Case may get second phase

Monday, Nov. 1, 2004 | 9:07 a.m.

HOUSTON -- The first criminal trial to emerge from Enron Corp.'s 2001 collapse -- over the alleged sham sale of river barges in a scheme to help the energy company meet earnings targets -- could stretch into a second phase.

U.S. District Judge Ewing Werlein has told attorneys in the case that without a decision from the U.S. Supreme Court on the constitutionality of federal sentencing guidelines, he may add a sentencing phase to the case.

Four former Merrill Lynch and Co. executives and two former midlevel Enron executives face conspiracy and fraud charges for allegedly taking part in the sham sale of three barges in 1999 so the company could book a $12 million pretax profit critical to meeting earnings targets.

On Oct. 4 -- two weeks into the barge case -- the Supreme Court heard arguments in a case that challenges the federal sentencing system. Werlein said he expected the high court to rule by the time a verdict in the barge case was rendered. A verdict has not been rendered, but jurors are deliberating.

The high court has yet to issue a decision on whether judges -- not juries -- can consider factors that can increase defendants' prison sentences. Factors considered could include the number of victims or amount of financial loss from a fraud.

If the current federal sentencing system emerges from the high court challenge intact, convictions in the barge case could mean longer sentences.

But if the issue remains undecided when a verdict in the barge case is reached and a second phase is warranted, the same jury that decided the first phase would act as an advisory jury for sentencing purposes, hearing evidence related to increasing potential prison time.