Two former Merrill Lynch & Co. executives convicted in Enron Corp.'s bogus sale of power barges to the brokerage were sentenced Thursday to prison terms far shorter than the punishment sought by the government.
James A. Brown, former head of the brokerage's asset lease group, was sentenced to three years and 10 months in prison and a year's probation. Daniel Bayly, former head of investment banking for Merrill Lynch, was sentenced to 2 1/2 years incarceration and six months probation. Each was ordered to pay $840,000 in fines and restitution. Both men live in Darien, Conn.
Federal probation officers had recommended up to 15 years for Bayly and up to 33 for Brown for their roles in the bogus sale. Their case illustrated Wall Street participation in Enron crimes through the brokerage's choice to take part in a sham deal to make a lucrative client happy.
U.S. District Judge Ewing Werlein, who sentenced the men, criticized the pursuit of sentences longer than the maximum 10-year sentence that awaits former Enron finance chief Andrew S. Fastow, who ran bogus schemes that rotted Enron.
"The defendant is correct to observe that this would be a harsh and irrational result," Werlein said of the recommended term for Brown.
Both men gave statements to the judge before their separate sentencings.
"Since I was indicted, I have been branded a liar and a criminal; I could no longer make a living in my chosen profession," Brown said.
"This whole experience has been devastating to me," Bayly said.
Fastow had faced 98 counts including fraud, conspiracy, insider trading and money laundering. Last year he pleaded guilty to two counts of conspiracy for hiding Enron debt and inflating profits while pocketing millions for himself.
A decade is the maximum sentence for two conspiracy counts, though Fastow can shave a year and a half from that with credit for good behavior.
Werlein rejected the government's contention that investors suffered a $43.8-million loss by overpaying that amount for Enron shares after the barge deal helped the company make its earnings targets, undercutting the main factor supporting double-digit sentences. Enron collapsed in 2001.
The judge also rejected prosecutors' notions that Merrill defendants were leaders or organizers, which also can lengthen a prison term.