Houston Chronicle: Attorneys Take Slap at Barge Case Prosecution

By KRISTEN HAYS

Copyright 2007 Houston ChronicleDefense attorneys say the government is grasping at straws to come up with a crime and want their clients' case dismissed.Last year, an appeals panel gutted the basis of the 2004 trial of three former Merrill Lynch & Co. executives and overturned most of their convictions.But federal prosecutors are seeking to retry the trio in January."There is no scheme to deprive anyone of any money or property anywhere in this indictment," attorney Sidney Powell told U.S. District Judge Ewing Werlein in a hearing Friday.The issue is central to the retrial of her client, James Brown, as well as two others, Daniel Bayly and Robert Furst.They were convicted in 2004 of helping push through a 1999 deal with Enron in which Merrill pretended to buy three barge-mounted power plants so the energy company could appear to have met earnings targets.Last year, the 5th U.S. Circuit Court of Appeals threw out their fraud and conspiracy convictions, deeming as flawed a prosecution theory that they robbed Enron and its shareholders of their honest services.The panel ruled that prosecutors wrongly presented that theory to jurors, reasoning that the defendants didn't steal money or property and their actions were in Enron's corporate interests.All three served several months to a year of more lengthy prison terms. Bayly and Furst were released on bond before the ruling was issued, while Brown was released days later. The panel, however, upheld Brown's convictions of perjury and obstruction of justice.For a retrial, federal prosecutor Spencer Arnold stripped honest services allegations from the original indictment, leaving an allegation that they took money or property."Where's the money?" Werlein asked Arnold.Arnold sifted through the indictment to find a reference to a $250,000 advisory fee Enron paid Merrill. Even though none of the defendants received any of the money, he told the judge that the alleged scheme defrauded Enron and its shareholders of that amount.But Powell noted that such theft isn't alleged in the slimmed-down indictment. "It is undisputed that these men did not seek a dime for themselves," she said.

Also before Werlein is Arnold's request that Brown's bond be revoked and that he serve the rest of his three-year, 10-month sentence, even though three of the five crimes that prompted Werlein to impose that punishment were overturned.Powell noted that Alice Fisher, assistant attorney general for the Justice Department's criminal division, said in a court filing three days after the 5th Circuit overturned his other convictions that Brown should be resentenced on the two upheld counts.Under federal sentencing guidelines, the year he served would satisfy that punish- ment.But on Friday, Arnold said his higher-up's concession was a rash mistake.Noting that her filing was "an embarrassment and we wish we hadn't done it," he said it wasn't binding.Werlein has yet to rule on the issues.