finance chief Andrew Fastow that could favor the defendants in the case involving an alleged sham sale of barges.

Defense attorneys cried foul last week at learning about Fastow's statements just days before trial. They had been demanding information that could help them prepare their cases for months. The government says the Fastow statements don't constitute material prosecutors are obligated to provide, but they informed the defense out of an "abundance of caution."

"That's not going away," said William Rosch III about defense attorneys' intention to address whether prosecutors wrongly held back information they are required to turn over. Rosch represents one of the defendants, former Enron finance executive Dan Boyle.

Last month, Werlein said he'd consider last-minute issues Monday morning, but he intended to seat a jury on Monday.

Prosecutors don't intend to call Fastow to testify, but they contend he played a key role in the deal central to the case.

The jury will decide whether four former Merrill Lynch & Co. executives and two former Enron executives conspired to help manipulate the energy company's books in December 1999.

The six are charged with conspiracy for allegedly helping push through Enron's sham sale of Nigerian barges to Merrill to help the energy company appear to have met earnings targets.

Prosecutors say Fastow wiped out the sale's legitimacy by verbally promising that Enron would buy back the barges from Merrill within six months.

Last week prosecutors revealed Fastow had told investigators he didn't say "guarantee" or "promise" when talking about the deal, so he wasn't explicit about the certainty of the buyback. But the government contends the defendants got the message. Fastow also told investigators he didn't remember if Boyle participated in the deal.

It's unclear exactly when Fastow made those statements, but he has been cooperating with the government since pleading guilty in January to two counts of conspiracy.

Fastow followed through on the buyback when LJM2, one of his partnerships created to help Enron hide debt and inflate profits, bought the barges in June 2000. At the time, LJM2 was treated as a separate entity from Enron even though Fastow ran it.

Merrill got involved when Jeffrey McMahon, then Enron's treasurer, approached the brokerage about the deal after Enron had failed to find another buyer for the barges. According to documents filed in Enron's bankruptcy, McMahon promised Merrill's "hold" on the barges would last six months or less and Enron would buy them back at a premium.

McMahon has not been charged and is not on the prosecution's witness list. Defense attorneys say his attorneys have told them he is unavailable to them as well.

In addition to Boyle, the defendants are: Sheila Kahanek, a former in-house Enron accountant; Daniel Bayly, formerly Merrill Lynch's chairman of investment banking; Robert Furst, former managing director who answered to Bayly; James A. Brown, former head of Merrill's asset lease and finance group; and William Fuhs, former vice president who answered to Brown.