Defense Launched in Enron Fraud Trial

Defendants in the first Enron Corp. criminal trial launched their defense Monday against charges that they engaged in a bogus barge sale to inflate the company’s profit.

The conspiracy and fraud trial in Houston of two former mid-level Enron employees and four former Merrill Lynch bankers centers on whether the companies had a secret pact to reverse the 1999 transfer of electricity-producing barges moored off Nigeria.

One of the first defense witnesses, Katherine Zrike, a Merrill Lynch lawyer, disputed prosecutors’ claims that Enron and Merrill had an oral agreement for Enron to repurchase the barges from Merrill within six months at a guaranteed price, making the deal a loan rather than a sale.

Prosecutors rested their case last week after testimony from more than a dozen witnesses, including former Enron officers Ben Glisan and Michael Kopper, who said the deal was designed to help Enron cover an earnings shortfall.