Sentences May Shorten for Merrill, Enron Execs

A federal judge issued a ruling that could shorten the potential sentences of five former executives at Merrill Lynch & Co. and Enron Corp. who were convicted of conspiring to inflate the bankrupt energy trader’s earnings.

U.S. District Judge Ewing Werlein said in court papers released Monday that some of the jury’s findings in the penalty phase of the case were irrelevant in light of a recent U.S. Supreme Court ruling. The findings included the size of Enron’s loss and the role of the executives in the crimes.

The case stems from Enron’s 1999 sale to Merrill Lynch of a $7-million stake in three energy-generating barges that prosecutors said was a disguised loan to Enron to inflate the company’s earnings for that year. Before the ruling, some of the five executives faced prison terms of at least 15 years.

Werlein’s ruling “will certainly have some effect,” said William G. Rosch III, lawyer for Dan Boyle, the former Enron finance chief convicted in the trial. “But as to the effect on the length, severity or leniency of the sentence, I’m not Jimmy the Greek. I have no idea.”

When the former Enron officer and four former Merrill Lynch executives were convicted in November, Werlein convened a sentencing phase of the trial. Jurors were asked to determine the size of the loss suffered by victims of the fraud and whether each of the defendants had played aggravating or leadership roles in the crime. Such factors have been used in other cases to add years to the sentences of white-collar criminals.

This month, the U.S. Supreme Court ruled that judges were no longer bound by such jury determinations. Lawyers said after the ruling that it could lead to shorter sentences for corporate-fraud defendants.

“We’ll have to wait to see what the recommendation of the probation department is,” said Ira Lee Sorkin, lawyer for Robert S. Furst, a former Merrill Lynch managing director who was convicted. “In his ruling, the judge says he’ll rely on whatever the probation department recommends.”