In my investigation of the Jamie Olis case, I wrote:

Following the collapse of Enron in December 2001, the city of Houston became the center for prosecutions of executives in the oil and gas industry. Men and women—innocent and guilty—were paraded before howling mobs and dragged into prejudiced courts, with no effort to determine whether they were con artists or wheeler-dealers, whether they had schemed to commit frauds or had merely run afoul of convoluted securities regulations.

Prosecutors, politicians, and the press—flouting their own codes of conduct— ignored all such distinctions and whipped up mass hysteria against the suspects, denouncing them as barely human creatures who had conspired in secret to ruin ordinary people, in order to slake an insatiable lust for wealth. Someday, I have no doubt, historians will write about Houston’s twenty-first century “rich-hunt” trials as they now write about Salem’s seventeenth-century witch-hunt trials.

No one has documented the great Houston rich-hunt as meticulously as Tom Kirkendall, a defense lawyer in that city who blogs at Houston’s Clear Thinkers . In his professional capacity, Kirkendall represented Jeff McMahon, who was at one point Enron’s Treasurer but who moved up rapidly as the company collapsed: first replacing the disgraced Andy Fastow as Chief Financial Officer in October 2001, and then becoming Chief Operating Officer and President in January 2002.

Kirkendall has been especially meticulous in following the so-called Nigerian Barge case, the first Enron case to go to trial. No doubt, that is because McMahon was part of the Nigerian Barge story during his time as treasurer, although he was never indicted in the matter. (Many years later he settled an SEC civil suit by paying a small fine but without admitting guilt.) For that reason, everyone who wishes to write honestly about the Nigerian Barge case is compelled to draw on Kirkendall’s reporting, and I have done so extensively for the comment below.

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According to Kirkendall, the Enron Task Force (ETF) threatened to destroy Merrill Lynch (as it would soon destroy Arthur Andersen), unless the firm handed over some sacrificial lambs in the Nigerian Barge matter. This Merrill did, being no more inclined than most other capitalist organizations to retrieve its wounded . The four handed over were: James A. Brown (head of Merrill’s Strategic Asset and Lease Finance Group), William Fuhs (a vice president under Brown); Dan Bayly (head of Merrill’s Global Investment Banking division), and Robert Furst (an employee under Bayly, responsible for Enron business).

The basic charges against the four were that they had committed mail and wire fraud. In addition, Brown was charged with committing perjury and obstruction of justice because of his testimony to the grand jury that indicted him. On November 2004, all four were convicted, and in the Spring of 2005 all were sentenced to prison terms: Brown to 46 months; Bayly to 30 months; Furst and Fuhs to 37 months. Naturally, all appealed, but their imprisonment was not postponed while their appeals were being heard.

That proved to be a terrible miscarriage of justice. For in August 2006, after all of the defendants had served more than a year in prison, the Fifth Circuit Court of Appeals threw out most of their convictions. The conviction of Fuhs was tossed entirely, as being based on insufficient evidence. The convictions of Bayly and Furst were vacated on all counts; and the conviction of Brown was vacated on all counts except the perjury and obstruction charges.

The reason for this sweeping reversal was simple: The charges against the men had been based on the doctrine of honest-services fraud, which the Fifth Circuit Appeals Court was even then finding to be flawed. Still, apart from the Fuhs case, prosecutors were free to prosecute the defendants’ actions anew, under some different theory of fraud, and for several years it appeared that the government would do just that.

Finally, three and a half years later, in January 2010, the government gave up on its prosecution of Daniel Bayly and dropped all charges against him. Four months after that, in May, the government gave up on its prosecution of Robert Furst and entered into a deferred prosecution agreement, which said that if he were a good boy for a year the government would to drop all charges against him.

But the persecution of James Brown continued. Essentially, the government decided to scratch the words “honest fraud” from its indictment of him and to try him again. This new trial was set to begin on September 20, 2010.

"[T]he government has no legitimate bases for a continuance–certainly none that can overcome the outrageous prejudice to Brown (and the taxpayers)."

-from Brown's Opposition to Continuance

Then, on September 10, just ten days before the trial was to begin, the government asked for an indefinite continuance of the proceedings. Their reason, ostensibly, was that Brown had long ago filed a motion for a new trial on the counts of perjury and obstruction of justice, alleging that the government had previously withheld exculpatory evidence from the defense. Brown’s motion had been denied by the trial judge, but naturally Brown was appealing the denial. Under the circumstances, the government said, we should wait to see how that appeal goes. If Brown wins a new trial on those charges, then we will want to merge that retrial with this retrial on the first three charges.

It sounded reasonable enough. But on Monday (September 13), the defense struck back with some absolutely astounding facts about the real reasons behind the government’s request:

“Our trial preparation has disclosed that the government has not contacted any of the persons who have knowledge of the transaction [at the base of its prosecution] and who it presented in its case-in-chief in 2004. Indeed, it has not even contacted its ‘star witness,’ Ben Glisan, from Brown I ‘in years.’ Nor has it contacted its lone Merrill Lynch witness, Tina Trinkle, about Brown’s trial. Trinkle was the only individual whose testimony even alleged that Brown might have participated in one internal Merrill call regarding the government’s purported criminal conspiracy. The government’s failure even to notify its key witness of the long-scheduled September 20 trial suggests that the government has been using the court to run an outrageous ‘bluff’—demonstrating the Department’s continuing disinguous gamesmanship with Brown’s life and liberty.”

On Wednesday, the trial judge denied the government’s motion for a continuance, and the government immediately filed a motion to drop all charges against Brown. On Thursday, the motion was granted.

In his blog post discussing this sudden turn of events, Kirkendall wrote: “So, what was the government's purpose in putting James Brown and his family through the wringer over the past seven years? Ayn Rand's observation about socialists who use state power to further their supposedly altruistic goals seems particularly apt: ‘[T]he truth about their souls is worse than the obscene excuse you have allowed them, the excuse that the end justifies the means and that the horrors they practice are means to nobler ends. The truth is that those horrors are their ends.’”

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