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Lawyers winnowing jurors in first criminal Enron trial

A judge overseeing the first criminal trial involving former Enron Corp. executives told prospective jurors Monday that he didn't expect them to have "come out of some hole somewhere" and not know of the former energy-trading giant.

Those chosen for the panel will decide if four former Merrill Lynch & Co. executives and two former midlevel Enron executives participated in the sham sale of electricity-producing Nigerian barges to the brokerage in 1999 to prop up Enron's earnings.

On Monday, lawyers whittled the 150-member pool to 50 candidates, and were expected to return today to seat 12 jurors and four alternates.

U.S. District Judge Ewing Werlein told the prospective jurors that he expected they would at least would have heard of Enron or the demise of Arthur Andersen, convicted two years ago of covering up for its accounting client.

When asked if any of the jury pool had heard specifically of the barge case, about 10 people raised their hands. Two others said they were familiar with at least one of the lawyers involved in the case.

Questionnaires distributed to the potential jurors asked if they had any ties to Enron, Merrill Lynch or Andersen, if they or someone close to them had a financial interest in the companies and if they were hurt by the collapse of Enron and Andersen.

None of the six defendants have the notoriety of Enron's former top managers, such as founder Kenneth Lay and former CEO Jeffrey Skilling.

Werlein mentioned Skilling on Monday as one of the names jurors would hear during the trial. He also cited former Enron finance chief Andrew Fastow and former chief accounting officer Rick Causey, although none of the three is on the prosecution witness list.

Prosecutors contend that Merrill Lynch's hunger for lucrative banking business from Enron prompted the Merrill Lynch defendants to help push through the sham sale nearly two years before Enron crashed in scandal. While the scheme is not alleged to have contributed to Enron's December 2001 bankruptcy, prosecutors say it's one of many the company used to polish a facade of success.

The six defendants are charged with conspiracy and fraud, and three face additional charges of lying to investigators or a grand jury. Prosecutors say they knew the sale was a sham because Enron secretly promised to buy back the barges.

The defendants, who have pleaded innocent, are Daniel Bayly, former chairman of investment banking for Merrill Lynch; Robert S. Furst, the former Enron relationship manager for Merrill Lynch; James A. Brown, former head of Merrill Lynch's asset lease and finance group; William Fuhs, former Merrill Lynch vice president who answered to Brown; Dan Boyle, a former finance executive on Fastow's staff; and Sheila Kahanek, a former in-house Enron accountant.

The brokerage itself avoided prosecution a year ago by acknowledging that some employees may have broken the law, cooperating with the government and implementing reforms that prohibit dubious deals. Six months earlier, Merrill Lynch paid the Securities and Exchange Commission $80-million to settle allegations involving the barge deal without admitting wrongdoing.

Fastow, who became the government's most high-profile cooperating witness in January when he pleaded guilty to two counts of conspiracy, is alleged to have assured Bayly that Enron would buy back the barges.

Skilling and Causey each face more than 30 counts of conspiracy, fraud, lying to auditors and insider trading that span nearly two years until Enron filed for bankruptcy. Causey also faces several counts of money laundering. Lay faces 11 counts of conspiracy, wire fraud, bank fraud and lying to banks.