updated 10/31/2004 4:00:17 PM ET 2004-10-31T21:00:17

The first criminal trial to emerge from Enron Corp.’s 2001 collapse could stretch into a second phase.

U.S. District Judge Ewing Werlein has told prosecutors and defense attorneys that without a decision from the U.S. Supreme Court on the constitutionality of federal sentencing guidelines, he will have to consider adding a sentencing phase to the case concerning former Enron and Merrill Lynch & Co. executives.

Werlein had thought the high court would have ruled in the dispute by the time a verdict was rendered. But the court has yet to issue a decision on whether judges alone, not juries, can consider factors that can increase defendants’ prison sentences under the 17-year-old federal sentencing system. Factors considered could include the number of victims or amount of financial loss from a fraud.

Deliberations continued Friday in the conspiracy and fraud case against four former Merrill Lynch executives and two former midlevel Enron executives. They are charged with helping push through Enron’s alleged sham sale of barges to the brokerage in 1999 so the energy company could book a profit and appear to have met earnings targets.

Prosecutors say the deal was really a loan because Enron promised to resell or buy back the barge interest in six months, guaranteeing Merrill wouldn’t lose money. The defendants say Enron was never obligated to resell or buy back the barges.

Longer sentences?
If the current federal sentencing system emerges from the high court challenge intact, convictions in the barge case could mean longer sentences.

But if the issue remains undecided when a verdict is reached and a second phase is warranted, the same jury that decided the first phase would act as an advisory jury for sentencing purposes. The jury would hear evidence related to increasing potential prison time.

The issue of sentencing arose in June, when justices ruled in a Washington state case that juries, not judges, should consider increasing a convict’s sentence.

The ruling overturned the seven-year prison sentence of a man whose punishment was increased by a judge who deemed the four-year maximum set by state guidelines to be too lenient. The defendant, Ralph Howard Blakely, was convicted of kidnapping his estranged wife in 1998.

The Blakely decision included a footnote by Justice Antonin Scalia that federal sentencing guidelines were not at issue in the Washington state case. Dissenters argued that the ruling would undermine or even obliterate the federal system, which was created to increase uniformity in sentencing.

The Blakely ruling prompted judges throughout the country to postpone sentencings or avoid the harsher sentences.

Supreme Court arguments
On Oct. 4 — two weeks into the barge case — the Supreme Court heard arguments regarding the challenge to the federal sentencing system.

The indictment against the barge defendants was expanded in July to add allegations that the deal led to $80 million in losses. The Department of Justice began adding information about possible sentence enhancements to federal indictments in light of the Blakely decision.

That indictment is among reams of documents available for jurors’ review during deliberations that began late Thursday in the barge case.

The Merrill defendants in the barge case are Daniel Bayly, former head of investment banking; James A. Brown, former head of the brokerage’s asset lease group; William Fuhs, who answered to Brown; and Robert Furst, Merrill’s former Enron relationship manager. The Enron defendants are former finance executive Dan Boyle and former in-house accountant Sheila Kahanek.

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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