- The Washington Times - Sunday, June 6, 2004

HOUSTON (AP) — The first Enron criminal trial opens today with an expected rapid jury-selection process and defense questions about a last-minute revelation of information from the prosecution.

About 100 prospective jurors will gather to answer questionnaires and then be questioned, mostly by the judge.

In the meantime, defense attorneys plan to raise questions about statements made to investigators by former Enron finance chief Andrew Fastow that could favor the defendants.

“That’s not going away,” said William Rosch III, who represents one of the defendants, former Enron finance executive Dan Boyle, who was on Fastow’s staff.

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

Defense attorneys cried foul last week because they had learned about Fastow’s statements only days before the trial.

The government says the Fastow statements don’t constitute material that prosecutors are obligated to provide, but they informed the defense out of an “abundance of caution.”

Enron, which in 2000 claimed to have $100 billion in revenues, went bankrupt in December 2001, when revelations surfaced that its success was a facade.

The six defendants are charged with conspiracy amid accusations that they helped push through Enron’s sham sale of three barge-mounted power plants to Merrill Lynch & Co. in December 1999 to help the energy company appear to have met earnings targets. They have pleaded not guilty.

Prosecutors say Fastow verbally promised that Enron would buy back the barges from Merrill within six months, wiping out the legitimacy of the sale of the floating power plants.

Last week, prosecutors revealed that Fastow had told investigators he wasn’t explicit about the certainty of the buyback, which is central to the conspiracy charges. Prosecutors, however, contend that the defendants got the message.

It is not clear 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 separate from Enron even though Fastow ran it.

In addition to Mr. 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 Mr. Bayly; James A. Brown, former head of Merrill’s asset lease and finance group; and William Fuhs, former vice president who answered to Mr. Brown.

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