updated 10/10/2004 6:13:45 PM ET 2004-10-10T22:13:45

Former Enron Corp. finance chief Andrew Fastow and the man who replaced him when he was forced out are among roughly 50 potential witnesses for the defense phase of the fraud and conspiracy trial regarding the energy company’s alleged sham sale of several barges to Merrill Lynch & Co. at the end of 1999.

Prosecutors rested their case conditionally last week, with the issue of whether entire transcripts or excerpts of a defendant’s grand jury testimony to be presented to jurors awaiting the judge’s ruling. Once that is decided, the defense phase is expected to begin Monday.

However, the presence of Fastow and Jeff McMahon, as well as the six defendants themselves, on the combined defense witness list doesn’t mean they’ll testify. Prosecutors summoned 14 of more than 30 potential witnesses on their list.

“Who’s on the list doesn’t really have much value in terms of who they’re actually going to call,” said Kirby Behre, a former federal prosecutor in Washington, D.C. Often such lists simply alert adversaries as to who might testify, he said.

Fastow became the government’s most high-profile cooperating witness when he pleaded guilty to two counts of conspiracy in January.

Fastow expected to testify
He is expected to be a key witness in a separate criminal case pending against Enron founder Kenneth Lay, former CEO Jeffrey Skilling and former top accountant Richard Causey.

In that case, Skilling and Causey each face more than 30 counts of fraud, conspiracy, insider trading and lying to auditors, and Lay faces 11 counts of fraud, conspiracy and lying to banks. All three have pleaded innocent, and are awaiting a ruling on whether they will stand trial separately.

McMahon has not been charged with any crimes. He replaced Fastow as chief financial officer in mid-October 2001 as Fastow-orchestrated partnerships and financing methods designed to hide Enron debt, inflate profits and skim millions of dollars for himself began surfacing in detail. He resigned from Enron, after ascending to president and chief operating officer, as of June 2002.

Their names have come up repeatedly in the barge trial, which will enter its fourth week on Monday.

In the case, prosecutors contend four former Merrill executives and two former midlevel Enron executives helped push through a bogus sale so Enron could book a critical $12 million pretax profit to appear to have met earnings targets. The government says the deal was really a loan because Fastow and McMahon verbally promised Merrill’s $7 million investment would be bought out — by another buyer or Enron itself — at a premium within six months.

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