Four former Merrill Lynch employees and an ex-Enron executive have been found guilty of fraudulently inflating the energy firm’s profits.
A jury convicted ex-bankers Daniel Bayly, Robert Furst, William Fuhs and James Brown of fraud and conspiracy.
Ex-Enron finance director Dan Boyle was also found guilty. They were accused of orchestrating the bogus sale of Enron-owned electricity barges to Merrill, artificially boosting the energy firm’s earnings.
Prosecutors said the deal was a loan in disguise, as the two sides had agreed to reverse the transaction later on.
A sixth defendant, former Enron accountant Sheila Kahanek, was found not guilty by the Houston jury. Those convicted face up to 15 years in prison, with sentencing due to take place at a later date.
During the trial, prosecutors said that the barge deal was an example of the kind of financial chicanery which led to Enron’s collapse three years ago.
Lawyers for the defendants argued that the deal was genuine, and said that in any case, their clients were too junior to have played a significant part.
Assistant U.S. Attorney General Christopher Wray said Wednesday’s verdict would serve as a warning to white collar criminals.
“Today’s verdict signals that executives committing corporate fraud will be vigorously investigated and prosecuted. Those who aid such fraud will meet the same fate,” he said.
Enron went bankrupt in December 2001 after it emerged that the company had hidden hundreds of millions of dollars in debt through a series of complex financial transactions.
The demise of Enron, a highly respected energy trading firm, dented investor confidence in corporate America, and sent shock waves through the financial markets.
Since Enron’s collapse, the company’s former chief financial officer, Andrew Fastow, has pleaded guilty to fraud and is helping prosecutors with their inquiries.
Former chairman Ken Lay and former chief executive officer Jeffrey Skilling are also facing multiple criminal charges.