Opening arguments in the first criminal case against former Enron Corp. employees are set to begin after a federal court spent Monday whittling down a panel of Houston-area residents to find an impartial jury in the city still stinging from the company’s downfall.
In comments to the panel of 150 people, U.S. District Court Judge Ewing Werlein Jr. acknowledged the publicity that had swirled around the energy company that collapsed in scandal into bankruptcy in December 2001.
“I guess just about all of you would have seen something about those events,” he told the prospective jurors.
The case against the two ex-Enron workers and four former employees from Wall Street giant Merrill Lynch & Co Inc (MER.N: Quote, Profile, Research) concerns a 1999 deal to sell power-generating barges in Nigeria.
Prosecutors from the government’s Enron Task Force say Enron and Merrill had an unwritten agreement that Merrill would buy the barges, but that Enron or a third party would buy them back within six months at a guaranteed premium.
Enron booked the transaction as a sale and recorded a $12 million profit to help meet quarterly earnings targets, although legally the deal should have been recorded as a loan, prosecutors say.
Prosecutors and defense lawyers continued working into the evening on Monday to pare down the panel to a group of 12, plus four alternates, from the 45 members that Werlein has called back for Tuesday morning.
Defense lawyers in the case and two other pending criminal cases have complained that finding a fair jury in Houston would be difficult because Enron’s collapse had a dramatic impact on the city.
Thousands of people were lost their jobs and pensions when Enron folded into bankruptcy after its bogus bookkeeping methods were exposed, revealing billions of dollars in debt hidden in off-balance sheet partnerships.
Werlein said the trial was expected to last between four and seven weeks.
The defendants are former Enron finance director Dan Boyle, former accountant Sheila Kahanek and former Merrill bankers Daniel Bayly, Robert Furst, William Fuhs and James Brown.
The six face conspiracy and wire fraud charges, and Brown and Boyle face charges for lying about the transaction.
So far, 14 people have pleaded guilty to crimes linked to Enron’s downfall, including former Chief Financial Officer Andrew Fastow, who pleaded guilty to fraud and agreed to cooperate with prosecutors.
Ken Lay, Enron’s former chairman, his former Chief Executive Officer Jeffrey Skilling and the company’s former chief accounting officer, Richard Causey, are all facing multiple charges in a separate case related to the company’s downfall.
Five other former executives at Enron’s Internet broadband unit are scheduled to go on trial together in March 2005.