A U.S. court has ordered the release from prison of two former Merrill Lynch & Co bankers convicted of fraud for helping Enron Corp artificially inflate its profit, the Wall Street Journal reported on its Web site on Thursday.
The story said the Fifth U.S. Circuit Court of Appeals ruled that Daniel Bayly, a former investment banking chief for Merrill, and Robert Furst, the bank’s Enron relationship manager, could be released on bail while they appeal their fraud convictions. Neither of the defendants’ lawyers were immediately available for comment.
Their cases relate to a deal in which Enron sold electricity-producing barges in Nigeria to the Wall Street bank, but later bought them back at a pre-set price.
Enron recorded the deal as a $12 million profit, enabling it to meet earnings targets for the year, even though it was technically a loan under accounting rules.
Last year, Bayly received a prison sentence of two and a half years and Furst was sentenced to 3 years and 1 month.
The court didn’t reverse the convictions, but the story cited lawyers saying that the ruling was a good sign for the defendants.
“It is hard to imagine why they would order defendants released from prison, unless the court was going to reverse their convictions,” the Journal quoted David Spears, who represents another former Merrill executive, William Fuhs.
Fuhs was released this year after he was sentenced last year to 3 years and 1 month in prison.