June 18 (Bloomberg) -- Three former Merrill Lynch & Co. bankers can be retried on charges they helped Enron Corp. defraud shareholders in a deal involving Nigerian power barges, an appeals court decided.
The 2004 convictions of former Merrill executives Daniel Bayly, James Brown and Robert S. Furst were overturned in 2006 by the U.S. Court of Appeals in New Orleans after it found the government tried them under an invalid legal theory. In a ruling posted yesterday on the court’s Web site, the appeals court rejected the men’s bid to block their retrial on constitutional grounds.
Prosecutors were found to have improperly applied federal laws concerning the theft of so-called “honest services.” The appeals court said the men weren’t guilty because they had acted in the company’s best interest and hadn’t personally benefited from the scheme to inflate Enron’s 1999 earnings through the sham sale of power-generating barges moored off the Nigerian coast to the investment bank.
“We could not have been clearer that our reversal was premised narrowly and solely on the failure of the honest services charge,” according to yesterday’s appellate decision. “The opinion implicitly, if not explicitly, recognized the possibility that criminal wrongdoing might be proved in a retrial” under different statutes.
Double Jeopardy
Attorneys for the investment bankers had urged the court to block the government’s retrial attempt under constitutional safeguards against double jeopardy, or being tried twice for the same offense.
Sydney Powell, Brown’s appellate attorney, said the appellate ruling doesn’t address the bankers’ allegations that their latest indictment, which doesn’t mention any theft of honest services, is also flawed.
“So we could all go through another trial, and the court would have to reverse again because the indictment does not state an offense,” Powell said in an e-mail.
Laura Sweeney, spokeswoman for the U.S. Justice Department, declined to comment on prosecutors’ plans to retry the three bankers.
Bayly’s lawyer, Tom Hagemann, and Paul Coggins, a lawyer for Furst, didn’t immediately return phone calls after regular business hours yesterday.
The appellate case is U.S. v. Brown, 08-20038, U.S. Court of Appeals for the Fifth Circuit (New Orleans).
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