Jurors still have work to do after convicting several former Wall Street bankers and a former Enron Corp finance executive of conspiring to push through a sham deal.
In a move that mirrors penalty phases in state courts, US District Judge Ewing Werlein instructed jurors to hear evidence yesterday on whether prison sentences should be enhanced based on various factors, such as alleged financial loss from the deal.
The six men and six women on the jury will serve in an advisory capacity to the judge.
Werlein added the phase because of an unresolved dispute over federal sentencing guidelines that allow judges to increase sentences based on findings that aren't presented to juries.
On Wednesday the jury convicted four former Merrill Lynch & Co executives and a former Enron finance executive of conspiracy and fraud related to Enron's sham sale of floating power barges to Merrill in 1999 so the energy company could book a critical profit.
Jurors acquitted a sixth defendant, former in-house Enron accountant Sheila Kahanek.
The maximum sentences the five defendants face, depending on how many charges they were convicted of, ranges from 15 to 30 years.
But with the veracity of the federal sentencing system up in the air, "There's no standard here because it's pretty much being done on the fly," said Kirby Behre, a former federal prosecutor and an expert on federal sentencing guidelines.
Werlein had thought the US Supreme Court would have ruled on a dispute challenging the 17-year-old federal sentencing system as unconstitutional by the time a verdict was rendered in the barge case.
But the high court, which heard arguments on the issue Oct. 4, has yet to issue a decision on whether judges alone, not juries, can consider factors that can increase defendants' prison sentences.
So Werlein added a sentencing phase. Two experts are expected to testify -- one for the prosecution, one for the collective defendants -- on financial loss that allegedly emerged from the barge deal.
Prosecutors allege the loss exceeded US$80 million, though a government expert pegged it at US$43 million. The defense expert contends no financial loss to investors or anyone else resulted from the deal.
The defendants convicted in the barge case are Daniel Bayly, Merrill's former head of investment banking; James Brown, former head of the brokerage's asset lease group; William Fuhs, who answered to Brown; Robert Furst, Merrill's former Enron relationship manager; and Dan Boyle, a former Enron finance executive.
All five were convicted of conspiracy and two counts of wire fraud. Brown also was convicted of perjury and obstructing a grand jury, and Boyle also was convicted of lying to Senate investigators.