James Brown Supplemental Memorandum in Support of Motion For A New Trial

Case 4:03-cr-00363 Document 1217 Filed in TXSD on 07/09/10 Page 1 of 22
UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
UNITED STATES OF AMERICA, §

Plaintiff, §
§
v. § CR. NO. H-03-363-2 (Werlein, J.)
§
JAMES A. BROWN, §
Defendant. §
DEFENDANT JAMES A. BROWN’S SUPPLEMENTAL MEMORANDUM IN SUPPORT

OF HIS MOTION FOR NEW TRIAL, DKTS. 1004, 1020, 1030, 1061, 1160, 1201.
PORTER & HEDGES LLP SIDNEY POWELL, P.C.
DANIEL K. HEDGES SIDNEY POWELL

Texas Bar No. 09369500 Texas Bar No. 16209700
1000 Main Street, 36th Fl. TORRENCE E. LEWIS

Houston, TX 77002 IL State Bar No. 222191
Telephone: (713) 226-6000
Facsimile: (713) 228-1331 3831 Turtle Creek Blvd. #5B
Dallas, Texas 75214
Phone: (214) 653-3933
Fax: (214) 319-2502
ATTORNEYS FOR DEFENDANT JAMES A. BROWN

TABLE OF CONTENTS
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
I. The ETF-Highlighted Dolan 302 Produced March 30, 2010, Shows

That The ETF Deliberately Withheld Clear Exculpatory Evidence of
Dolan’s Knowledge And Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
II. The ETF-Highlighted Production Proves Ruemmler Deliberately Withheld

From the Court-Ordered Summary Zrike’s Exculpatory Statements About The
Best-Efforts Representations And Why It Was Not In the Documents. . . . . . . . . . . . . . . 6
III. The ETF-Highlighted Brady Materials Prove That The Task Force Deliberately
Withheld Exculpatory Evidence Of McMahon That Proves Brown’s Innocence
And ETF Misconduct At Trial. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1. Enron Never Promised Or Made Any Guarantee To Merrill That It Would

Receive A Rate-Of-Return, Buy-Out, Or Specific Sale Price. . . . . . . . . . . . . . . . . 8
2. Fastow Actually Agreed To Oral Assurances That Enron Would Use Its
Best Efforts To Assist In Re-Marketing Merrill’s Equity Interest To A
Third-party. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
IV. Evidence Prosecutors Concealed Proves That Key Government Witnesses Gave
Wrong Or Perjured Testimony. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
V. The ETF-Highlighted Evidence Proves That Prosecutors Deliberately Withheld

The Exculpatory Evidence Of Merrill Executive Schuyler Tilney Since 2004. . . . . . . . 11
VI. Brown Is Entitled To Discovery, An Evidentiary Hearing, and A Dismissal. . . . . . . . . 13
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
CERTIFICATE OF SERVICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ii
CHARTS:
Exculpatory Evidence That the Etf Itself Highlighted As Brady Material but
Then Withheld from the Court-Ordered Brady “Summary” in 2004–materials
Disclosed To Brown on 03-30-10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Concealed Exculpatory Evidence Directly Refutes Prosecutors’ Statements

at Trial and Proves Egregious Misconduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Government Concealed Crucial Brady Material From Zrike’s SEC Testimony . . . . . . . . . . 3
Zrike’s Grand Jury Testimony Proves an Egregious Brady Violation,

Misconduct and Brown’s Innocence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Zrike’s 302 Proves Egregious Brady Violations And ETF Misconduct at Trial . . . . . . . . . . . . . . 5
McMahon’s Raw Notes Prove an Egregious Brady Violation And Brown’s Innocence . . . . . . . 6
ETF-Highlighted McMahon Raw Notes Contain Material it Recognized as Brady

and Which Belies Government Representations at Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Fastow Raw Notes Prove Egregious Brady Violations And That Brown’s
Testimony Was True . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Tilney Raw Notes Prove Egregious Brady Violations And Brown’s Innocence . . . . . . . . . . . . . . 9
The Belated Disclosure of Hoffman’s Exculpatory Evidence Proves a Brady

Violation and Brown’s Innocence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
All Call Participants Verify Brown’s Grand Jury Testimony Was True . . . . . . . . . . . . . . . . . . . 11
EXHIBITS:
Neil A. Lewis, Tables Turned On Prosecution In Stevens Case,

N.Y. TIMES, April 7, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-1
Order of Dismissal - Stevens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2
Excerpts of Transcript of Hearing, United States v. Stevens,

No. 1:08-cr-00231-EGS (D.D.C. April 7, 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-3
iii
Dolan’s 302 Showing ETF Omissions and Alterations

(ETF Highlighted Dolan 302 Produced March 30, 2010 and
ETF “Brady Disclosure” of July 30, 2004 on Dolan] . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-1, B-2
ETF Highlighted Zrike Grand Jury Testimony Produced March 30, 2010 . . . . . . . . . . . . . . . . . C
ETF Highlighted McMahon Raw Notes Produced March 30, 2010 . . . . . . . . . . . . . . . . . . . . . . D
Mary Flood, Star Witness in Enron Trial Could Testify Tuesday,

HOUS. CHRON ., October 4, 2004, . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E
ETF Highlighted Tilney Raw Notes Produced March 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . F
iv
TABLE OF AUTHORITIES
Cases Page(s)
Brady v. Maryland,
373 U.S. 83, S. Ct. 1194 (1963) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Drake v. Portuondo,
553 F.3d 230 (2d Cir. 2009) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Giglio v. United States,

405 U.S. 150, 92 S. Ct. 763 (1972) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4
Kyles v. Whitley,
514 U.S. 419, 115 S. Ct. 1555 (1995) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3, 4
Leka v. Portuondo,
257 F.3d 89 (2d Cir. 2001) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Napue v. Illinois,
360 U.S. 264, 79 S. Ct. 1173 (1959) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 5, 10
Tassin v. Cain,
517 F.3d 770 (5th Cir. 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
United States v. Andrews,

532 F.3d 900 (D.C. Cir. 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
United States v. Bayly,

2008 WL 89624 (S.D. Tex. 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
United States v. Burnside,

824 F. Supp. 1215 (N.D. Ill. 1993) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
United States v. Carmichael,

269 F.Supp.2d 588 (D.N.J. 2003) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
United States v. Chapman,

524 F.3d 1073 (9th Cir. 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
United States v. Cuffie,

80 F.3d 514 (D.C. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
v
United States v. Dollar,

25 F. Supp. 2d 1320 (N.D. Ala. 1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
United States v. Espinosa-Hernandez,

918 F.2d 911 (11th Cir. 1990) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
United States v. Hamilton,

559 F.2d 1370 (5th Cir. 1977) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
United States v. Manners,

— F.3d —, 2010 WL 2546109 (5th Cir. 2010) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
United States v. Omni Intern. Corp.,

634 F. Supp. 1414 (D. Md. 1986) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 14, 15
United States v. Quinn,

537 F. Supp. 2d 99 (D.D.C. 2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
United States v. Ramming,

915 F. Supp. 854 (S.D. Tex. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
United States v. Smith,

77 F.3d 511 (D.C. Cir. 1996) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
United States v. Wall,

389 F.3d 457 (5th Cir. 2004),
cert. denied, 544 U.S. 978, 125 S. Ct. 1874 (2005) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
United States v. Wallach,

935 F.2d 445 (2d Cir. 1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
United States v. Williams,

233 F.3d 592 (D.C. Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Other Authorities
John C. Hueston, Behind the Scenes of the Enron Trial:

Creating the Decisive Moments, 44 AM . CRIM . L. REV . 197 (2007) . . . . . . . . . . . . . . . . . . . . . . 10
Rules
18 U.S.C. § 3161 (h)(1)(D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
vi
On March 30, 2010, Brown received a production of 1005 pages of Brady material from Mr.
Stokes.1 Careful review of the electronic copy disclosed that the disk contains highlighting of Brady
material selected by the ETF itself in 2004. The highlighted material was the basis for the ETF’s
“summaries” that this Court ordered to be given to the defense in 2004–over government
objection–after its in camera review. Additional scrutiny disclosed startling misconduct: the ETF
withheld from the court-ordered summaries irrefutable Brady material of Zrike, Dolan, Tilney
and McMahon–that the ETF had itself highlighted in these documents. This could only have
been a strategic and deliberate decision to keep this material from the defense before trial, and it
raises a host of new questions that mandate an evidentiary hearing.
The conclusion is now inescapable that the ETF engaged in a calculated, multi-step process
to deprive Brown of his constitutional right to Due Process. (1) They repeatedly denied the existence
of Brady material, told this court they had met their Brady obligations and fought vehemently against
producing anything (Dkt.1168, Charts 1, 2). (2) They highlighted only selected material in a
veritable garden of Brady evidence–much of their selections being vague, tangential or
marginal–while working around clear, declarative, relevant exculpatory material even in the same
page, paragraph or document. (3) When ordered by the Court to produce summaries to the defense,
they further redacted even the Brady material they had themselves highlighted and withheld the
crucial facts that they had highlighted as Brady. (4) They egregiously capitalized on their
1
New prosecutors began dribbling out real Brady material to the defense in December 2007 and
again as recently as June 2010. Each time there is a production, startling new Brady violations come to light.
See Dkt. 1168, Charts 1-10. The hearing will expose more. In the March letter, Stokes stated: “The disk
contains scanned copies of the witness statements, notes and grand jury transcripts submitted to the court,
pursuant to its request, on June 1, 2004. These documents formed the basis of the government’s July 30,
2004, disclosure letter.”
1
misconduct at trial by making assertions that were directly belied by the exculpatory evidence they
withheld. (5) And, to this day, despite Judge Sullivan’s actions in Stevens and “changes” in DOJ
discovery policy, current prosecutors still deny any Brady violation or misconduct here and
adamantly oppose a hearing on the issues.
The prejudice at trial from the ETF’s misconduct was palpable and overwhelming. Defense
counsel were like “deer in headlights.” In just one example of many, Merrill counsel Zrike went
from being the witness who could have and should have exonerated all defendants (had her Brady
material been disclosed pre-trial as required)2 to the witness who Friedrich told the jury was
“devastating to the defense.” This was possible only because the Task Force concealed that Zrike
knew about the buy-back issue, tried to incorporate the best efforts agreement in the documents, and
that Enron’s counsel, V & E, rejected it because it could be deemed a buy-back and they would not
allow Enron to retain any risk that would mitigate Enron’s gain on the sale.
These 1005 pages of documents produced electronically this March prove beyond refute that
the Task Force prosecutors selectively withheld declaratory, exculpatory statements by key witnesses
with personal knowledge that went to the heart of the defense and exonerated all defendants on all
charges. Instead of seeking truth, prosecutors obtained convictions built purely on hearsay,
misrepresentations, and deliberately-created misunderstandings or outright lies that were belied by
the first-hand evidence they withheld. See Chart 1 (deliberate omissions from the highlighted
material); Chart 2 (misrepresentations refuted), infra. These egregious Due Process violations
caused the wrongful conviction and imprisonment of four men who were innocent of all charges.
2
As soon as Zrike left the grand jury, having given truthful Brady evidence which the ETF withheld,
the ETF notified her counsel that her status changed from subject to “target.”
2
All are now free of prosecution except Brown.3 Prosecutorial misconduct deprived Brown of any
semblance of a fair trial. Brown spent a year in prison while the government hid the truth. At a
minimum, Brown is entitled to a new trial and to a hearing on this motion.
Sunlight is a powerful disinfectant. The reason the government so strongly opposes a hearing
on this motion is because it does not want its misconduct exposed–as it has been recently in
Broadcom, Stevens and other cases. Yet, the Brady violations here are as egregious as in the Stevens
prosecution, in which the government ultimately confessed its Brady violations and dismissed rather
than face a hearing.4 Judge Sullivan referred the prosecutors for criminal investigation.5 As Judge
Sullivan’s decisive acts exemplify, this Court’s Article III independence and status as an equal
branch of government were created to protect Brown’s constitutional rights against the government’s
wrongdoing–not to protect the government from its constitutional obligations and violations.
The government’s misconduct violated at least two separate constitutional rules, either of
which requires a new trial. First, under the dictates of Brady v. Maryland, 373 U.S. 83, 87, 83 S. Ct.
1194, 1196-97 (1963), “suppression of material evidence justifies a new trial irrespective of the good
faith or bad faith of the prosecution.” Giglio v. United States, 405 U.S. 150, 153, 92 S. Ct. 763, 766
(1972) (citations omitted); United States v. Andrews, 532 F.3d 900, 905 (D.C. Cir. 2008) (“If the
undisclosed evidence is material, a new trial is required.”) (citing Kyles v. Whitley, 514 U.S. 419,
3
Fuhs was acquitted by the Fifth Circuit after serving 8 months in a maximum security prison. All
charges were recently dismissed in full against Bayly.
4
Matthew Friedrich was involved in both cases. See http://www.c-spanvideo.org/program/282050-3
(last visited July 9, 2010) (Friedrich, bragging about the work of the Stevens prosecutors).
5
Neil A. Lewis, Tables Turned On Prosecution In Stevens Case, N.Y. TIM ES , April 7, 2009,
attached hereto as Exhibit A-1. See also Order (Exhibit A-2), and Transcript of Hearing, United States v.
Stevens, No. 1:08-cr-00231-EGS (D.D.C. April 7, 2009) (vacating jury verdict and ordering dismissal of
indictment), excerpts attached hereto as Exhibit A-3.
3
421-22, 115 S. Ct. 1555, 1560 (1995)). “The question is not whether the defendant would more
likely than not have received a different verdict with the evidence, but whether in its absence he
received a fair trial, understood as a trial resulting in a verdict worthy of confidence.” Kyles, 514
U.S. at 434, 115 S. Ct. at 1566. “Brady violations are just like other constitutional violations.
Although the appropriate remedy will usually be a new trial, a district court may dismiss the
indictment when the prosecution’s actions rise . . . to the level of flagrant prosecutorial misconduct.
Chapman, 524 F.3d at 1086. Cf. United States v. Ramming, 915 F. Supp. 854 (S.D. Tex. 1996);
United States v. Dollar, 25 F. Supp. 2d 1320 (N.D. Ala. 1998).6
Second, the Due Process Clause forbids the government from introducing or failing to correct
testimony that it knows or reasonably should know to be false. Napue v. Illinois, 360 U.S. 264, 269,
79 S. Ct. 1173, 1177 (1959) (noting “[t]he principle that a State may not knowingly use false
evidence, including false testimony, to obtain a tainted conviction, [is] implicit in any concept of
ordered liberty”); Giglio, 405 U.S. at 153, 92 S. Ct. at 766 (The Supreme “Court [has] made clear
that deliberate deception of a court and jurors by the presentation of known false evidence is
6
“Evidence is material if ‘the undisclosed information could have substantially affected the efforts
of defense counsel to impeach the witness, thereby calling into question the fairness of the ultimate verdict.’”
United States v. Cuffie, 80 F.3d 514, 517 (D.C. Cir. 1996) (quoting United States v. Smith, 77 F.3d 511, 515
(D.C. Cir. 1996)). Brown is also entitled to a new trial and a dismissal of the indictment under this Court’s
supervisory powers. Even where government misconduct is not sufficiently “outrageous” to violate due
process, the Court under its supervisory powers may impose various sanctions, including dismissal. United
States v. Chapman, 524 F.3d 1073, 1084 (9th Cir. 2008) (affirming dismissal pursuant to the court’s
supervisory powers due to government’s violation of discovery obligations and flagrant misrepresentations
to court). “Repeated instances of deliberate and flagrant misconduct justify dismissal of the indictment,”
United States v. Omni Intern. Corp., 634 F. Supp. 1414, 1438 (D. Md. 1986), both “to vindicate a defendant’s
rights in an individual case” and “primarily to preserve the integrity of the judicial system.” Id. (citations
omitted) (emphasis added). Brown has exhaustively set forth the legal authority for (1) a new trial because
of Brady violations and/or under the five-factor Berry test, Dkts.1004, 1020, 1030, 1061, 1160, 1201, and
(2) dismissal of the indictment for prosecutorial misconduct. Dkts. 1168, 1204. He is entitled to a new trial
under either or all of the standards. Brown’s prior briefing on these matters is incorporated herein by
reference.
4
incompatible with rudimentary demands of justice.”) (citation omitted); accord Tassin v. Cain, 517
F.3d 770, 776 (5th Cir. 2008).7 “Because the integrity of our justice system relies on the presentation
of truthful evidence for a jury to evaluate, ‘the prosecution’s knowing use of false testimony entails
a veritable hair trigger for setting aside the conviction.’” United States v. Quinn, 537 F. Supp. 2d
99, 120 (D.D.C. 2008) (Bates, J.) (citation omitted).8
I. The ETF-Highlighted Dolan 302 Produced March 30, 2010, Shows That The ETF
Deliberately Withheld Clear Exculpatory Evidence of Dolan’s Knowledge And Actions.
Attached as Exhibit B-1 is the Dolan 302 as it was highlighted by the ETF itself. Those
highlights surround–but omit or the disclosure alters–the crucial facts, inter alia, that: (1) Dolan
himself deleted the buy-back language from the engagement letter; (2) Dolan explained his notes
which reflected his knowledge of the deal, the fees to ML, and the gain to Enron; (3) he told Wilson
to make changes to the engagement letter; and, (4) it was his handwriting on the document.
Prosecutors therefore flat-out lied when they accused Fuhs and Brown’s group of deleting the buy-
back language to hide it from the lawyers and auditors. Dolan had told them he did it. Ex. B-1, B-2,
Chart 2, infra.
7
“The same result obtains when the State, although not soliciting false evidence, allows it to go
uncorrected when it appears.” Napue, 360 U.S. at 269, 79 S. Ct. at 1177.
8
See also United States v. Williams, 233 F.3d 592, 594 (D.C. Cir. 2000) (“[t]he phrase –
‘reasonable likelihood,’ ‘could have affected’ – mandates a virtual automatic reversal of a criminal
conviction”) (citation omitted). “Napue sets forth a very defense-friendly standard. A defendant need only
show that false testimony was presented at trial, that the government knew, or should have known, that the
testimony was false, and that there is reasonable likelihood that the false testimony could have affected the
judgment of the jury.” Quinn, 537 F.Supp.2d at 120. See also Drake v. Portuondo, 553 F.3d 230, 241 (2d
Cir. 2009) (“if it is established that the government knowingly permitted the introduction of false testimony,
reversal is virtually automatic”) (quoting United States v. Wallach, 935 F.2d 445, 456 (2d Cir. 1991)). This
Court (and the government) relied exclusively on Wallach to deny Brown’s Motion to Dismiss for facial
insufficiency of the indictment. United States v. Bayly, 2008 WL 89624, *4-5 (S.D. Tex. 2008). Hopefully,
the Court will rely on the same opinion when Wallach requires granting Brown a new trial.
5
In an even more egregious and flagrant constitutional violation, in crafting her “Brady
summary,” Ruemmler further omitted the Brady material the ETF itself had highlighted–the clear
statement explaining why Dolan changed the engagement letter and deleted the buy-back language:
“such an agreement would be improper because such a transaction could be viewed as a ‘parking’
transaction.” Exhibit B-2 [Dolan 302]. And, she omitted: “Dolan’s understanding was that ML
purchased an interest in the Nigerian Barges with the expectation that Enron would help ML find
a buyer for ML’s interest in the barges.” She also deleted the word “subsequent” in reference to a
conversation between Dolan and Brown which proved Brown never agreed with Merrill’s
participation in the transaction. See Ex. B-2, infra.
II. The ETF-Highlighted Production Proves Ruemmler Deliberately Withheld From the
Court-Ordered Summary Zrike’s Exculpatory Statements About The Best-Efforts
Representations And Why It Was Not In the Documents.
The ETF highlighted, but Ruemmler withheld the crucial statement that Zrike made to the
grand jury: “The fact that they would not put in writing an obligation to buy it back, to, indemnify
us, all those things were consistent with the business deal and were not things that I felt were
nefarious and were problematic.” Zrike GJ, Dkt.1168, Ex. F, at p. 75; Exhibit C, infra. Ruemmler
could have only purposely omitted this from the “summary” because she included the sentence after
it on the same page. In addition, the ETF withheld all Zrike’s testimony and statements
regarding the best-efforts assurances and her attempts to document it from nearby pages.
Dkt.1168, Ex. F, at pp. 55, 63-64, 66-70. After hiding the truth, the prosecutors then made
outrageous misrepresentations to the Court and jury that were directly refuted by the evidence they
concealed–including that Zrike was “devastating to the defense” and arguing that the defendants
were all liars because there was no best efforts agreement in the documents and defendants could not
6
explain why. Charts 2-5, infra.9 There is no innocent explanation for this flagrant misconduct, and
it was extremely prejudicial to Brown. Zrike’s grand jury material, SEC testimony (never disclosed),
not to mention her 302, could have been used by defense counsel to prepare to examine Zrike and
to prepare the entire defense–from opening statement throughout the trial. It was the crux of the
defense. Zrike knew everything that was discussed and negotiated, beyond the defendants, and the
deal was lawful. This evidence alone or in combination with other egregious omissions–exacerbated
ten-fold by outrageous representations by the ETF at trial and belied by what they withheld–screams
injustice, and leaves no confidence in the jury’s verdict. Charts 1-11, infra.
III. The ETF-Highlighted Brady Materials Prove That The Task Force Deliberately
Withheld Exculpatory Evidence Of McMahon That Proves Brown’s Innocence And
ETF Misconduct At Trial.
The recently disclosed raw notes of McMahon’s interviews in 2002 exonerate Brown on all
counts. Exhibit D. McMahon was unavailable to Brown at trial (Tr. 5260-61), and the government
made only a four-line, misleading disclosure of his statements.10 As with the Dolan “summary,”
Ruemmler deliberately withheld statements the ETF had previous highlighted in obvious recognition
that it was Brady material. See Ex. D, at 000478, 494, 513-515, 544, 560. The following highlights
and other excerpts from the same notes show that the ETF has known and withheld these crucial
exculpatory facts since as early as 2004:
9
The ETF did not even list Hoffman as possessing Brady evidence. The withheld evidence of
Hoffman establishes that Hoffman also saw the buy-back language in the draft engagement letter, discussed
it with Dolan, and knew it was deleted. See FBI 302 of Alan Hoffman, October 12, 2002, Dkt. 1204, Ex. A.
10
“McMahon did not recall any definite push to get the NBD done by year end. Merrill wanted
Enron/Fastow’s assurance that Enron would use best efforts to syndicate or find a buyer for these assets. It
was not unusual for this type of agreement not to be in writing. McMahon does not recall any guaranteed take
out at the end of the 6 month remarketing period.” Dkt.1168, Exhibit O, at p. 7. This disclosure was taken
from the notes of only one interviewer, Stephanie Segal. Exhibit D, at DOJ-ENRONBARGE-000529, infra.
7
1. Enron Never Promised Or Made Any Guarantee To Merrill That It Would

Receive A Rate-Of-Return, Buy-Out, Or Specific Sale Price.
Highlighted by the ETF–but withheld: No recollection of a promise (to re-buy) outside best-
efforts promise in the phone call. Ex. D, DOJ-ENRONBARGE-000544 (Alex DeMots). Andy said
– Enron help remarket in next six months. Id. at 000560 (Jim Pitrizzi). In addition, they also
withheld from the same notes that McMahon affirmatively told the government:
• Enron “[n]ever made rep[resentation] to ML [Merrill Lynch] that E[nron] would buy them
out or [] @ set rate of return.” Ex. B, DOJ-ENRONBARGE-000449 (Bob Roach).
• NO - never guaranteed to take out [Merrill Lynch] w/rate of return. Id. at 000493 (Ross
Kirschner).
2. Fastow Actually Agreed To Oral Assurances That Enron Would Use Its Best
Efforts To Assist In Re-Marketing Merrill’s Equity Interest To A Third-party.
At least four separate government interviewers confirmed, and the ETF highlighted but
withheld both the highlighted exculpatory evidence below and the other statements below:
• Disc[ussion] between Andy [Fastow] & ML [Merrill Lynch]. Agreed E[nron] would use best
efforts to help them sell assets. Ex. D, DOJ-ENRONBARGE-000447 (Roach).
• AF [Fastow] agreed that E[nron] would help them [Merrill Lynch] remarket the equity 6
mo[nths] after closing. Id. at 000450 (Roach).
• Andy agreed E would help remarket equity w/in next 6 months. –no further commitment.
000494 (Kirschner).
• Andy agreed E[nron] would help them mkt [market] the equity w/in 6 months after closing.
> E[nron] and ML [Merrill Lynch] would work to remarket for the 6 months after. Id. at
000478 (Henseler).
• Enron would use best efforts to help remarket the equity. Id. 000513 (Casette).
• AF agreed that ENE would help them remarket in 6 mos. 000514. Don’t recall any promise
that ENE would get them out. 000515 (Casette).
• Andy said–Enron help remarket in next six months. Id. 000560 (Pitrizzi). Chart 1.11
11
Contradicting the government’s representation that Fastow told Merrill Lynch that LJM2 was
always available to take out Merrill’s equity interest (Dkt.1168, Ex. I, at pp. 3-4; Tr. 6150, 6264), McMahon
said LJM2 was not mentioned on the call. McMahon “[d]oesn’t recall LJM being mentioned at all”
regarding the transaction. Ex. B, DOJ-ENRONBARGE-000515 (two lines down from highlighted
omission). McMahon “[d]oesn’t believe LJM was ever mentioned on th[e] [Fastow/Bayly] call.” Id at
000530. See id. at 000561 (same). Kelly Boots, who was forced to take the Fifth Amendment during the trial
8
These highlighted yet withheld (and non-highlighted and withheld) raw notes prove Brown’s
innocence and contradict the government’s concocted hearsay case on all counts. Remarkable in its
omissions, Ruemmler’s pre-trial “summary” refers only to what Merrill wanted, and fails to state
what actually happened–the crux of the defense: that Fastow agreed to these lawful, best-efforts
assurances on the phone call with Bayly–and that is all. This is the fact upon which the entire
case turned and what Zrike tried to document. The McMahon (and Fastow) raw notes (Ex. D;
Dkt.1168, Ex. B) contain startling revelations which implicate all of the pre-trial production and
prove its inadequacy: the government concealed the fact that McMahon, the unindicted, alleged
guarantor, told them that no one guaranteed Merrill Lynch a rate-of-return, buy-out, or
specific price for the asset. The raw notes are unequivocal–McMahon, who was never indicted, said
“NO - never guaranteed to take out [Merrill Lynch] w/rate of return.” Ex. D, at 000493. “No
further commitment.” Id. at 000494. It is now beyond dispute that the ETF reviewed this material
long ago, recognized its significance to the defense in 2004, and deliberately withheld it for 6 years.
See also Dkt.1168, Ex. D, at p. 4. This evidence confirms Brown’s “understanding” and testimony
that Enron had only agreed to use its “best efforts” to find another buyer. Chart 6, infra.
The ETF egregiously capitalized on its Brady violations by making at least twenty (20)
representations in opening and closing arguments (alone) portraying as a crime that McMahon gave
Merrill an unlawful and secret guarantee to buy back the barges which Fastow then ratified (Tr.
6157-59, 6216-17, 6527-28). See Dkt.1168, at pp. 28-34; Chart 7 infra. The government was able
to make these representations only by concealing McMahon’s statements, then soliciting, over
after the government decided not to call her as a witness, Tr. 4336, was definitive that LJM2 was not even
mentioned. Dkt.1004, Ex. I, at p. 3. Boots was in Fastow’s office for the phone call. Id.
9
objection, the false or wrong hearsay testimony of Glisan, Kopper, and other Fastow “subordinates”
whom Fastow had admittedly mislead–a fact also concealed from Brown.
IV. Evidence Prosecutors Concealed Proves That Key Government Witnesses Gave Wrong
Or Perjured Testimony.
Glisan was the government’s star witness in Brown I,12 with Kopper running a close second.
Evidence concealed for years proves that Kopper and Glisan’s testimony in Brown I was wrong or
perjured. See Dkt. 1168, Exs. B, at Bates #000263-264, 349; D, at pp. 4-6; J, at pp. 1532-33; K, at
p. 7189. The fact that long-concealed first-hand evidence from Fastow and McMahon both
directly contradicts the government’s hearsay-only case and flat-out declares as false the
testimony of the Task Force’s hearsay witnesses is alone sufficient to entitle Brown to a new
trial. Napue v. Illinois, 360 U.S. 264, 269, 79 S. Ct. 1173, 1177 (1959).13
It is beyond dispute that the testimony of both Kopper and Glisan–the only two upper-level
executives from Enron who testified–“affected the judgment of the jury.” United States v. Wall, 389
F.3d 457, 473 (5th Cir. 2004), cert. denied, 544 U.S. 978, 125 S. Ct. 1874 (2005); accord United
States v. Manners, — F.3d —, 2010 WL 2546109, *3 (5th Cir. 2010). See Dkt. 1004 at p. 7; supra
12
Mary Flood, Star Witness in Enron Trial Could Testify Tuesday, HOUS . CHRON ., October 4, 2004,
attached hereto as Exhibit E. See also John C. Hueston, Behind the Scenes of the Enron Trial: Creating the
Decisive Moments, 44 AM . CRIM . L. REV . 197, 200-02 (2007) (ETF prosecutor; outlining critical nature of
Ben Glisan in the Enron trials).
13
McMahon stated: He “reviewed the transcript of Mr. Fastow and former Enron treasurer Ben
Glisan’s testimony in the Lay-Skilling trial, Mr. Glisan’s testimony in the trial of the Nigerian Barge case,
and the FBI’s Form 302 of Mr. Fastow’s statements regarding the transaction. Based on that review and his
knowledge of what actually occurred,[he] concluded that both men testified falsely.” Dkt.1168, Ex. D, at
pp. 4-6. Fastow, too, has now testified that Kopper’s testimony at Brown I was contrary to his own “in many
respects.” Dkt.1168, Ex. J, Newby, at pp. 1532-33. And in the Skilling trial, Fastow said that Glisan and
Kopper’s testimony in the Barge trial was “largely contradictory to my recollection of events.” Dkt.1168,
Ex. K, Skilling, at Tr. 7188-89. The long-concealed Fastow raw notes make clear why their testimony was
wrong or false. See Dkt.1168, at pp. 12-28.
10
pp.1-4. The Task Force relied heavily on their testimony in closing arguments.14 By pointing to
Glisan’s testimony 52 times and to Kopper’s 27 times, the government exacerbated the egregious
concealment of the contradictory first-hand evidence of the Merrill-Enron call participants in this
hearsay-only case–where life and liberty hung on the words in a ten-minute phone conversation. It
is obvious why the Task Force chose not to have a single participant in the Merrill-Enron call testify:
they all contradict the Task Force’s contrived, hearsay, falsely-premised and falsely-presented
case–and the Task Force knew it. Cf. Dkt.1004, at pp. 7 n.10, 16 n.26.
V. The ETF-Highlighted Evidence Proves That Prosecutors Deliberately Withheld The

Exculpatory Evidence Of Merrill Executive Schuyler Tilney Since 2004.15
The government finally disclosed its raw notes of Schuyler Tilney’s interviews, which the
government has concealed since July 2002 and highlighted in 2004. Exhibit F, infra. Tilney flatly
contradicts the ETF’s case and corroborates Brown’s testimony that Enron had only made best-
efforts assurances to find a third-party purchaser for Merrill’s equity interest. Chart 9, infra.
Despite highlighting around certain facts, and omitting even its own highlighted ones noted below,
the Task Force withheld that Tilney told the government affirmatively that Fastow told Merrill Lynch
that Enron “will find a new home” for Merrill’s equity interest. Ex. F, at 000704. See id. at 000681
(“a strong verbal understanding [that] they would find a home for this”); 000704 (same); 000726
(same). Tilney said that “ML had no legal recourse to Enron” and that “ML [was willing to] place
14
See, e.g., Tr. 6159 (“And during that conversation [between Glisan and McMahon], Mr. McMahon
confirmed to Mr. Glisan that he had, in fact, given an oral guarantee to Merrill Lynch.”); Tr. 6218-19; Tr.
6523 (“And he testified that Kopper had told him that Enron promised to do a buyback if a third-party buyer
couldn’t be found, which is exactly what Mr. Kopper testified to.”).
15
The government’s pre-trial, 6-sentence “Brady” “summary” regarding Merrill Executive Schuyler
Tilney (participant in the Fastow/Bayly phone call) omits any reference to the best-efforts agreement.
Dkt.1168, Exhibit O, at p. 8.
11
$7 million at risk to build its relationship with Enron.” Id. at 000679. A “‘commitment to
guaranty’ [reflected in the APR] conflict[ed] w[ith]/his understanding of what would take
place under [the] transaction.” Id. at 000706. Fastow’s representations did not include a
guarantee–orally or in writing. Id. at 000680.16 There was “no legal obligation for E[nron] to do
anything.” Id. at 000727. This is almost verbatim what Brown told the grand jury. Chart 9, infra.
There is no excuse or innocent explanation for the government to have withheld this information.
By failing to disclose any and all of this crucial evidence, the government wilfully distorted
the truth-seeking process. The defense was entitled to know well before trial and to prepare with full
knowledge of the exculpatory evidence, and Brown was entitled to have a jury hear that: (1) the
attorneys were fully aware of the discussions and tried to document the best efforts agreement
but, ultimately, Enron refused even to do that so that there was no possibility Enron was
retaining any risk that would undermine the accounting of the transaction as a sale; (2) the
actual call participants told the government long before trial that it was only a lawful, best-
efforts agreement–no promise or guarantee; (3) Fastow and McMahon (never indicted) both
contradict the government’s Barge witnesses; (4) Fastow’s raw notes disclose that even he told
the government he made only a best efforts assurance; (5) Fastow’s raw notes explain why the
16
Tilney told the government (and the ETF withheld) that this sort of best efforts assurance was
commonplace within the industry, and not unusual. Id. at 000683. See id. at 000727 (best efforts deal). Zrike
302, Dkt.1168, Ex. E, at p. 11. The newly produced notes also disclose that Barry Mandel, general counsel
for Merrill Lynch, stated: “That is why we evaluated it as 7mm investment and prepared to lose it.” Ex. F,
at 000679. See id. at 000705 (“looked @ investment–was ML [Merrill Lynch] prepared to lose $7m[illion]”);
000745 (same); 000678; 000727 (“ML placed $7million @ risk to E[nron] w/no guarantee”); 000743;
000744; 000745. Tilney believed that Katherine Zrike, in-house counsel for Merrill Lynch was on the
Bayly/Fastow phone call. Ex. F, at 000678. See id. at 000677 (listing call participants, including Kathy
Zrike); 000726 (same). Kelly Boots, who was in Fastow’s office for the entirety of the phone call, also
believed and told the ETF in 2004 that Merrill counsel, a female, may have been on the call. Dkt. 1004, Ex.
I, at p.3. See Chart 11, infra.
12
testimony of government witnesses was wrong or perjured; (6) McMahon declared Glisan’s
testimony false; (7) the attorneys deleted the buy-back language because Merrill would not
participate in a parking transaction; and, (8) Merrill counsel deemed Brown and Fuhs to be
ethical bankers who brought issues of concern to his attention. The ETF’s own highlighting
demonstrates what can only be deliberate conduct. The suppression of each and any of these pivotal
exculpatory facts constitutes a flagrant constitutional violation, directly contradicts ETF assertions
at trial, and could have and should have resulted in the acquittal of each defendant or a dismissal of
the case pre-trial.17
VI. Brown Is Entitled To Discovery, An Evidentiary Hearing, and A Dismissal.
A hearing is essential because of the evidence of prosecutorial misconduct which bears
directly on Brown’s entitlement to a new trial. United States v. Hamilton, 559 F.2d 1370, 1373 (5th
Cir. 1977) (“Where evidentiary hearings are ordered, it is because of unique situations typically
involving allegations of ..., prosecutorial misconduct.”); cf. United States v. Espinosa-Hernandez,
918 F.2d 911, 913-14 (11th Cir. 1990) (reversing for failure to order evidentiary hearing on
prosecutorial misconduct). Defense counsel in Brown I could not prepare for trial or make a
reasoned decision as to witnesses–much less decide what to ask–without substantive disclosure by
the prosecution. Leka v. Portuondo, 257 F.3d 89, 103 (2d Cir. 2001); United States v. Carmichael,
17
Brown has requested all of this material, with specificity, for years, while the government
repeatedly and falsely claimed that it had met its Brady obligations. See, e.g., Dkt. 948, at pp. 29-31;
Dkt.1157, at p. 9. See Dkt. 1168, Charts 1, 2.
13
269 F.Supp.2d 588, 597 (D.N.J. 2003). And the first-hand exculpatory evidence the ETF concealed
left the defense helpless to rebut the government’s distortions, misrepresentations, lies, and hearsay.18
In denying Brown’s Speedy Trial Act motion, Dkt. 1208,19 the Court stated that “it expected
to conduct initial hearings or additional hearings on these motions[,]” including Brown’s Motion for
New Trial. Dkt.1208, at pp. 11-12. The court relied on 18 U.S.C. § 3161 (h)(1)(D), and excluded
“all time between the filing of a motion and any required hearing thereon.” Dkt.1208, at p. 12
(emphasis added). Indeed, the Court went on to state that “Brown’s counsel expressly requested the
Court to set a hearing date for Brown’s motion for new trial, which has yet to be heard.” Id. at p. 13
(citation omitted). The court cannot now, with the other edge of the same sword, deny Brown an
evidentiary hearing on his Motions for New Trial and To Dismiss.
This is far too important an issue to the integrity of the Court itself to whitewash or sweep
under the rug. United States v. Omni Int’l.Corp., 634 F. Supp. 1414, 1438 (D.Md. 1986) (courts
cannot “become accomplices to such misconduct”) (citation omitted). Despite Judge Sullivan’s
18
As in Stevens, Brown needs discovery into all communications between the government and all
witnesses, raw notes of all witness interviews, including those of prosecutors, to subpoena witnesses to
provide first-hand non-hearsay evidence that the government concealed, to elicit testimony from witnesses
about abusive government tactics, and to subpoena and interrogate the former members of the Enron Task
Force–who highlighted and surgically redacted the original Brady production. Brown is entitled to all this
evidence to understand the depth and severity of the Brady violations and misconduct in this case; including
(1) to determine who made the redactions, according to what principles and whose instructions, and why the
Task Force repeatedly told this Court it had met its Brady obligations but consistently (and still) opposes
further productions; (2) to make known all the details regarding the ETF’s determinations to withhold this
information; and (3) to evaluate the nature and full extent of the Department of Justice’s knowledge and
complicity in the misrepresentations made to the Court and jury during Brown I. See United States v.
Burnside, 824 F. Supp. 1215, 1258 (N.D. Ill. 1993) (government has affirmative duty to disclose mere
indications of improper conduct by witnesses and government personnel “so as to enable counsel to
undertake the inquiry which the government deliberately avoided”).
19
Brown urges the court to reconsider its erroneous Speedy Trial Act determination and does not
waive any existing or further challenges thereto (including as to the “sham” nature of any hearings).
14
actions, the Dept. of Justice still cannot recognize Brady material and admit its wrongdoing. As in
Stevens, strong action must be taken to deter the government from engaging in misconduct that
mocks our system of justice. Here, as in Stevens and Omni Int’l Corp., this Court cannot credit the
government’s vehement opposition to a hearing and continued denials of past and current Brady
violations and obligations. As in Omni,
The AUSA’s failure to be fully candid could have had tragic consequences. The
Court was faced with the issue of whether or not to permit an evidentiary hearing.
If the Court had blindly relied on the AUSA’s representations, no hearing would have
been held . . . In light of all the testimony adduced at the [28-day-long] evidentiary
hearing, it is clear that this case rises to the high threshold imposed for invocation of
the supervisory power [to dismiss]. The Court condemns the manner in which the
Government proceeded, and cannot now stand idly by, implicitly joining the federal
judiciary into such unbecoming conduct.
Omni Int’l Corp., 634 F . Supp. at 1434, 1438-39. If this court has not learned enough to date to
grant a new trial and dismiss this case, it should judicially mandate full discovery, including the raw
notes of all Barge witness interviews, prosecutors’ notes, and all government communications
regarding witnesses, and hold a full evidentiary hearing to seek the truth.
CONCLUSION
As in Stevens, the Department of Justice should confess error in its Brady violations, move
to vacate Brown’s wrongful convictions on Counts IV and V, and dismiss all charges against Brown.
If it does not, Brown’s motions for new trial and to dismiss the entire indictment should be granted.
Dated: July 9, 2010 Respectfully submitted,
PORTER & HEDGES LLP SIDNEY POWELL, P.C.

DANIEL K. HEDGES By: /s/ Sidney Powell
Texas Bar No. 09369500 SIDNEY POWELL
1000 Main Street, 36th Fl. Texas Bar No. 16209700
Houston, TX 77002
Telephone: (713) 226-6000 TORRENCE E. LEWIS
Facsimile: (713) 228-1331 IL State Bar No. 222191
15
3831 Turtle Creek Blvd. #5B

Dallas, TX 75219
Telephone: (214) 653-3933
Facsimile: (214) 319-2502
CERTIFICATE OF SERVICE
I hereby certify that a copy of the above and foregoing was served upon Patrick Stokes,
counsel for the United States, via the ECF system on July 9, 2010. It has also been served
electronically on all counsel of record.
/s/ Sidney Powell

Sidney Powell
16
Case 4:03-cr-00363 Document 1217-1 Filed in TXSD on 07/09/10 Page 1 of 21
CHART 1: EXCULPATORY EVIDENCE THAT THE ETF ITSELF HIGHLIGHTED AS

BRADY MATERIAL BUT THEN WITHHELD FROM THE COURT-ORDERED BRADY
“SUMMARY” IN 2004–MATERIALS DISCLOSED TO BROWN ON 03-30-10
DOCUMENTS WITH ETF PORTIONS HIGHLIGHTED BY ETF AS BRADY BUT
HIGHLIGHTING DELIBERATELY WITHHELD FROM JULY 30, 2004
“SUMMARY” DISCLOSURES
FBI 302 of Gary Dolan DOLAN had a subsequent conversation with BROWN in which BROWN
conveyed that he was concerned with the commercial risk ML was taking on the
Nigerian Barge transaction. BROWN was worried about the potential
environmental risk associated with owning power plants and ML’s liability
issues.
DOLAN stated that the original draft of the engagement letter obligated Enron
to eventually take ML out of the Nigerian Barge transaction. This was contrary
to DOLAN's understanding of the transaction and DOLAN believed that such an
agreement would be improper because such a transaction could be viewed as a
“parking” transaction.
DOLAN’s understanding was that ML purchased an interest in the Nigerian
Barges with the expectation that Enron would help ML find a buyer for ML’s
interest in the Nigerian Barges. DOLAN stated that there was no obligation or
commitment that Enron would find a buyer or that Enron purchase ML‘S interest
if a buyer could not be found.
Raw Notes of Jeff McMahon 000478: “Andy agreed E[nron] would help them mkt [market] the equity w/in 6
months after closing. > E[nron] and ML [Merrill Lynch] would work to remarket
*The pre-trial summary says for the 6 months after.”
what “Merrill wanted” only and
withholds repeated exculpatory 000494: “Andy agreed E[nron] would help remarket [the] equity w/in next 6
evidence highlighted by the ETF months–no further commitment”
in 2004 that Fastow agreed only
that Enron would provide best 000513: “Enron would use best efforts to help remarket the equity.”
efforts.
000514: “A.F. agreed that E[nron] would help them remarket in 6 mo[nth]s.”
000560: “Andy said Enron would help remarket in next six months.”
Id. at 000539 - ML had already approved deal internally before “wanting

assurances”
Grand Jury Testimony of Kathy ETF withheld that Zrike testified: “The fact that they would not put in
Zrike writing an obligation to buy it back, to indemnify us,all those things were
consistent with the business deal and were not things that I felt were nefarious
*The government made no [or] problematic.” Dkt.1168, Ex. F, at p. 75.
disclosure of any negotiation
between parties.
1
DOCUMENTS WITH ETF PORTIONS HIGHLIGHTED BY ETF AS BRADY BUT

HIGHLIGHTING OMITTED FROM JULY 30, 2004 “SUMMARY” DISCLOSURES
Raw Notes of Schuyler Tilney Ex. D, at 000675, 000703 – Tilney wanted Bayly involved because in the event
from 2002 the Marubeni deal fell through, he didn’t want it on his neck alone
Id. at 000679 -ML had no legal recourse to Enron and that ML was willing to
place 7 million at risk to benefit relationship with Enron. Id. at 000727 -“no legal
obligation for Enron to do anything”
2
CHART 2
CONCEALED EXCULPATORY EVIDENCE DIRECTLY REFUTES PROSECUTORS’
STATEMENTS AT TRIAL AND PROVES EGREGIOUS MISCONDUCT
Government Representations at Brown I. ETF Concealed Brady Evidence Requiring New

Trial
Matthew Friedrich: “If its just ‘best efforts,’ then it Andrew Fastow: “It was [Enron’s] obligation to use
would have been okay.” Tr. 4528, 4520. “There is ‘best efforts’ to find 3rd Party takeout. Fastow went on
nothing wrong with remarketing. There’s nothing to detail his sophisticated knowledge of a best efforts
wrong with that. They could have gotten sale and a gain agreement: ‘Best Efforts’ - must do everything possible
treatment on this. If it was a remarketing agreement, that a reasonable businessman would do to achieve
there wouldn’t have been a problem with that.” Tr. result..... Best effort would be to find a 3rd Party to
6486. accomplish buy out.” Dkt.1168, Raw Notes, Ex. C, at
Bates #000263.
John Hemann: “McMahon called Merrill Lynch and Jeffrey McMahon: “Disc[ussion] between Andy
he cut a deal …. and what was the deal? …. that was [Fastow] & ML [Merrill Lynch]. Agreed E[nron]
the guarantee that Merrill Lynch got from [] would use best efforts to help them sell assets.” Ex. B,
McMahon.” Tr.402-404. Raw Notes, DOJ-ENRONBARGE #000447.
“NO - never guaranteed to take out [Merrill Lynch]
Kathryn Ruemmler: “You know that Enron, through w/rate of return.” Id. at 000493.
its treasurer [McMahon] and chief financial officer “[A]t no time during the call [with Merrill Lynch]
[Fastow], made an oral guarantee to these Merrill did Mr. Fastow ever suggest that Enron would
Lynch defendants, that they would be taken out of the ‘repurchase’ the interest from Merrill Lynch or
barge deal by June 30th, 2000, at a guaranteed rate of ‘guarantee’ that Merrill Lynch would not incur risk
return.” Tr.6144. of loss associated with the [Barge equity]
investment.” Dkt.1168, McMahon Memorandum to
Hemann: “The purpose of the handshake … was to the SEC, Ex. D, at pp. 4-6.
confirm the deal that had been cut by Mr. McMahon.”
Tr. 404. See Tr. 6527-28 (Friedrich: same). 000494: “Andy agreed E[nron] would help remarket
[the] equity w/in next 6 months–no further
Ruemmler: “And during that conversation [between commitment”
Glisan and McMahon], Mr. McMahon confirmed to
Mr. Glisan that he had, in fact, given an oral guarantee 000513: “Enron would use best efforts to help remarket
to Merrill Lynch.” Tr. 6159. See Tr.6157-58 (same). the equity.”
Ruemmler: “So the key, . . . was Jeff McMahon. …. 000514: “A.F. agreed that E[nron] would help them
Trinkle told you …. and Glisan told you that Jeff remarket in 6 mo[nth]s.”
McMahon confirmed to him that he gave that exact
guarantee.” Tr. 6159-60. See Tr. 6218-19 (same). 000560: “Andy said Enron would help remarket in next
six months.”
Ruemmler: “It was [Bayly’s] job … to get on the
phone with Mr. Fastow … and make sure that Mr. * Yellow highlighting denotes material the ETF
Fastow ratified the oral guarantee that Mr. McMahon highlighted and still withheld. The other material
had already given to Mr. Furst.” Tr. 6168. included herein was Brady evidence that was also
withheld.
1
Government Representations at Brown I ETF Concealed Brady Evidence Requiring

New Trial
Kathryn Ruemmler: “[T]he written agreement Katherine Zrike: “Merrill tried to put the re-
between Enron and Merrill Lynch had no remarketing agreement in the w ritten
marketing or best efforts provision. You heard agreem ent b ut E nron said it w as
testimony . . . that there was some suggestion, inappropriate and it could not commit to it.
made primarily through Ms. Zrike, . . . that the The ‘best efforts’ agreement for selling
Merrill Lynch defendants believed that all that
Merrill’s position looked like Enron had to
Enron had committed to do was to re-market .
buy back Merrill’s interest in the barges.
. . Merrill Lynch’s interest in the barges; . . .
You can spend as many hours as you would like. Merrill was putting in real equity with only
You will nowhere in those documents ever find Enron to re-market its position. Zrike also
a reference to a re-marketing agreement or a wanted a ‘hold harmless clause for Merrill
best-efforts provision. It’s not there.” Tr. 6151- but Enron rejected that because Merrill had
52. to be at risk.*** Zrike tried to insert a ‘best
efforts’ clause but Enron said that it was too
Matthew Friedrich: “The Merrill Lynch much of an obligation and that they could not
Defendants take the uniform approach . . . that have this clause in the agreement.” Dkt.1168,
all that was going on was just that it was a FBI 302, Ex. E, at pp. 10-11, 15,.
remarketing agreement. That’s all it was. There
was no buyback. It’s just a remarketing “Everyone understood the rules, the accounting
agreement. But ask yourselves this simple rules and the accounting treatment. . . . we [] had
question: If it’s a remarketing agreement, if to be willing to own it until the thing got sold
that’s all it is, why was it not put in writing? . . or–and keep the risk of what that entails on our
. If it was a remarketing agreement, there balance sheet and–making sure that they are
wouldn’t have been a problem with that. If comfortable with that.” Dkt.1168, Grand Jury
that’s all it was, why wasn’t it put in writing? Testimony, Ex. F, at p. 55.
Tr. 6486.
Katherine Zrike: “Merrill – the Merrill Lynch
Matthew Friedrich: There is a suggestion . . . lawyers in my group and myself did ask that we
that what’s going on is sort of a good-faith include a provision that – two types of provisions
exchange between two parties as they try to that we thought would be helpful to us. ... The
negotiate different legal documents that sort of [second] thing that we marked up and we wanted
come back and forth, and sometimes language to add was a best efforts clause, ...that they
comes in, sometimes it’s taken out, that kind of would use their best efforts to find a [third-party]
thing. This is not the average business case. This purchaser [for Merrill’s equity interest.***[T]he
is not a case where people are trying to . . . put response from the Enron legal team was that –
language into documents as some sort of good- both of those provisions would be a
faithnegotiating process. Tr. 6493-94. problem....[t]hey kept coming back to the fact
that it really had to be a true passage of
risk.***[W ]e w ere not successful in
negotiating that [in] with Vinson & Elkins.”
Id. at pp. 63-64, 69.
2

New Trial
Matthew Friedrich: “Let’s move on to the Katherine Zrike: “Zrike did point out the risks to
so-called ‘advice of counsel’ defense and Kathy the DMCC, Davis and Bayly.... Zrike wanted the
Zrike. Kathy Zrike was called as a defense more experienced group of Merrill employees of
witness. She was completely devastating to the the DMCC to review it.... Zrike thought the
defense. **** This was a case, not about reliance DMCC would allow the deal to be fully vetted....
on counsel; this was a case about defiance of [Zrike] wanted the deal looked at in detail. Zrike
counsel.” Tr. 6500. made the decision to take the deal to the DMCC.
... She told Brown, who was not a member of the
John Hemann: “And I’m going to say this as DMCC, to attend the DMCC.” Dkt.1168, Ex. E,
clearly as I can: There will not be evidence in at p. 8.
this case that any lawyer was asked if it was all
right for Enron to count this deal as income.” “Zrike took the lead in the [DMCC] meeting
Tr. 419. because it was an equity deal in the DMCC and
she had to present the deal to Tom Davis. Zrike
Matthew Friedrich: “The key thing, the key and Brown discussed the deal issues [at the
thing in a reliance [on counsel] defense is they DMCC].” “It went to the DMCC because that’s
have to be in the loop. They have to know where I decided it would be best to be vetted.***I
what’s going on. You have to disclose all the wanted to get [the transaction] reviewed by
material information to them … The lawyer has people who were familiar with transactions like
to know. They have to make a judgment. They this -- structured deals, complicated ownership
have to render advice. That didn’t happen here. interest -- that had some expertise in the area.”
The opposite thing happened. They were told Dkt.1168, GJ Testimony, Ex. F, at pp. 123, 128.
you couldn’t do it and they did it anyway. And,
from that, you can infer bad intent on all their “We were making it clear to everybody [at
parts.” Tr. 6504 (Friedrich). DMCC and at Merrill], .., both Jim Brown and I,
that this is an equity investment that we will own
Matthew Friedrich: “Mr. Schaeffer said that and that we have to have all the risks associated
nothing was hidden from Kathy Zrike, and with that equity investment in order for them to
that’s just not true. Things were hidden from take it as a sale and to book the gain or loss,
her time and time again.” Tr. 6503. whatever it happens to be – it happens to be gain
in their case, on their financial statements. So for
accounting purposes it had to be a true sale. And
there could be no mitigation of that status.”
Dkt.1168, SEC Testimony, Ex. Y, at p. 192.
“[T]he response from the Enron legal team was

that – both of those provisions would be a
problem....[t]hey kept coming back to the fact
that it really had to be a true passage of
risk.***[W]e were not successful in negotiating
that [in] with Vinson & Elkins.” Id. at 63-64, 69.
3

New Trial
Matthew Friedrich: “Mr. Fuhs – there’s no Alan Hoffman: “HOFFMAN had a discussion
evidence that Mr. Fuhs made any effort to talk with FUHS in which he mentioned that ML
to a lawyer or had any reliance on a lawyer hoped to be out of the deal in a few weeks or
about what was going on.” Tr. 6539. months.” FBI 302 of Alan Hoffman, October 12,
2002, Dkt. 1204, Ex. A. at p. 3.
*THE GOVERNMENT MADE NO
DISCLOSURE WHATSOEVER FOR ALAN “FUHS did tell HOFFMAN that Enron did not
HOFFMAN WHO HAS SIGNIFICANT have an obligation to find someone to purchase
EXCULPATORY EVIDENCE. ML’s interest in the Nigerian Barge. However,
FUHS did state that Enron would try to help ML
find a buyer for their interest in the Nigerian
Barge.” Id. at p. 5.
“Moreover, there was nothing in the written

agreement between Enron and ML which
reflected that Enron would help ML find a third
party buyer for their interest in the Nigerian
Barge. However, it was HOFFMAN’s
understanding that there was an unwritten
understanding that Enron would help ML find a
purchaser for their interest in the Nigerian
Barge. Id.
“A few days before Christmas 1999 HOFFMAN

received a phone call from BROWN. BROWN
needed HOFFMAN's assistance with a deal
involving ENRON and the purchase of
NIGERIAN BARGES. BROWN wanted
HOFFMAN to focus on three (3) areas; the
non-recourse loan, the indemnification
agreement, and reviewing the deal to make sure
that there were no adverse tax consequences.” Id.
at p. 1.
“HOFFMAN held a very high opinion of

BROWN and FUHS and felt that they were very
ethical. He felt that they were excellent bankers
who would point out any problematic accounting
issues and they were very vigilant about pointing
out accounting issues.” Id. at p. 4.
4

New Trial
Matthew Friedrich: “The fact that Fuhs is Gary Dolan: “DOLAN was shown a copy of an
sending lawyers documents with the bad E-mail from WILSON to DOLAN dated
language deleted out of the engagement letter 12/23/1999 (Bate stamped ML034707). This
doesn’t prove anything about his intent. . . . E-mail contained a copy of the proposed
‘reliance on advice of counsel’ doesn’t mean just changes to the engagement letter made by
some random attorney someplace getting a DOLAN. DOLAN acknowledged that the
document that has strike-out language. . . The handwriting on the page is his. DOLAN does
lawyer has to know what’s going on; they have not remember talking to anyone at Enron about
to know all the facts. . . . there’s no evidence that the changes he made to the engagement letter.
Mr. Fuhs made any efforts to talk to a lawyer or However, DOLAN did receive handwritten
had any reliance on a lawyer about what was comments from someone from Enron. Enron did
going on. . . . [Fuhs] gets copies, for example, of
not object to the language in the original draft
the engagement letter that had the offending
of the engagement letter which stated that
language included, and that shows you what he
knew at the time the deal was.” Tr. 6538-39. ‘Enron will buy or find affiliate to buy . . .’”
However, “DOLAN did object to this
See also Dkt.1204, at p. 14 n.16 (The government language and made the necessary changes.”
attributed all Fuhs’ wrongs to Brown: “Mr. Dolan knew “that such an agreement would
Brown’s group was tasked with getting the deal be improper because such a transaction could
done, with actually getting the deal closed. Mr. be viewed as a ‘parking’ transaction.”
Bill Fuhs worked for Mr. Brown. His job was to Dkt.1168, FBI 302, Ex. G, at pp. 5-6;
make sure that the deal actually got executed.
Mr. Fuhs, when it came down to actually getting “DOLAN also had a conversation with JEFF
the stuff put together, was the guy who dealt WILSON about the engagement letter. DOLAN
with Mr. Boyle at Enron.” Tr. 6167. Even more believes W ILSO N helped draft the
explicit and misleading is Ruemmler’s argument engagement letter. Dolan requested that
in summation: “The engagement letter is Wilson delete some of the language in the
addressed to Mr. McMahon, again, consistent engagement letter.” Id. at p. 5.
with the evidence that Mr. McMahon is the
person who makes the original guarantee. …
And Mr. Fuhs says -- who we know has already
had a conversation with Mr. Brown… -- told
you he has no idea why that language is in the
letter and that is totally inconsistent with his
understanding of the deal. That’s just not
credible on its face, ladies and gentlemen.” Tr.
6222. See also Tr. 412, 6143, 6212, 6220-21,
6223, 6230-31, 6266, 6534, 6538.
5

New Trial
Kathryn Ruemmler: “And so what did they do, Schuyler Tilney: Tilney believed that Katherine
ladies and gentlemen? They cut her [Zrike] out. Zrike, in-house counsel for Merrill Lynch was on
They cut her out of this call on December 22nd, the Bayly/Fastow phone call. Exhibit B, DOJ-
and they cut her out of this call between Mr. ENRONBARGE-000678. See id. at 000677
Bayly and Mr. Fastow. Ms. Zrike was never (listing call participants, including Kathy Zrike);
present for these conversations in which this 000726 (same).
verbal guarantee was discussed.” Tr.6206.
Kelly Boots: “On the telephone call between
Enron and Merrill Lynch were: from Merrill
Lynch SCHUYLER TILNEY (who was involved
as a Relationship Manager), FURST, a Merrill
Lynch credit person (BOOTS does not know if
this person’s name was KEVIN COX), a female
who may have been an attorney and a senior
person from the Investment Banking side.” Boots
FBI 302.
6
CHART 3: THE GOVERNMENT CONCEALED CRUCIAL BRADY MATERIAL

FROM ZRIKE’S SEC TESTIMONY
Government’s “Summary” Pre-trial “Brady” CONCEALED Evidence From Katherine
production regarding Katherine Zrike, from Zrike’s SEC Testimony from October 29, 2003,
July 30, 2004. and November 18, 2003.
The government recast Zrike’s actual statements to The government has never disclosed Zrike’s SEC
minimize and obfuscate, and did not disclose her full testimony which contains specific exculpatory
knowledge: evidence as to Brown:
“Based on the representations that were made to her, “[Zrike] knew that this transaction involved a rate of
Zrike did not feel that there was a commitment by Enron return for the purchaser of this investment. Because that’s
to guarantee Merrill’s takeout within 6 months.” typical of any private equity … that there is some rate of
Dkt.1168, Ex. O, at p. 9. return that is received.” Id. at 120-21. “[Zrike] believe[d]
that these were the terms which Enron had negotiated a
sale to a third party, that we, buying the equity and
“Zrike believed that there was a business understanding stepping into the shoes of that third party for the short
between Enron and Merrill that Enron would remarket the period of time would be subject to, although this of course
barges.” Id. is an anticipated rate of return, but that we were subject to
because we might not ever get rid of the barges.” Id. at pp.
123-24.
“Zrike tried to make sure that Davis and Bayly understood Zrike “talked to [inside and outside counsel] about putting
that this was a risk and that Merrill could end up owning in – they will use their best efforts to close the transaction
the barges and could lose its money. Zrike’s focus was to with Marubeni....[B]est efforts is a very strong level of
ensure that Merrill’s management understood that Merrill commitment that the parties are committing themselves to
was the owner of the barges and could be an owner for when they agree to a best efforts clause. Id. at 305-06.
longer than it expected because there was no obligation
for Enron to buy it back.” Id. “We were making it clear to everybody [at DMCC and at
Merrill], .., both Jim Brown and I, that this is an equity
investment that we will own and that we have to have all
the risks associated with that equity investment in order
“Zrike said she gave Bayly her views that based on what for them to take it as a sale and to book the gain or loss,
we know and the information we have this was not illegal. whatever it happens to be – it happens to be gain in their
Zrike initially said she gave no legal advice on the NBD case, on their financial statements. So for accounting
[Nigerian Barge Deal].” Id. purposes it had to be a true sale. And there could be no
mitigation of that status.” Id. at 192.
“Zrike said that she was comfortable this was not a made-
up transaction.” Id. There were two areas of – other than obviously we
wanted it to look and be right, but my focus, I wasn’t
really worried about … the basic stuff, but more trying to
put in [the contract] a covenant that they would use their
best efforts to find a buyer or to close the transaction,
really, sort of further assurances clause or covenant that
they would use best efforts to close the transaction with
the purchaser that had been identified to us as the
purchaser that was anticipated to buy the interest. Id. at
p.109.
“[T]he whole sort of approach was we are not doing this

to make any money. We are doing this to build a
relationship.” Id. at p. 87.
CHART 4: ZRIKE’S GRAND JURY TESTIMONY PROVES AN EGREGIOUS

BRADY VIOLATION, MISCONDUCT AND BROWN’S INNOCENCE
Government’s “Summary” Pre-trial “Brady” PREVIOUSLY CONCEALED Evidence From

production regarding Katherine Zrike, from Katherine Zrike’s Grand Jury Testimony from
July 30, 2004. April 15, 2003, Disclosed to Brown on
December 12, 2007.
The government’s summary was misleading, incomplete “[T]hey were not committing to do whatever it took.
and altered to minimize Zrike’s actual testimony: They were committing to take – and the business ended
up being a, you know, oral business understanding [to
“Based on the representations that were made to her, assist in locating a third-party].” Dkt.1168, Ex. F, at pp.
Zrike did not feel that there was a commitment by Enron 10-11, 15.
to guarantee Merrill’s takeout within 6 months.”
Dkt.1168, Ex. O, at p. 9. “Everyone understood the rules, the accounting rules and
the accounting treatment. . . . I was trying to make sure
that [senior executives] understood that this was a true
“Zrike believed that there was a business understanding risk that we would end up owning this barge and so – and
between Enron and Merrill that Enron would remarket the from an exit perspective, we [] had to be willing to own it
barges.” Id. until the thing got sold or–and keep the risk of what that
entails on our balance sheet and–making sure that they are
“Zrike tried to make sure that Davis and Bayly understood comfortable with that.” Id. at 55.
that this was a risk and that Merrill could end up owning
the barges and could lose its money. Zrike’s focus was to “The fact that they would not put in writing an obligation
ensure that Merrill’s management understood that Merrill to buy it back, to indemnify us, all those things were
was the owner of the barges and could be an owner for consistent with the business deal and were not things that
longer than it expected because there was no obligation I felt were nefarious [or] problematic.” Id. at 75.
for Enron to buy it back.” Id.
“Merrill – the Merrill Lynch lawyers in my group and
“Zrike said she gave Bayly her views that based on what myself did ask that we include a provision that – two
we know and the information we have this was not illegal. types of provisions that we thought would be helpful to
Zrike initially said she gave no legal advice on the NBD us. One would be to indemnify us or hold harmless if
[Nigerian Barge Deal].” Id. there was any sort of liability like a barge explosion of
environmental spill, loss of life, or something that was,
BROWN’S GRAND JURY: “In - - no, I don’t - - the you know, a disaster scenario....The other thing that we
short answer is no, I’m not aware of the promise. I’m marked up and we wanted to add was a best efforts
aware of a discussion between Merrill Lynch and clause, ...that they would use their best efforts to find a
[third-party] purchaser [for Merrill’s equity
Enron on or around the time of the transaction, and I
interest.***[T]he response from the Enron legal team was
did not think it was a promise though.” (GJ Tr. at 88, that – both of those provisions would be a
lines 13-23)” (Dkt. 311; RE2). I thought we had problem....[t]hey kept coming back to the fact that it really
received comfort from Enron that we would be taken had to be a true passage of risk.***[W]e were not
out of the transaction within 6 months or we would successful in negotiating that [in] with Vinson & Elkins.”
get that comfort. If assurance is synonymous with Id. at 63-64, 69. See also id. at 66-70 (same, including
guarantee, then that is not my understanding. If Alan Hoffman’s involvement negotiating with V & E).
assurance is interpreted to be more along the lines of
strong comfort or use best efforts, that is my “It went to the DMCC because that’s where I decided it
understanding.” (BrownX980, 980B: 76, 77, 81, 82, would be best to be vetted. Id. at 123, 128. See id. at 132-
88, 91, 92; Tr. 3238-41). 33 (same). “The[] [DMCC] declined to improve it -- to
approve it because it wasn’t -- but I still got what I
wanted, which was some smart people looking at it . . .”
Id. at 131.
CHART 5: ZRIKE’S 302 PROVES EGREGIOUS BRADY VIOLATIONS

AND ETF MISCONDUCT AT TRIAL
Government’s Summary Pre-trial “Brady” PREVIOUSLY CONCEALED Evidence From

production regarding Katherine Zrike, from Katherine Zrike’s 19 page FBI 302, Disclosed to
July 30, 2004, only 1.2 pages. Brown on December 12, 2007.
The government recast Zrike’s actual statements to “During the DMCC meeting, there was an agreement to
minimize and obfuscate her full knowledge and actions remarket Merrill’s position. The agreement was not put
and withheld her most important information. in writing because that would have been ‘overkill.’
Merrill tried to put the re-marketing agreement in the
“Based on the representations that were made to her, written agreement but Enron said it was inappropriate
Zrike did not feel that there was a commitment by Enron and it could not commit to it. The ‘best efforts’
to guarantee Merrill’s takeout within 6 months.” agreement for selling Merrill’s position looked like
Dkt.1168, Ex. O, at p. 9.
Enron had to buy back Merrill’s interest in the
barges. Merrill was putting in real equity with only
“Zrike believed that there was a business understanding
between Enron and Merrill that Enron would remarket the Enron to re-market its position. Zrike also wanted a
barges.” Id. ‘hold harmless clause for Merrill but Enron rejected
that because Merrill had to be at risk. Marinaro or
GOVERNMENT MISREPRESENTATION AT TRIAL: Dolan may have told Zrike that a ‘best efforts’ clause,
such as requiring Enron to buy back Merrill’s
Matthew Friedrich: “The Merrill Lynch Defendants position, is viewed by courts as too open ended.
take the uniform approach . . . that all that was going Enron buying back Merrill’s position was not the deal
on was just that it was a remarketing agreement. with Enron. All of the terms of the deal between the
That’s all it was. There was no buyback. It’s just a parties were not in the document and this happens all
remarketing agreement. But ask yourselves this simple the time. Merrill and Enron had a businessman’s
question: If it’s a remarketing agreement, if that’s all agreement for Enron to get Merrill out of the deal. ***
it is, why was it not put in writing? . . . If it was a Davis was not happy with the way that the transaction
remarketing agreement, there wouldn’t have been a came up at the last minute. Davis wanted Bayly to
problem with that. If that’s all it was, why wasn’t it put approach someone at Enron more senior than Enron’s
in writing? Tr. 6486. treasurer to make it known to Enron that Merrill did not
normally make this kind of deal, Merrill had
accommodated Enron and Merrill was relying on Enron
to follow through on its assurances. Bayly agreed to do
this. Zrike was not sure how it was decided who was
going to be approached by Enron.” FBI 302 of Katherine
Zrike, Dkt.1168, Ex. E, at pp. 10-11.
Zrike reviewed the purchase agreement for the deal. The

draft document had no indemnification clause for Merrill.
Zrike tried to add one. She discussed with the attorneys
the environmental risks with the deal and that Merrill
wanted to mitigate those risks. Enron sent the agreement
back and told Merrill that there could not be any
indemnification clause or ‘hold harmless’ provisions.
Zrike tried to insert a ‘best efforts’ clause but Enron
said that it was too much of an obligation and that
they could not have this clause in the agreement.” Id.
at p. 15.

production regarding Katherine Zrike, from Katherine Zrike’s 19 page FBI 302, disclosed to
“Zrike tried to make sure that Davis and Bayly understood Zrike did point out the risks to the DMCC, Davis and
that this was a risk and that Merrill could end up owning Bayly.... [Zrike] wanted the deal looked at in detail. Zrike
the barges and could lose its money. Zrike’s focus was to made the decision to take the deal to the DMCC.... She
ensure that Merrill’s management understood that Merrill told Brown, who was not a member of the DMCC, to
was the owner of the barges and could be an owner for attend the DMCC.” Id. at p. 8.
longer than it expected because there was no obligation
for Enron to buy it back.” Ex. O, at p. 9. She wanted the deal explained to the business people who
would challenge the deal. She wanted to know if the deal
“Zrike said she gave Bayly her views that based on what had an economic value and that it was not a sham. She
we know and the information we have this was not illegal. wanted the reaction of the DMCC team especially
Zrike initially said she gave no legal advice on the NBD regarding Enron’s earnings management and the
[Nigerian Barge Deal].” Id. materiality of the deal to Enron. The DMCC did not think
the deal was material to Enron. Zrike knew this deal
would add one cent to Enron’s earning per share (eps) for
the year. Zrike was told by a banker that Arthur Andersen
had looked at the deal and knew of Merrill’s role. Arthur
Andersen wanted the deal to be a true sale and risk to
transfer. The period of time that Merrill remained in the
deal was not relevant to Merrill. These issues were
discussed in the DMCC. Zrike took the lead in the
meeting because it was an equity deal in the DMCC and
she had to present the deal to Tom Davis. Zrike and
Brown discussed the deal issues. Zrike talked about the
earnings impact and Enron’s need to meet Wall Street
estimates. The bankers said that they knew Enron and the
Wall Street estimates. The bankers also said that they
knew that Enron would book the deal at ten to twelve
million dollars. They also said that they knew Enron’s
eps numbers. The discussion was that the deal was too
small to have a material effect on Enron.
The DMCC did discuss Enron re-marketing Merrill’s

position. Zrike focused on the paragraph [in the APR]
regarding a guaranty afer the DMCC meeting and talking
with Davis. She noticed the guaranty paragraph and
thought that Merrill did not use the document containing
the guaranty. She also talked to Marinaro regarding
Merrill not getting a guaranty. Id. at p. 12.
“Merrill thought of the deal as a relationship builder.” Id.

at p. 5.
Page 2

production regarding Katherine Zrike, from Katherine Zrike’s 19 page FBI 302, disclosed to
GOVERNMENT MISREPRESENTATIONS AT TRIAL: “Zrike thought the due diligence was sufficient for
the size of the deal.” Id. at p. 6.
Kathryn Ruemmler: “[Y]ou know Merrill Lynch was
certainly not in the business of owning power barges in ZRIKES CONCEALED GRAND JURY TESTIMONY:
Nigeria. No dispute about that. Fourth, Merrill Lynch did “It’s more of this could cost more than our loss of the $7
no due diligence on the deal, even though the barges million that was the investment in the barge. It could
were an extraordinarily risky investment. They didn’t do lead to loss of life, litigation, money, entanglement,
anything.” Tr. 6149.
complications. . .” Dkt. 1168, Ex. F, at p. 47;
John Hemann: “[T]he evidence will prove in this case
“Brown was skeptical of the barge deal....He was looking
that Merrill Lynch didn’t care much about the actual
for a legitimate way to get out of the deal.” Ex. E, at p. 7.
barges. Because no matter what the barges looked like, no
matter what condition they were in, whether they sank or
blew up or were taken over by pirates, they were out in
“Dolan and Marinaro talked with Alan Hoffman about the
six months and they were out with a profit that they had
deal. She was informed by Dolan and Marinaro that
been promised.” Tr. 405-06.
Merrill could not obtain an indemnity clause from
Enron. Hoffman was negotiating on behalf of Merrill
with Vinson and Elkins.” Id. at p. 16.
See full 19-page Zrike 302 at Dkt. 1168, Exhibit E.
Page 3
CHART 6: McMAHON’S RAW NOTES PROVE AN EGREGIOUS BRADY VIOLATION

AND BROWN’S INNOCENCE
Defendant James Brown’s Grand Jury ETF Highlighted Raw Notes of Interviews of
Testimony From Which The Government Jeffrey McMahon From June 2002, Disclosed to
Wrongly Procured Convictions For Perjury Brown March 30, 2010, Are Completely
And Obstruction. Exculpatory of Brown.
“Q: Do you have any understanding of why Enron “Context of Call - ML [Merrill Lynch] had approved deal
would believe it was obligated to Merrill to get them out internally.” Ex. D, DOJ-ENRONBARGE-000447.
of the deal on or before June 30th?
A: It’s inconsistent with my understanding of what the “Never made rep[resentation] to ML [Merrill Lynch]
transaction was. (Tr. at 80, lines 6-11.) that E[nron] would buy them out at price or @ set
rate of return.” Id. at 000449.
Q: ....Again, do you have any information as to a promise
to Merrill that it would be taken out by sale to another “NO - never guaranteed to take out [Merrill
investor by June 2000?
Lynch] w/rate of return .” Id. at 000493.
A: In - - no, I don’t - - the short answer is no, I’m not
aware of the promise. I’m aware of a discussion Andy said–Enron help remarket in next six
between Merrill Lynch and Enron on or around the time months. Id. at 000560.
of the transaction, and I did not think it was a promise
though. “No recollection of a promise (to re-buy)” Id. at 000544.
Q: So you don’t have any understanding as to why there Andy said E would help remarket equity w/in
would be a reference [in the Merrill Lynch document] [sic next 6 months. –no further commitment. Id. at
(it was not an ML document)] to a promise that Merrill 000494.
would be taken out by a sale to another investor by June
of 2000? “AF [Fastow] agreed that E[nron] would help them
[Merrill Lynch] remarket the equity 6 mo[nths] after
A: No. (Tr. at 88, lines 13-23)” (Dkt. 311; RE2). closing.” Id. at 000450.
A: I did not understand - - you know, my “Andy [Fastow] agreed E[nron] would help them mkt
understanding of the transaction was that they [market] the equity w/in 6 months after closing. > E[nron]
were not required to get us out of the transaction, and ML [Merrill Lynch] would work to remarket for the
but we made it clear to them that we wanted 6 months after.” Id. at 000478.
to be out of it by June 30 th . “A.F. agreed that E[nron] would help them remarket in 6
****
mo[nth]s.” Id. at 000514.
A: No. I thought we had received comfort from Enron
that we would be taken out of the transaction within 6
months or we would get that comfort. If assurance is
“Disc[ussion] between Andy [Fastow] & ML [Merrill
synonymous with guarantee, then that is not my
Lynch]. Agreed E[nron] would use best efforts to
understanding. If assurance is interpreted to be
help them sell assets.” Id. at 000447.
more along the lines of strong comfort or use
best efforts, that is my understanding .
(BrownX980, 980B: 76, 77, 81, 82, 88, 91, 92; Tr. 3238-
* Yellow highlighting denotes material that the ETF
41).
deemed Brady evidence in 2004 but withheld from
the defense. Other highlighted material herein was
also exculpatory evidence that was wrongly withheld.
CHART 7: ETF-HIGHLIGHTED McMAHON RAW NOTES CONTAIN MATERIAL IT

RECOGNIZED AS BRADY AND WHICH BELIES GOVERNMENT
REPRESENTATIONS AT TRIAL
The ETF’s Representations At Trial Regarding ETF-Highlighted Raw Notes of Statements by

The “McMahon Guarantee” Are Directly Belied Jeff McMahon in June 2002, Withheld From
By Evidence IT Marked As Brady But Withheld Brown Until March 30, 2010
John Hemann: “McMahon called Merrill Lynch and “Context of Call - ML [Merrill Lynch] had approved deal
he cut a deal …. and what was the deal? …. that was internally.” Ex. D, DOJ-ENRONBARGE-000447.
the guarantee that Merrill Lynch got from []
McMahon.” Tr.402-404 (emphasis added). “Never made rep[resentation] to ML [Merrill
Lynch] that E[nron] would buy them out at price
Hemann: “The purpose of the handshake … was to or @ set rate of return.” Id. at 000449.
confirm the deal that had been cut by Mr.
McMahon.” Tr.404 (emphasis added). Andy said–Enron help remarket in next six
months. Id. at 000560.
Kathryn Ruemmler: “You know that Enron,
through its treasurer [McMahon] and chief financial “No recollection of a promise (to re-buy)” Id. at
officer [Fastow], made an oral guarantee to these 000544.
Merrill Lynch defendants, that they would be “NO - never guaranteed to take out [Merrill
taken out of the barge deal by June 30th, 2000, at Lynch] w/rate of return .” Id. at 000493.
a guaranteed rate of return.” Tr.6144 (emphasis
added). Andy said E would help remarket equity w/in
next 6 months. –no further commitment. Id. at
Ruemmler: “And during that conversation [between 000494.
Glisan and McMahon], Mr. McMahon confirmed
to Mr. Glisan that he had, in fact, given an oral “AF [Fastow] agreed that E[nron] would help them
guarantee to Merrill Lynch.” Tr.6159 (emphasis [Merrill Lynch] remarket the equity 6 mo[nths] after
added). closing.” Id. at 000450.
“Andy [Fastow] agreed E[nron] would help them mkt

Ruemmler: “It was [Bayly’s] job … to get on the
[market] the equity w/in 6 months after closing. > E[nron]
phone with Mr. Fastow … and make sure that Mr.
and ML [Merrill Lynch] would work to remarket for the
Fastow ratified the oral guarantee that Mr. 6 months after.” Id. at 000478.
McMahon had already given to Mr. Furst.” Tr.6168
(emphasis added). “A.F. agreed that E[nron] would help them remarket in 6
mo[nth]s.” Id. at 000514.
Ruemmler: “Remember again what Mr. Glisan told
you, that ... Andy Fastow was the one who ratified “Disc[ussion] between Andy [Fastow] & ML [Merrill
the commitment that had already been made by Mr. Lynch]. Agreed E[nron] would use best efforts to
McMahon.” Tr.6218-19. help them sell assets.” Id. at 000447.
* Yellow highlighting denotes material that the ETF

deemed Brady evidence in 2004 but withheld from the
defense. Other highlighted material herein was also
exculpatory evidence that was wrongly withheld.
CHART 8: FASTOW RAW NOTES PROVE EGREGIOUS BRADY VIOLATIONS

AND THAT BROWN’S TESTIMONY WAS TRUE
Government’s “Summary” Pre-trial “Brady” Newly Discovered Evidence ONLY IN the Raw
production regarding Andrew Fastow, from Notes Of Andrew Fastow, Concealed By The
June 1, 2004. Enron Task Force For Years, Disclosed 3/24/2008.
The government’s SUMMARY of its already improper Andrew Fastow: “It was [Enron’s] obligation to use ‘best
COMPOSITE 302 made no mention of Fastow’s use of efforts’ to find 3rd Party takeout. Fastow went on to
BEST EFFORTS–the crux of the defense. detail his sophisticated knowledge of a best efforts
“The reason Merrill Lynch [] invested in the Nigerian agreement: ‘Best Efforts’ - must do everything possible that
Barge deal was the extraordinarily high level of
a reasonable businessman would do to achieve result..... Best
assurance Fastow provided to Merrill that Merrill would
effort would be to find a 3rd Party to accomplish buy
be taken out of the deal within six months with their
stated rate of return.” Dkt.1168, Ex. I, at p. 3. out.” Dkt.1168, Raw Notes, Ex. C, at Bates #000263.
“Fastow may have told [Rebecca] McDonald that Enron Fastow: “W/ Subordinates
had to get Merrill out of the Barge deal.” Id. at p. 3. 1) Probably used a shorthand word like promise or
guarantee
“The importance of the June 30 buyout date was well-
known in Enron It was discussed at weekly senior 2) Internally at Enron. AF, JM + BG would tell
management meetings.” Id. at p. 6. Enron people this was a guarantee so to light a fire
with Int’l people - so it should be in paperwork.
“Merrill did not need to hear the word ‘guarantee,’ but 3) On phone call, didn’t say EN would buy-back -
the participants in the call knew what Fastow meant.” Id.
Rep of 3rd party. Explicit.
at p. 4. See id. at pp. 4-5 (“Fastow generally uses the
phrase ‘I can’t say guarantee,’ and Fastow intends his Internally said Enron would buy back. Unit less
use of the phrase to convey ‘guarantee.’”). motivated if know of LJM.” Dkt.1168, Ex. B, at
Bates #000349.
“It was reasonable for anyone listening to the call to
think that it was Enron that was going to buy [Merrill] “Phone call did not obligate [Enron] to buy out. Did
out.” Id. at p. 5. See id. (“Enron’s obligation to re- not intend to bind [Enron].” Id. at Bates #000263.
purchase”).
“Fastow was not bothered by Glisan’s use of the word “Object[ed] to word obligate” in internal Enron
‘obligated’ to describe Fastow’s representation of [GLISAN’S] e-mail as inconsistent with
Enron’s agreement to get Merrill out of the barge deal.” transaction. Dkt. 1168, Ex. B, at Bates #000264.
Id.
BROWN’S GRAND JURY: “In - - no, I don’t - - the

short answer is no, I’m not aware of the promise. I’m “Summary” of transaction was “not consistent” with
aware of a discussion between Merrill Lynch and Enron [Fastow’s] understanding because it included the
on or around the time of the transaction, and I did not word, “promise.” Id. at #000263.
think it was a promise though.” (GJ Tr. at 88, lines 13-
23)” (Dkt. 311; RE2). I thought we had received comfort
from Enron that we would be taken out of the transaction
within 6 months or we would get that comfort. If “It was [Enron’s] obligation to use ‘best efforts’ to
assurance is synonymous with guarantee, then that is not get third party takeout.” Id. at #000263.
my understanding. If assurance is interpreted to be more
along the lines of strong comfort or use best efforts , “Best efforts would be to find 3rd party to
that is my understanding.” (BrownX980, 980B: 76, 77, accomplish buyout.” Id.
81, 82, 88, 91, 92; Tr. 3238-41).
CHART 9: TILNEY RAW NOTES PROVE EGREGIOUS BRADY VIOLATIONS

AND BROWN’S INNOCENCE
Defendant James Brown’s Grand Jury Notes of Interviews of Schuyler Tilney in July
Testimony From Which The Government 2002, Disclosed to Brown March 30, 2010.
Erroneously Procured Convictions For Perjury
And Obstruction.
“Q: Do you have any understanding of why Enron would There was “no legal obligation for E[nron] to do
believe it was obligated to Merrill to get them out anything.” Id. at 000727.
of the deal on or before June 30 th ?
A: It’s inconsistent with my understanding of what the

Fastow told Merrill Lynch that Enron “will find
transaction was. (Tr. at 80, lines 6-11.)
a new home” for Merrill’s equity interest. Exhibit
Q: ....Again, do you have any information as to a promise B, DOJ-ENRONBARGE-000704. See id. at
to Merrill that it would be taken out by sale to another 000681 (“a strong verbal understanding [that]
investor by June 2000? they would find a home for this”); 000704
(“‘we’ll find a new home for this’”).
aware of the promise. I’m aware of a discussion
between Merrill Lynch and Enron on or around the
time of the transaction, and I did not think it was a Tilney stated that a “‘commitment to guaranty’
promise though. conflict[ed] w[ith]/his understanding of what
would take place under [the] transaction.” Id. at
Q: So you don’t have any understanding as to why there
000706.
would be a reference [in the Merrill Lynch document] [sic
(it was not an ML document)] to a promise that Merrill
of 2000?
Fastow’s representations did not include a
A: No. (Tr. at 88, lines 13-23)” (Dkt. 311; RE2).
guarantee–orally or in writing. Id. at 000680.
A: I did not understand - - you know, my understanding
of the transaction was that they were not required to
get us out of the transaction, but we made it clear to There was “no legal recourse [for Merrill Lynch]
them that we wanted to be out of it by June 30th. to force” Enron to do anything. Id. at 000745.
****
months or we would get that comfort. If assurance is
synonymous with guarantee, then that is not This was a “best efforts” transaction agreement
my understanding. If assurance is interpreted with no further obligation for Enron. Id. at
to be more along the lines of strong comfort or 000676, 000679, 000683, 000727.
use best efforts, that is my understanding.
(BrownX980, 980B: 76, 77, 81, 82, 88, 91, 92; *Yellow highlighting denotes material the ETF
Tr. 3238-41). highlighted and still withheld. The other material
included herein was Brady evidence that was also
withheld.
CHART 10: THE BELATED DISCLOSURE OF HOFFMAN’S EXCULPATORY

EVIDENCE PROVES A BRADY VIOLATION AND BROWN’S INNOCENCE
Defendant James Brown’s Grand Jury PREVIOUSLY CONCEALED Evidence From

Testimony From Which The Government Alan Hoffman’s Interview With The ETF,
Erroneously Procured Convictions For Perjury Including Andrew Weissmann, Received
And Obstruction. December 2007
“Q: Do you have any understanding of why Enron would “HOFFMAN had a discussion with FUHS in which he
believe it was obligated to Merrill to get them out of the mentioned that ML hoped to be out of the deal in a few
deal on or before June 30th? weeks or months. After the deal was completed FUHS
mentioned to HOFFMAN that the Nigerian government
A: It’s inconsistent with my understanding of what the may repudiate the contract. HOFFMAN's response was
transaction was. (Tr. at 80, lines 6-11.) that ML would be out $7 million or they could ship the
asset to another country and cut their losses.” FBI 302 of
Q: ....Again, do you have any information as to a promise Alan Hoffman, October 12, 2002, Dkt.1204, Ex. A, at p.
to Merrill that it would be taken out by sale to another 3.
investor by June 2000?

aware of the promise. I’m aware of a discussion
between Merrill Lynch and Enron on or around the “HOFFMAN held a very high opinion of BROWN
time of the transaction, and I did not think it was a and FUHS and felt that they were very ethical. He felt
promise though. that they were excellent bankers who would point out
any problematic accounting issues and they were
Q: So you don’t have any understanding as to why there
very vigilant about pointing out accounting issues.”
would be a reference [in the Merrill Lynch document] [sic
Id.
(it was not an ML document)] to a promise that Merrill
of 2000?
A: No. (Tr. at 88, lines 13-23)” (Dkt. 311; RE2).
A: I did not understand - - you know, my understanding

of the transaction was that they were not required to
get us out of the transaction, but we made it clear to
them that we wanted to be out of it by June 30th. “Moreover, there was nothing in the written
**** agreement between Enron and ML which
reflected that Enron would help ML find a third
months or we would get that comfort. If assurance is party buyer for their interest in the Nigerian
synonymous with guarantee, then that is not my Barge. However, it was HOFFMAN's understanding that
understanding. If assurance is interpreted to be more there was an unwritten understanding that Enron
along the lines of strong comfort or use best efforts, would help ML find a purchaser for their interest
that is my understanding. (BrownX980, 980B: 76, 77,
in the Nigerian Barge .” Id.
81, 82, 88, 91, 92; Tr. 3238-41).
CHART 11: ALL CALL PARTICIPANTS VERIFY BROWN’S GRAND JURY

TESTIMONY WAS TRUE
Matthew Friedrich: “The people who testified there was a buyback agreement were many, many
witnesses. ... The people who told you, among others, that there was an oral side deal and a buyback
agreement were Eric Boyt, John Garrett, Ben Glisan, Michael Kopper, Tina Trinkle. And they’re
all telling you the same thing, that there’s a buy-back agreement.” (Tr. 6524).
ENRON STATUS
Jeff McMahon: “at no time did Mr. McMahon say anything during [his original Enron Treasurer, CFO,
telephone conversation with Merrill Lynch on the barge transaction] (or at any other President: Never indicted
time, for that matter) regarding any alleged commitment by Enron or any of its
affiliates to repurchase, or guaranty a rate of return on, the equity interest to be sold
to Merrill Lynch in the transaction”; and “at no time during the [Fastow/Bayly] call
did Mr. Fastow ever suggest that Enron would ‘repurchase’ the interest from Merrill
Lynch or ‘guarantee’ that Merrill Lynch would not incur risk of loss associated with
the [Barge equity] investment.” Dkt.1168, Ex. C, at 4-6.
“Context of Call - ML [Merrill Lynch] had approved deal internally. *** Want[ed]
ass[urances] that E[nron] would assist them in selling [the interest] w/in 6 months.”
Ex. B, DOJ-ENRONBARGE-000447.
“[Enron] [n]ever made rep[resentation] to ML [Merrill Lynch] that E[nron] would buy
them out or [] @ set rate of return.” Id. at 000449.
“NO - never guaranteed to take out [Merrill Lynch] w/rate of return.” Id. at 000493.
Andy agreed E would help remarket equity w/in next 6 months. –no further
commitment. Id. at 000494
McMahon did not “ever make any representation to Merrill – get out w/in 6 mos and
return investment with profit.” Id. at 000560.
“Disc[ussion] between Andy [Fastow] & ML [Merrill Lynch]. Agreed E[nron] would
use best efforts to help them sell assets.” Id. at 000447, 000513.
“Andy [Fastow] agreed E[nron] would help them mkt [market] the equity w/in 6
months after closing. > E[nron] and ML [Merrill Lynch] would work to remarket for
the 6 months after.” Id. at 000478, 000514.
“Call: ML [Merrill Lynch] had approved investment in the Barges, + wanted
assurance that E[nron] would assist in the sale to 3rd parties in the next 6 mos. (Verbal
agreement)-(typical).” Id. at 000544.
Andrew Fastow: “I recall using the phrase ‘extraordinary best efforts,’ a phrase like Enron CFO; Indicted on
‘extraordinarily high level of confidence’ with regard to there being a purchaser for 100+ counts; plead to 2
Merrill Lynch’s interest within 6 months.” Dkt.1168, Ex. K, at 1882. counts; cooperated with
“It was [Enron’s] obligation to use ‘best efforts’ to find 3rd Party takeout.” Fastow ETF in hundreds of hours
went on to detail his sophisticated knowledge of a best efforts agreement: ‘Best of interviews improperly
Efforts’ - must do everything possible that a reasonable businessman would do to reduced to a “composite”
achieve result..... Best effort would be to find a 3rd Party to accomplish buy out.” 302.
Dkt.1168, Raw Notes, Ex. C, at Bates #000263.
“Summary not consistent w/AF’s memory b/c not word ‘promise.’ ... “Phone call did
not obligate ENE to buy-out.” Id.
“On phone call, didn’t say EN would buy-back – Rep. of 3rd party. Explicit.” Id.
“Phone call did not obligate [Enron] to buy out. Did not intend to bind [Enron].”
Id.
Kelly Boots: Boots was “aware that Merrill Lynch’s equity ha[d] to be at risk in order Enron Employee
for the transaction to be approved.” She “felt that the equity was at risk.” FBI 302 of Never indicted
Kelly Boots, at 4.
“In [her] mind, after the telephone call, Merrill Lynch was still at risk in the
[transaction].”
She “did not think that there was an enforceable guarantee giv[en] to Merrill Lynch
in the [Barge deal].” Boots “d[id] not think that Fastow used the word guarantee on
the telephone call with Merrill Lynch.” Id.
Dan Boyle: Enron did not give Merrill a “promise” or “guarantee,” but merely Convicted; did not appeal.
provided assurances “that Enron was going to stick with this project ... [to] make sure
that they continued to develop it so that it could generate cash flows and everybody
could be repaid or the project sold.” Tr. 4962-63.
MERRILL LYNCH STATUS

Daniel Bayly: “I considered [Fastow’s] statements the equivalent of a best-efforts Convictions reversed; all
statement that they were going to facilitate our exit.” Dkt.1168, Ex. S. charges dismissed with
prejudice by government
“[W]e engage in best-efforts transactions frequently.” Id. at 67. in January 2010.
“Best-efforts transaction after a conversation with a company, that’s very different

than a firm commitment.” Id.
Schuyler Tilney: Fastow told Merrill Lynch that Enron “will find a new home” for Merrill Senior
Merrill’s equity interest. Exhibit D, DOJ-ENRONBARGE-000704. See id. at 000681 Relationship Manager
(“a strong verbal understanding [that] they would find a home for this”); 000704 with Enron; Never
(same). indicted
Tilney stated that a “‘commitment to guaranty’ conflict[ed] w[ith]/his understanding

of what would take place under [the] transaction.” Id. at 000706.
There was “no legal obligation for E[nron] to do anything.” Id. at 000727.
Fastow’s representations did not include a guarantee–orally or in writing. Id. at
000680.
There was “no legal recourse [for Merrill Lynch] to force” Enron to do anything. Id.
at 000727, 000745.
This was a “best efforts” transaction agreement with no further obligation for Enron.
Id. at 000676, 000679, 000683, 000727.
2
OTHER NEWLY DISCOVERED EVIDENCE

Katherine Zrike: “[W]e were trying to be creative to protect Merrill but they kept Merrill Lead Counsel:
coming back to the fact it really had to be a true passage of risk, . . . the other part of Never indicted
this was the best efforts clause, the concern that could be used again to require them
to buy it back; and that would not be - - was not the deal . . . that would not be
consistent with the business deal that’s being a true sale.” Dkt.1168, Ex. F, at pp. 6-7;
Zrike Ex. C., infra.
Gary Dolan: “Dolan requested that Wilson delete some of the language in the
engagement letter. Generally, ML engagement letters use general terms to describe Merrill Counsel:
a deal because the deal terms can subsequently change.” (emphasis added). Dolan Never Indicted
believed that “such an agreement [obligating Enron to take Merrill out of the
transaction as contained in the first draft of the engagement letter] would be improper
because such a transaction could be viewed as a parking transaction,” and he deleted
the buy-back language. Dkt.1168, Ex. G, at p. 6.
Alan Hoffman: “Enron did not have an obligation to find a buyer of Merrill Lynch’s
interest, but Fuhs did state that Enron would try to help Merrill Lynch find a buyer for Merrill Lead Outside
their interest.” Dkt.1204, Ex. A, at p. 5. Counsel: Never Indicted
Paul Wood: Wood confirmed that the transaction was “an equity-like investment,”
which did not contain “an Enron Corp. Guarantee.” Dkt.1168, Ex. R, at pp. 39-40. Merrill Executive:
Never Indicted
3
EXHIBIT A-1
Tables Turned on Prosecution in Stevens Case - NYTimes.com
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April 8, 2009
Tables Turned on Prosecution in Stevens Case

By NEIL A. LEWIS
WASHINGTON — A federal judge dismissed the ethics conviction of former Senator Ted Stevens of
Alaska on Tuesday after taking the extraordinary step of naming a special prosecutor to investigate
whether the government lawyers who ran the Stevens case should themselves be prosecuted for
criminal wrongdoing.
Judge Emmet G. Sullivan, speaking in a slow and deliberate manner that failed to conceal his anger,
said that in 25 years on the bench, he had “never seen mishandling and misconduct like what I have
seen” by the Justice Department prosecutors who tried the Stevens case.
Judge Sullivan’s lacerating 14-minute speech, focusing on disclosures that prosecutors had improperly
withheld evidence in the case, virtually guaranteed reverberations beyond the morning’s dismissal of
the verdict that helped end Mr. Stevens’s Senate career.
The judge, who was named to the Federal District Court here by President Bill Clinton, delivered a
broad warning about what he said was a “troubling tendency” he had observed among prosecutors to
stretch the boundaries of ethics restrictions and conceal evidence to win cases. He named Henry F.
Schuelke 3rd, a prominent Washington lawyer, to investigate six career Justice Department
prosecutors, including the chief and deputy chief of the Public Integrity Section, an elite unit charged
with dealing with official corruption, to see if they should face criminal charges.
http://www.nytimes.com/2009/04/08/us/politics/08stevens.html?_r=1&pagewanted=print (1 of 4) [7/7/2010 11:18:49 AM]

Only days after a jury
Case last October Document
4:03-cr-00363 found Mr.1217-2
Stevens Filed
guiltyinon seven
TXSD onfelony counts,
07/09/10 Page he3was
of 5 narrowly
defeated in his bid for re-election. Mr. Stevens had been the longest-serving Republican in the history
of the Senate.
The smile Mr. Stevens displayed during Tuesday’s court session would have been unfamiliar to those
who have followed him in the Senate, where he had a reputation as being dour and grumpy.
In a brief statement, Mr. Stevens told the court that he had long maintained an unwavering faith in the
judicial system. “But what some members of the prosecution team did nearly destroyed my faith,” he
said. “Their conduct had consequences for me that they will never realize and can never be reversed.”
Mr. Stevens was charged with failing to list on Senate disclosure forms some $250,000 worth of goods
and services he received, mostly to transform a modest chalet he owned in Girdwood, Alaska, into a
more splendid residence.
During the five-week trial, prosecutors were repeatedly forced to acknowledge that they had failed to
turn over information to defense lawyers as required. “Again and again, both during and after the trial
in this case, the government was caught making false representations and not meeting its discovery
obligations,” Judge Sullivan said Tuesday.
A 1963 Supreme Court ruling, Brady v. Maryland, requires prosecutors to give a defendant all
information they hold that might materially help the defense.
The Stevens case finally collapsed last Wednesday, more than five months after the verdict, when Eric
H. Holder Jr., the recently installed attorney general, asked that all charges be dismissed because the
new lawyers whom he had put in charge of the case had discovered yet another example of concealment.
During the trial, defense lawyers argued that Mr. Stevens had written a letter to Bill Allen, a onetime
friend and the owner of a huge oil services company, asking for a bill for all the goods and services that
Mr. Allen had provided. Mr. Allen, the chief prosecution witness, discredited that letter, testifying that

he had been told by Bob Persons, an emissary from Mr. Stevens, to ignore the letter because the senator
was just seeking to provide a false record to protect himself.
But recently discovered notes showed that prosecutors who interviewed Mr. Allen on April 15, 2008,
heard him say that he did not remember any such conversation with Mr. Persons.
Mr. Stevens’s defense lawyer, Brendan Sullivan, told the court Tuesday that he had been blindsided by
Mr. Allen’s testimony about the letter. “It was the most explosive testimony in the case,” Mr. Sullivan
said.
Mr. Sullivan said that had he known of the prosecutors’ notes, he would have been able to argue that
Mr. Allen’s account of the conversation with Mr. Persons was fabricated.
Paul O’Brien, chief of the new prosecution team that discovered the latest impropriety by the original
prosecutors, said in court that “we deeply regret that this has occurred.”
Judge Sullivan named six prosecutors as the subject of Mr. Schuelke’s investigation, including William
M. Welch II, who heads the public integrity unit, and his deputy, Brenda K. Morris. Justice Department
officials said the prosecutors remained at work on Tuesday.
The other lawyers are Joseph W. Bottini, James A. Goeke, Nicholas A. Marsh and Edward P. Sullivan.
None of them were in the courtroom Tuesday except as presences to be repeatedly flayed by the judge
and Brendan Sullivan.
Judge Sullivan also criticized Michael B. Mukasey, the last attorney general in the Bush administration,
saying it was shocking that he had failed to respond to letters from the defense team complaining about
the Stevens prosecution. Mr. Mukasey’s office would not comment.
Judge Sullivan previously served on the District of Columbia Superior Court, the equivalent of a state
court, to which he was appointed by President Ronald Reagan.

Like other judges on the Federal District Court in the nation’s capital, he has ruled on cases involving
the rights of detainees at Guantánamo Bay, Cuba, and other issues of federal policy. He is now hearing a
case that he will decide without a jury: the contention of animal rights advocates that the Ringling
Brothers and Barnum & Bailey Circus mistreats its elephants.
Michael Madigan, an experienced former prosecutor with the Orrick law firm in Washington, said
Judge Sullivan’s decision to name his own prosecutor was highly unusual but was explicitly provided
for in the rules of federal procedure. Under the rules, Mr. Madigan said, a judge may choose his own
prosecutor for contempt investigations.
Mr. Madigan said Mr. Schuelke would “operate under the authority of the court.”
“He will then recommend to the court whether to seek criminal contempt charges,” Mr. Madigan said.
David Johnston contributed reporting.
Copyright 2009 The New York Times Company
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1 UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA
2
--------------------------X
3 UNITED STATES OF AMERICA, Docket No. 08-231
Plaintiff,
4
v. Washington, D.C.
5 Tuesday, April 7, 2009
10:10 a.m.
6
THEODORE F. STEVENS,
7 Defendant.
---------------------------X
8
MOTION HEARING
9 BEFORE THE HONORABLE EMMET G. SULLIVAN
UNITED STATES DISTRICT JUDGE
10
11 APPEARANCES:
12 For the Government: UNITED STATES DEPARTMENT OF JUSTICE

Criminal Division, Narcotic and
13 Dangerous Drug Section
By: Mr. Paul M. O'Brien
14 1400 New York Avenue, N.W.
Suite 11100
15 Washington, D.C. 20005
202.514.0169
16 paul.obrien@usdoj.gov
17 UNITED STATES DEPARTMENT OF JUSTICE

Criminal Division, Domestic Security
18 Section
By: Mr. David Jaffe
19 950 Pennsylvania Avenue
Washington, D.C. 20530
20 202.514.0865
david.jaffe@usdoj.gov
21
UNITED STATES ATTORNEY'S OFFICE
22 Criminal Division, Fraud Section
By: Mr. William Stuckwisch
23 1400 New York Avenue, N.W.
24 202.514.0169
william.stuckwisch@usdoj.gov
25 APPEARANCES cont'd on next page.
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1 APPEARANCES, cont'd.
2 For the Defendant: WILLIAMS & CONNOLLY, L.L.P.

By: Mr. Brendan V. Sullivan
3 Mr. Robert M. Cary
Mr. Alex G. Romain
4 Ms. Beth Stewart
Mr. Joseph Terry
5 Mr. Craig Singer
725 Twelfth Street, N.W.
6 Washington, D.C. 20005
202.434.5000
7 bsullivan@wc.com
csinger@wc.com
8 aromain@wc.com
bstewart@wc.com
9 jterry@wc.cm
rcary@wc.com
10
Court Reporter: Catalina Kerr, RPR
11 Official Court Reporter
U.S. District Courthouse
12 Room 6716
13 202.354.3258
catykerr@msn.com
14
15 Proceedings recorded by mechanical stenography, transcript
16 produced by computer.
17
18
19
20
21
22
23
24
25
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1 P-R-O-C-E-E-D-I-N-G-S
2 (10:10 P.M.; OPEN COURT; DEFENDANT PRESENT WITH HIS
3 ATTORNEYS.)
4 THE DEPUTY CLERK: Criminal Case 08-231, United
5 States versus Theodore Stevens. Would counsel please identify
6 yourselves for the record.
7 MR. O'BRIEN: Paul O'Brien, David Jaffe, Bill
8 Stuckwisch for the United States.
9 THE COURT: Good morning.
10 MR. CARY: Good morning, Your Honor. Joe Terry,
11 Alex Romain, Beth Stewart, Brendan Sullivan, and Rob Cary for
12 Senator Stevens, who's present.
13 THE COURT: All right. Good morning. This is
14 indeed a dramatic day in a case that has -- has had many
15 dramatic and unfortunately many shocking and disturbing
16 moments. For nearly 25 years I have told defendants appearing
17 before me that in my courtroom they will receive a fair trial
18 and that I will make sure of it. In nearly 25 years on the
19 bench, I've never seen anything approaching the mishandling
20 and misconduct that I've seen in this case.
21 Before we hear from the parties this morning, the
22 Court believes it is important to take a few minutes to talk
23 about how we got to this point in this case and to share some
24 thoughts about what we, as a legal community, need to do to
25 safeguard the integrity of our criminal justice system.

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1 The United States Government has an obligation to
2 pursue convictions fairly and in accordance with the
3 Constitution, and when the Government does not meet its
4 obligations to turn over evidence, the system falters.
5 Again and again, both during and after the trial in
6 this case, the Government was caught making false
7 representations and not meeting its discovery obligations.
8 And each time those false representations or unmet obligations
9 came to light, the Government claimed that it had simply made
10 a good faith mistake, that there was no ill intent and/or that
11 the Court had already taken steps to address the problem and
12 therefore there was no need for court action.
13 When the Government failed to produce Rocky
14 Williams' exculpatory grand jury testimony, the Government
15 claimed that this testimony was immaterial. When the
16 Government sent Mr. Williams back to Alaska without advising
17 the Defense or the Court, notwithstanding the Court's
18 interactions with counsel for the parties that weekend, the
19 Government asserted that it was acting in, quote, good faith,
20 end quote.
21 When the Government affirmatively redacted
22 exculpatory statements from FBI Form 302s, it claimed that,
23 quote, it was just a mistake, end quote.
24 When Government counsel told the Court that Bill
25 Allen had not been reinterviewed the day before a hearing on

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1 its Brady disclosures, that was a, quote, mistaken
2 understanding, end quote.
3 When the Government failed to turn over exculpatory
4 statements from Dave Anderson, it claimed that they were
5 immaterial.
6 When the Government failed to turn over a critical
7 grand jury transcript containing exculpatory information, it
8 claimed that it was inadvertent.
9 When the Government used business records that the
10 Government undeniably knew were false, it said that it was
11 unintentional.
12 When the Government failed to produce the bank
13 records of Bill Allen, it claimed that a check included in
14 those bank records was immaterial to the Defense.
15 When an FBI agent involved with the investigation
16 and prosecution filed a complaint alleging misconduct on the
17 part of the prosecutors and another FBI agent, not only did
18 the Government seek to keep that complaint a secret but the
19 Government claimed that the allegations had nothing to do with
20 the verdict and no relevancy to the Defense, that the
21 allegations could be addressed by the Office of Professional
22 Responsibility's investigation and that any misconduct had
23 already been addressed and remedied during the trial.
24 In fact, as recently as February the 6th, the
25 Government told the Court that there was no need for any
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1 post-trial discovery and that the Government was, and I quote,
2 confident that its response to the Defendant's post-trial
3 motions would resolve the need for further inquiry into the
4 allegations as they relate to the trial and the convictions of
5 the Defendant, end quote.
6 And yet, after the Court held three senior attorneys
7 in contempt for blatantly failing to comply with this court's
8 order to produce documents and a new team of prosecutors was
9 assigned to the case, we learned for the first time what may
10 well be the most shocking and serious Brady violations of all,
11 that the Government failed to tell the Defense of an interview
12 with Bill Allen in which Allen stated that he did not recall a
13 conversation with Bob Persons about sending the Senator a bill
14 and that Allen estimated the value of the VECO work on the
15 Senator's home at $80,000, far less than the hundreds of
16 thousands of dollars the Government had alleged at trial.
17 As this court said during the trial, and I quote,
18 this is not about prosecution by any means necessary, end
19 quote, and as the Court also said, and I quote, the fair
20 administration of justice does not depend on the luck of the
21 draw or a lucky day or a lucky continuance, end quote; indeed,
22 it should not depend on who represents the Defendant, whether
23 an FBI agent blows a whistle, a new administration, a new
24 attorney general or a new trial team. The fair administration
25 of justice depends on the Government meeting its obligations

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1 to pursue convictions fairly and in accordance with the
2 Constitution. There was no question whatsoever in this case
3 that the Government knew of its obligations. The Court issued
4 discovery orders and talked about Brady from Day One;
5 nevertheless, the Government repeatedly failed to meet those
6 obligations.
7 The importance of these obligations cannot be
8 overstated. As the Supreme Court explained in its 1999
9 decision in a case of Strickler versus Green, and I quote, in
10 Brady, this court held that the suppression by the prosecution
11 of evidence favorable to an accused upon request violates due
12 process where the evidence is material either to guilt or to
13 punishment, irrespective of the good faith or bad faith of the
14 prosecution.
15 "We have since held that the duty to disclose such
16 evidence is applicable, even though there has been no request
17 by the accused, and that the duty encompasses impeachment
18 evidence as well as exculpatory evidence. Such evidence is
19 material if there is a reasonable probability that, had the
20 evidence been disclosed to the defense, the result of the
21 proceeding would have been different.
22 "Moreover, the rule encompasses evidence known only
23 to police investigators and not to the prosecutor. In order
24 to comply with Brady, therefore, the individual prosecutor has
25 a duty to learn of any favorable evidence known to the others

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1 acting on the Government's behalf in this case, including the
2 police. These cases, together with earlier cases condemning
3 the knowing use of perjured testimony, illustrate the special
4 role played by the American prosecutor in the search for truth
5 in criminal trials.
6 "Within the federal system, for example, we have
7 said that the United States Attorney is the representative,
8 not of an ordinary party to a controversy but of a sovereignty
9 whose obligation to govern impartially is as compelling as its
10 obligation to govern at all, and whose interest, therefore, in
11 a criminal prosecution is not that it shall win a case, but
12 that justice shall be done, end quote.
13 We must never forget the Supreme Court's directive
14 that a criminal trial is a search for the truth. Yet in
15 several cases recently this court has seen troubling failures
16 to produce exculpatory evidence in violation of the law and
17 this court's orders. Whether you are a public official, a
18 private citizen or a Guantanamo Bay detainee, the prosecution,
19 indeed the United States Government must produce exculpatory
20 evidence so that justice shall be done.
21 I, therefore, urge my judicial colleagues on every
22 trial court everywhere to be vigilant and to consider entering
23 an exculpatory evidence order at the outset of every criminal
24 case, whether requested to do so or not, and to require that
25 the exculpatory material be turned over in a useable format

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1 because, as we've seen in this case, the use of summaries is
2 an opportunity for mischief and mistake, and I encourage the
3 Attorney General, for whom I have the highest regard, to
4 require Brady training for new and veteran, experienced
5 prosecutors throughout the country and also encourage an open
6 dialogue between defense attorneys and prosecutors regarding
7 these discovery obligations.
8 Further, I urge the President and the Attorney
9 General, as they select new United States attorneys, to obtain
10 from those appointees their commitments to fulfilling these
11 important obligations, and indeed, the Senate confirmation
12 process should also address these most important prosecutorial
13 obligations.
14 Those are a few thoughts about how we got to this
15 point and where we go from here. I'll have more to say in a
16 few minutes, but first I'll hear from the Government. We are
17 here on the Government's motion to set aside the verdict and
18 dismiss the indictment with prejudice.
19 Before I hear from the Government, I want to
20 recognize Mr. O'Brien, Mr. Jaffe and Mr. Stuckwisch. The
21 record in this case was voluminous with a post-trial docket
22 even more extensive than the trial docket. The Court has no
23 doubt that the three of you worked around the clock over the
24 last seven weeks reviewing evidence, transcripts, pleadings,
25 opinions and orders, to so thoroughly familiarize yourself

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1 with that record that you were able to recognize what
2 information had not been turned over and why that information
3 was relevant. It could not have been an easy task, and the
4 Court thanks you for your efforts. Counsel.
5 MR. O'BRIEN: Good morning, Your Honor.
6 THE COURT: Good morning.
7 MR. O'BRIEN: Pursuant to Rule 48 of the Federal
8 Rules of Criminal Procedure, the United States respectfully
9 moves this court to set aside the verdict and dismiss the
10 indictment with prejudice, and as I indicated to the Court
11 last week, my comments this morning will be brief.
12 I just want to talk a little bit about how we
13 arrived at the decision we arrived at and generally where we
14 got to this morning. As the Court knows, in February of 2009,
15 Rita Glavin, the acting head, the Acting Assistant Attorney
16 General for the criminal division appointed myself, Mr. Jaffe
17 and Mr. Stuckwisch to handle the post-trial litigation in this
18 matter.
19 Specifically, we were asked to handle any litigation
20 arising from the complaint that was filed by Special Agent
21 Joy, and I know the Court is very familiar with that
22 complaint.
23 As the Court is also aware, we conducted a number of
24 witness interviews, reviewed documents in order to prepare for
25 the Government's response to the Defendant's motion to dismiss

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1 and also to prepare for a potential evidentiary hearing
2 concerning the allegations in the Joy complaint.
3 We thought it was important that we engage that
4 process and be as transparent as possible with the Court and
5 with the Defense, and that is why we elected early on to
6 voluntarily produce the 302s generated from the witness
7 interviews as we were preparing to file a response to the
8 motion to dismiss and for the potential evidentiary hearing.
9 It was during this process that we learned that
10 Mr. Allen had been interviewed on April 15th, 2008. The
11 Court has, I think, accurately summarized the statements that
12 are in our pleading concerning what we learned of that
13 interview, and I think certainly the Court, having heard and
14 tried this case, knows the significance not only of
15 Mr. Allen's trial testimony but also the significance of the
16 information contained in the notes that was not provided to
17 the Defense.
18 The Government was obligated to produce the
19 information from the April 15th, 2008 interview with
20 Mr. Allen to the Defense, and they did not do so.
21 Once we learned that, our focus shifted from looking
22 at the allegations in the joint venture complaint to dealing
23 with this issue because we recognized it was a serious and
24 important issue. What we did is what we were obligated to do
25 is we immediately provided that information to the Defense.

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1 And I certainly appreciate the Court's kind comments this
2 morning, but really, in my view, Mr. Jaffe, Mr. Stuckwisch and
3 myself did only what we were obligated to do, which was once
4 we found that information, to provide it to the Defense.
5 We saw that information --
6 THE COURT: So what you did was, you did what should
7 have been done months ago.
8 MR. O'BRIEN: Well, we --
9 THE COURT: At least a year ago, almost a year to
10 the date, April 15th; is that correct?
11 MR. O'BRIEN: The interview was April 15th, yes,
12 Your Honor.
13 We recognized the importance of that information,
14 and in analyzing that information and in looking at the trial
15 and the particular facts of this case, we reached the
16 conclusion that in the interest of justice, the Defendant was
17 entitled to a new trial, that the failure to turn over that
18 information warranted a new trial.
19 At that point, Your Honor, the issue became, should
20 we retry the Defendant? Should the Department of Justice
21 retry this particular Defendant, given the facts of this
22 particular case? And as the Court knows, the Attorney General
23 decided that in this particular case that it was in the
24 interest of justice not to retry this Defendant.
25 I hope the Court appreciates one thing this morning,

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1 speaking on behalf of the Department, we deeply, deeply regret
2 that this occurred. We would ask the Court to grant the
3 Government's motion, dismiss the indictment with prejudice,
4 and again, I apologize to the Court and we deeply regret that
5 this occurred. I would ask the Court grant our motion.
6 THE COURT: All right. Let me ask you this,
7 Counsel, and I need a very precise answer to this question.
8 The Government counsel will concede, will it not, that the
9 failure to produce the notes or information from the April 15,
10 2008 interview with Bill Allen in which he did not recall
11 having a conversation with Bob Persons about sending the bill
12 to the Senator was a Brady violation?
13 MR. O'BRIEN: It was a Brady violation. It was
14 impeaching material, and the Court knows that Giglio is a
15 subset of Brady.
16 THE COURT: Right.
17 MR. O'BRIEN: Also, there was -- I failed to mention
18 this and I should have. The Court did mention it, but there
19 was also information about the value of the work that was
20 performed.
21 THE COURT: And that was going to be the second
22 question. Indeed, was that a Brady violation as well?
23 MR. O'BRIEN: I believe that was. At a minimum, it
24 was favorable evidence to the Defense that should have been
25 turned over pursuant to the instructions that Your Honor

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1 previously mentioned.
2 THE COURT: All right. And if I understand it
3 correctly, this information was noted in -- in witness
4 interview sheets maintained by attorneys at the Department of
5 Justice?
6 MR. O'BRIEN: The information that we learned was --
7 as we pointed out in our papers, were interview notes of
8 prosecutors.
9 THE COURT: The prosecutors. Does the Government
10 intend to make public the results of the OPR investigation?
11 And if not, does the Government have a view as to whether
12 there are restrictions on the Court's ability to make public
13 those results?
14 MR. O'BRIEN: That is a fair question, Your Honor.
15 Let me just -- if I can just walk the Court through.
16 THE COURT: Sure.
17 MR. O'BRIEN: I am not trying to duck the answer --
18 THE COURT: No, I understand that.
19 MR. O'BRIEN: Duck the question, excuse me.
20 THE COURT: No.
21 MR. O'BRIEN: As we indicated in our --
22 THE COURT: This team hasn't ducked anything, and I
23 appreciate that.
24 MR. O'BRIEN: As we indicated in our pleading, the
25 Government will share the findings of the OPR inquiry with the
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1 no objection to the unsealing of the bench conferences.
2 THE COURT: All right. Defense counsel?
3 MR. CARY: Your Honor, Defense has reviewed them and
4 we have no objection as well, and we filed a pleading to that
5 effect this morning.
6 THE COURT: All right. That's fine. Therefore, the
7 Court will direct that the bench conferences be unsealed and
8 posted on the public docket. There is one off-the-record
9 discussion that the Court held a month or two ago, and that
10 will remain sealed.
11 Finally, the Court has repeatedly been told that the
12 office of professional responsibility at the Department of
13 Justice is conducting an investigation into the investigation
14 and prosecution in this case. The Court first heard about an
15 investigation on October the 2nd during the trial when a
16 member of the prosecution team informed the Court that the
17 prosecution team had, in her words, self-reported,
18 quote/unquote, to the Office of Professional Responsibility
19 because the Court had found a Brady violation.
20 That was six months ago. The Court next heard about
21 the OPR investigation when the Government assured the Court it
22 need not take any action based on the Joy complaint because
23 OPR was conducting a thorough investigation. That was four
24 months ago. And yet, and to date, the silence has been
25 deafening.
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1 Similarly, the Defense tells us just moments ago
2 they received no response to their numerous letters to former
3 Attorney General Mukasey urging him to commence a formal
4 investigation. Shocking but not surprising.
5 The Court looks forward to receiving the results of
6 the OPR investigation whenever that investigation concludes.
7 But the events and allegations in this case are too serious
8 and too numerous to be left to an internal investigation that
9 has no outside accountability. This court has an independent
10 obligation to ensure that any misconduct is fully investigated
11 and addressed in an appropriate public forum.
12 Accordingly, the Court shall commence criminal
13 contempt proceedings against the original prosecution team,
14 including William Welch, Brenda Morris, Joseph Bottini,
15 Nicholas Marsh, James Goeke and Edward Sullivan pursuant to
16 the Court's authority under Federal Rule of Criminal Procedure
17 42, based on failures of those prosecutors to comply with the
18 Court's numerous orders and potential obstruction of justice.
19 Moreover, as provided by that Rule and because the
20 subject attorneys are employed by the Department of Justice,
21 the Court finds that the interest of justice requires the
22 appointment of a non-Government disinterested attorney to
23 prosecute that matter. Therefore, the Court will appoint
24 attorney Henry F. Schuelke, S-c-h-u-e-l-k-e, III, as
25 prosecutor. Mr. Schuelke is a partner at the D.C. law firm,

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1 Janis, Schuelke & Wechsler, and enjoys an outstanding local
2 and national reputation for fairness, integrity and sound
3 judgment.
4 Mr. Schuelke has served as a military judge in the
5 United States Army judiciary. He also served for seven years
6 as an Assistant United States Attorney for the District of
7 Columbia, including three years as Executive Assistant United
8 States Attorney. He has also serve as special counsel for the
9 United States Senate Committee on Foreign Relations and
10 Special Counsel to the United States Senate Select Committee
11 on Ethics. He currently serves as Special Counsel to the
12 District of Columbia Commission on Judicial Disabilities and
13 Tenure.
14 Mr. Schuelke will investigate this matter with a
15 view toward filing an order to show cause, if appropriate.
16 Let me stress that I have not, by any means, prejudged these
17 attorneys or their culpability. I do not take this decision
18 lightly and I certainly hope the record will ultimately find
19 no intentional obstruction of justice.
20 Nevertheless, the Court has an obligation to
21 determine what happened here and respond appropriately, and I
22 intend to do so. To that end, the Court anticipates and
23 expects the United States' full cooperation in any further
24 proceedings, and indeed the Court will direct the United
25 States Government to cooperate fully with Mr. Schuelke,

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1 including providing him access to investigative files and
2 witnesses.
3 Now, at this point, the Court will focus on the
4 Government's motion to set aside the verdict and dismiss the
5 indictment with prejudice. The Court has the highest regard
6 for Attorney General Eric Holder. The Court had the honor of
7 serving on the Superior Court with him briefly and the Court
8 knows that Eric Holder has earned his impeccable reputation as
9 a lawyer firmly committed to fairness, integrity and the rule
10 of law.
11 Accordingly, the Court respects Mr. Holder's
12 decision to seek dismissal of this case in view of the
13 totality of circumstances surrounding this investigation and
14 prosecution, and the Court concurs with the Attorney General
15 that it is in the interest of justice that this verdict be set
16 aside and the indictment be dismissed with prejudice.
17 Accordingly, the Court grants the Government's
18 motion and dismisses this case with prejudice and indeed with
19 no prejudice to Rule 42 proceedings, as previously announced
20 by the Court. An appropriate order shall be entered today.
21 I actually have no further remarks at this point.
22 Before I recess, though, it's been a long hearing, a lot has
23 been said by everyone, including the Court. I want to take a
24 five-minute recess just to make sure that I have not
25 overlooked anything that needs to be said this morning. The

EXHIBIT B-1
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./--,
,/ - 1 -
) FEDERA BURAU OF INVSTIGATION

(
Date of transcription 11/04/2002

GARY CLARK DOLA, date of birth 1 , social
security number , home address
, was interviewed at the Bond building in
Washington, D. C. DOLA was represented by RICHARD WEINBERG,
FELICIA GROSS, and MARJORIE J. PIERCE. Also present during the
interview was Assistant United States Attorney (AUSA) Andrew
Weissmann and Securities and Exchange Commission (SEC) attorney
Kevin Loftus. After being advised of the identity of the
interviewing agent and the nature of the interview, DOLAN provided
the following information:
DOLA received a B.A. from University of Michigan in 1976

and a J.D. from Wayne State University in 1980. In September 1980,
DOLA worked at Merrill Lynch (ML) as an attorney in their ,
Corporate Law department for eight years. DOLA then transferred
to ML's Municipal Markets department and worked their for two to
three years. Then, DOLA transferred to ML's Emerging Markets
department where he worked for approximately three years. From
April 1999 to presenti DOLAN has worked at MLI s Investment Banking
(IB) department.
')
DOLAI s responsibilities in the IB department include
providing legal advice to ML's private equity placement group
structured leasing finance group, and IB department. Specifically, I
DOLA drafted private placement agreements, drafted engagement

letters, drafted deal documents, and attended 'equity committee
~ - (EC€)--meetings for-the -Private Equity Placeméht -group. -- DOLA
' attended Structured Leasing Committee meetings as well as drafted
deal documents for the Structured Leasing group. Among òther
things i he drafted engagement letters for the IB department.
The first time DOLA ever performed any work related to

Enron was in the summer of 1999. The Enron work related to ML's
Private Equity Placement group and an investment vehicle called
LJM2. ML was hired as an underwriter by LJM2 to help place the
fund. Regarding LJM2, DOLAN reviewed the engagement letter,
drafted deal documents related to the formation of a feeder fund
'for ML employees which enabled them to invest in LJM2 i reviewed the
Investigation on 10/24/2002 at Washington, D. C.

\
~Ie # 196C-HO-59147 Date dictated not dictated
by SA Orner J. Meisel/ojm
This document contains neither recommendations nor conclusions of the FBI. It is the property of the FBI and is loaned to your agency;
it and its contents are not to be distributed outside your agency.
DOJ-ENRONBARGE-000388
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"((:)
J, 196C-HO- 5 914 7
Continuation ofFD-302 of Gary Clark Dolan , On 10 /24/2 0 02 , Page 2
private placement memorandum (PPM), and attended the ECC review

meeting related to LJM2.
DOLA organized a conference call (sometime between the

summer of 1999 and the spring of 2000) between Enron and potential
ML employees who were eligible to invest in LJM2. DAVID SULLIVAN,
a ML banker, helped DOLA organize the conference call. The call
. lasted less than one hour but more than five minutes. ML possibly
recorded the conference call for potential ML investors who could
not attend the call.' ,If a tape was made, it would have been kept
for only one week. FASTOW and someone else who DOLA does not
recall spoke on behalf of LJM2. The purpose of the conference call
was to make a presentation to the potential ML investors about
LJM2. DOLA does not recall if there were any conversations about
the possible conflict of interest related to FASTOW being the
General Partner of LJM2 and Enron 1 s CFO.
KATHY ZRIKE, DON SCHNEIDER (head of Human Resources for

ML Investment Banking), and a couple of senior business people at
) ML decided who at ML could invest in LJM2. DOLAN i S role was to
prepare and review drafts of documents and E~mails related to ML i s
solicitation/indication of interest for the LJM2 investment. After
the LJM2 investment closedi DOLA received update letters from
LJM2 's General Partner and DOLA forwarded these letters to the ML
investors in LJM2. DOLAN worked on LJM2 issues at ML until
approximately August -2002 . EILEEN PORTER subsequently took- over
these functions from DOLA.
In November 20011 various ML investors in LJM2 expressed
concerns they had about. LJM2 to DOLAN. DOLAN contacted a female
employee (does not remember her name) at LJM2 a couple of times and
she told DOLAN that the ML LJM2 investors are more nervous than
they should be. DOLAN does not remember if this conversation
happened before or after Enron declared bankruptcy.
In November or December 20011 MICHAEL KOPPER held a

conference call for the ML LJM2 investors. This conference call
'was initiated because MLI s LJM2 investors were concerned about
LJM2 i s future prospects based on the collapse of Enron. KOPPER
described what investments' were being held in the LJM2 portfolio.
KOPPER discussed the valuations of the assets being maintained in
LJM2 and there was discussion about the prospect of the banks
accelerating LJM2 r s loan obligations. '
) Nigerian Barge:
FD.302a (Rev. 10-6-95)
//~.)
196C-HO- 5914 7
Continuation of FD.302 of Gary Clark Oolan . On 1 0 /24/2 0 02 . Page 3
DOLA first became aware of the prospect of ML investing

in an Enron project in Nigeria sometime before Christmas 1999 when
he attended a conference call. This conference call was held in
ZRIKE i s office and JIM BROWN was also present during the conference
call. DOLAN took notes during this meeting and still maintains a
copy of the notes. BROWN described the Nigerian Barge transaction
to the group. BROWN stated that Enron approached ML about
purchasing an interest in the Nigerian Barges and described the
proj ect as a floating power source for Nigeria. BROWN stated that
Enron initially planned to sell an interest in the Nigerian Barges
to a company called Marubeni, but Marubeni was not ready to
purchase it until early 2000. Enron wanted to sell an interest in
the Nigerian Barges by year end 1999 so they could generate
earnings for the fourth quarter of 1999. Enron proposed that ML
purchase an interest in the Nigerian Barges and that ML would only
have to hold it for a short period of time. BROWN stated that the
purchase price for ML would be small and that ML would earn a fee
from Enron for entering into the transaction.
) BROWN stated that there was going to be a conversation
between ML executives (DAN BAYLY and ZRIKE) and Enron executives
whereby ML was going to seek assurances from a senior officer at
Enron that if ML purchased an interest in the Nigerian Bargesi
Enron would help ML find a buyer for their interest if Marubeni did
not purchase ML i S interest. Enron had told ML that Marubeni was
going to purchase ML' s interest ih the Nigerian Barges by February
2000.
DOLA stated that Enron was merely providing a "moral
II to find a buyer for ML i S interest in the Nigerian
undertaking
Barges. DOLA stated that the agreement could not be in writing

and it was an oral agreement that had no formal legal significance.
DOLA understood that ML would hold their investment in the
Nigerian Barges for up to six month. Dolan had a sense that Enron
would not give ML any assurances in writing and ML would not ask
Enron for such a request.
DOLAN had a subsequent conversation with BROWN in which

BROWN conveyed that he was concerned with the commercial risk ML
was taking on the Nigerian Barge transaction. BROWN was worried
about the potential environmental risk associated with owning power
plants and ML1 s liability issues. BROWN wanted to ensure that the
deal documents addressed these environmental and liability risks.
1
FD.302a (Rev. 10-6-95)
(~-")
196C-HO-59147
Continuation ofFD-302 of Gary Clark Dolan . On 1 0 /24 /2 0 02 . Page 4
BROWN complained about the Nigerian Barge transaction.

BROWN stated that it was not his transaction and he was being stuck
with handling it because the transaction fit into the type of work
his group handled. The Nigerian Barge transaction was a deal which
was initiated by ML i S bankers in Texas. BROWN also complained
because his group was not earning any fees for handling the
transaction and that the deal was being consummated close to the
end of the year.
DOLA stated that ML was not in the business of

purchasing power plant barges in Nigeria and that is why they
originally decided to place the deal
in ML i S leasing unit. DOLA
was not involved in ML' s approval process or what internal ML
committee should review this transaction.
DOLAN does not remember when he learned that ML i S Debt

Markets Committee (DMCC) either reviewed or was going to review the
Nigerian Barge transaction. DOLAN did not at tend the DMCC meeting
and he does not know why it was being reviewed by the DMCC.
Typically 1 BROWN took transactions he worked on to the Lease
Advisory Committee. However, the Nigerian Barge transaction was
taken to the DMCC.
DOLA was shown a copy of notes (bate stamped MD037405)

which DOLA acknowledged was his notes. DOLA read his notes to
the agents as follows:
"Enron owns Nigerian Barge Co. has oil barges they will
build power plants on top and would sell power to Nigeria: Enron
wants to sell equity in project to book accounting gain. ML
Houston to put $7 million into. $40 million in fees last year and
this. ' ML to buy stock in BargeCo for $7 million and if goes into
service earns 22% return. Approved by executive committee. Dan
BAYLY, Kevin Cox, Kathy Z, and EVP (executive vice president) who
promises we will be taken out within 6 month. Did LLC to be owned
MLMLM. $7 million to buy stock in. LLC will borrow $21 million
from different Enron subsidiary. No recourse. We to buy $28
million in stock. Pref A, Pref B, common - we buy 20% of voting
rights (2/10). We get next 3 years cash flow from Barge operation.
Book $12, million gain at year on the stock. Nigerian Co. is in
existence. DMCC @ 12: 00 today 12/22. 10: 30 am (ML suggestion) .
Dan BAYLY business group at Enron. Cookies for Santa. $250
advisory fee. II
FD-302a (Rev. 10-6-95)
~-.)
/.
196C-HO-59147
Continuation ofFD-302 of Gary Clark Dolan ,On 10 /24 /2 0 02 . Page 5
The name II Cox" in DOLA's notes refers to a ML employee

who was a senior person at ML who dealt with commitment issues.
The name II Cox
II references that either Cox was on the call or that
Cox was supposed to be on the call with Enron. The reference "EVP"
refers to Executive Vice President at Enron. The word "promises II
refers to the assurances made by Enron regarding finding a buyer
for ML i S interest in the Nigerian Barges. DOLA explained that
"promise" could mean that the conversation where Enron made
assurances to ML already happened; not that it was going to happen
in the future. "40M in fees II is a reference to the fees earned by
ML from Enron.
DOLA has no reason to believe that "DMCC @ 12: 00 today
12/22" on bates stamp page ML037406 is not accurate with respect to
the date the DMCC meeting was held. DOLA is not sure if "Book
$12M @ year on the stock" refers to the amount Enron was able to
book due to ML i S investment in the Nigerian Barges.
Sometime close to the end of the fourth quarter 1999,

) DOLA reviewed and made comments to a draft of the Nigerian Barge
engagement letter between ML and Enron. The purpose of the
engagement letter was to memorialize the agreement between ML and
Enron so if there were any questions about the deal in the future,
it would be in writing. The engagement letter also insured that ML
would receive their fee for entering into the Nigerian Barge
transaction.
DOLA also had a conversation with JEFF WILSON about the
engagement letter. DOLA believes WILSON helped draft the
engagement letter. DOLA requested that WILSON delete some of the
language in the engagement letter. Generally, ML engagement
letters use general terms to describe a deal because the deal terms
can subsequently change. The Nigerian Barge engagement letter was
too specific and DOLA wanted the letter to be more general.
Furthermore, DOLA made changes to some of the terms

related to the deal that were provided in the engagement letter
because DOLAN did not believe that those were the actual terms.
DOLA stated that the original draft of the engagement letter
obligated Enron to eventually take ML out of the Nigerian Barge
transaction. This was contrary to DOLA's understanding of the
transaction and DOLA believed that such an agreement would be
improper because such a transaction could be viewed as a "parking"
transaction.
f
FD-302a (Rev. 10-6-95)
J--- )'
:
196C-HO- 5914 7,
Continuation of FD-302 of Gary Clark Dolan' , On 1 0 /24/2 0 02 . Page 6
DOLA's understanding was that ML purchased an interest

in the Nigerian Barges with the expectation that Enron would help
ML find a buyer for ML i S interest in the Nigerian Barges. DOLA
stated that there was no obligation or commitment that Enron would
find a buyer or that Enron purchase, ML i S interest if a buyer could
not be found. This was merely an oral understanding between ML and
Enron that if Marubeni did not purchase ML' s interest then Enron
would help ML find another buyer.
DOLA was shown a copy of an E-mail from WILSON to DOLA

dated 12/23/1999 (bate stamped ML034707). This E-mail contained a
copy of the proposed changes to the engagement letter made by
DOLA. DOLAN acknowledged that the handwriting on the page is his.
DOLA does not remember talking to anyone at Enron about the
changes he made to the engagement letter. However 1 DOLA did
receive handwritten comments from someone from Enron. Enron did
not obj ect to the language in the original draft of the engagement
II However 1 DOLA did obj ect to this language and made the buy .
letter which stated that "Enron will buy or find affiliate to
necessary changes.
DOLAN acknowledged that he had seen the interoffice

memorandum bate stamped MD037390 through MD037395 at the time the
Nigerian Barge transaction was being consummated. DOLA does not
remember seeing the appropriation request bate stamped MD037396
until he prepared for his interview with the
FBI .
DOLA did not remember what ML i S rate of return was for
the Nigerian Barge transaction. ML was also paid a fee by Enron
for entering into the transaction. DOLA did not believe there was
a cap on how much money ML could make on their investment in the
Nigerian Barges.
Sometime in January or February 2000, DOLA had a meeting

with ALLA HOFFMA, an attorney not from ML, where they discussed
the formation of a ML entity which would house the Nigerian Barges.
ML formed a Cayman company for tax purposes. DOLA was in charge
of forming the Cayman company for ML. '
In June 20001 DOLA was contacted by JOE VALENTI, or
someone who worked for VALENTI, who told DOLAN that ML was selling
their interest in the Nigerian Barges. DOLA was asked to review
the documentation and draft the resolutions. DOLA does not
remember if he knew that the. purchaser was LJM2.
Case
FD.302a (Rev. 10-6-95) 4:03-cr-00363 Document 1217-5 Filed in TXSD on 07/09/10 Page 8 of 12
,'.--
/, '. )
¡ ,/ 196C-HO- 59147
Continuation ofFD-302 of Gary Clark Dolan . On 1 0 /24/2 0 0 2 , Page 7
DOLAN does not know if ML performed any due diligence or

analyzed any valuations with respect to the Nigerian Barge
transaction.
DOLA was shown a copy of documents bate stamped
MD037412-037417. DOLA does not remember seeing these E-mails.
DOLA was shown a copy of hand written notes bate stamped MD037424
which he did not recognize. DOLA was shown a copy of document
related to a special meeting of the ML Board of Directors dated
12/29/99 (bate stamped MD037482-037483). DOLA does not remember
seeing this döcument. DOLA does not remember this meeting and he
does not remember working on 12/29/1999. MARK MCANDREWS was the
Chief Administrative Officer at ML. DOUGLAS P. MADEN was a
paralegal at ML.
In early 2002, ZRIKE asked DOLAN what he recalled from

the Nigerian Barge transaction. DOLAN does not recall anything
else from this conversation.
'ì
i DOLA did not work on drafting a ML demand letter to
Enron regarding being taken out of the Nigerian Barge transaction.
DOLAN did not work on an energy swap deal between Enron
and ML.
) ,
'1
,T'JL-30-2004 15: 37 DOJ/FRAUD 2023533155 P.02/11
U.S. Department of Justice
Enron Task Force
1400 New York Avenue

Wash/ngron. D.C. 2()SlO
July 30,2004
BY FACSIMILE
Lawrence J. Zweifach, Esq. William G. Rosch, III, Esq.
Holly Kulka, Esq. Rosch & Ross
Heller Ehrman White & McAuliffe LLP 2100 Chase Bank Building
120 West 45\h Street, 21 at Floor 707 Travis
NY, NY 10036-4041 Houston, Texas 77002
(counsel for James Brown) (counsel for Daniel Boyle)
fax. 212/763-7600 fax. 713/222-0906
David Spears, Esq. Dan Cogdell, Esq.

Richards Spears Kibbe & Qrbe LLP Cogdell & Goodling
One World Financial Center 402 Main St., Suite 6 South
NY, NY 10281-1003 Houston, Texas 77002
(counsel for William Fuhs) (counsel for Shiela Kahanek)
fax. 212/530-1801 fax. 713/426-2255
Thomas Hagemann, Esq. Richard Schaeffer, Esq.

Gardere Wynne Sewell LLP Dornbush Mensch Mandelstam Schaeffer
1000 Louisiana, Suite 3400 747 Third Avenue, 2Th Floor
Houston TX 77002-5007 NY, NY 10017
(counsel for Daniel Bayly) (counsel for Daniel Bayly)
fax. 713/276-6064 fax. 212/753-7673
Ira Lee Sorkin, Esq.

Daniel Horwitz, Esq.
Carter Ledyard & Milburn LLP
2 Wall St.
New York, NY 10005
(counsel for Robert Furst)
fax. 212/732-3232
Re: United States v. Daniel Bay1x, et a1., Cr. No. H-03-363 (Werlein, J.)
Dear Counsel:
The following swnmary is provided to you in compliance with the Court's Order of July
14th, 2004.
As you know, in April of2oo4, the Enron Task Force provided you with the names of
JUL-30-2004 15:38 DOJ/FRAUD 2023533165 P.05/11
Mark Devito
Furst phoned Devito to say that Enron had an equity opportunity, equity bridge
need, regarding a Nigerian electricity barge. Enron was looking to see if Merrill
would have an interest in purchasing that equity for $7 million. Devito did not
recall the term handshake, as referenced in a Merrill document) and recalls that
Enron would assist with finding a third-party equity investor for the NBD. When
asked about Bayly confmning with Enron a guaranty, as referenced in another
Merrill document, he said he did not recall such a conversation.
Bowen Diehl
Diehl indicated that he was asked by someone whether he recalled F\.~rst saying in
2000, words to the effect: they are not going to get us out of the barges, and that
he might have replied affirmatively.
Vincent Dimassimo
Jencks material as to Dimassimo was provided to the defense in early June, 2004)
as part of pre-trial discovery of government witnesses.
Gary Dolan
Dolan stated that he understood Enron was providing a moral undertaking to find
a buyer for Merrill's interest in the NBD. Dolan stated that the agreement could
not be in writing and that he believed it was an oral agreement that had no legal
significance. Dolan had a sense that Enron would not give Merrill any assurances
in writing and that Merrill would not ask Enron for such a request.
Dolan was asked about a handwritten MemlJ document in which he wrote "Dan
Bayly & Kevin Cox & Kathy Z [Zrike] & EVP [Executive Vice President] who
promises we will be taken out w/in 6 mos." Dolan stated that the word
"promises" refers to the assurances made by Emon regarding finding a buyer for
Merrill's interest in the NBD. Dolan said that "EVP" refers to Executive Vice
President at Enron. Dolan said that promise could mean that the conversation
already happened J not that it was going to happen.
Dolan had a conversation with Brown in which Brown conveyed that he was
concemed with the commercial risk Merrill was taking on the NBD. Brown
wanted to ensure that the deal documents addressed the potential environmental
risk associated with owning power plants and Merrill)s liability issues.
Brown stated that the NBD was not his transaction and he was being stuck with
4
JUL-30-2004 15:39 DOl/FRAUD 2023533165 P.06/11
handling it because the transaction fit into the type ofwork his group handled.
The NBD was initiated by Merrill's bankers in Texas. Brown also complained
because his group was not earning any fees for handling the transaction and that
the deal was being conswnmated close to the end of the year.
The NBD engagement letter was too specific and Dolan wanted the letter to be
more general. As to a draft engagement letter in his files, Dolan made changes to
some ofthe engagement letter tenns related to the deal because Dolan did not
believe that those were the actual terms. Dolan stated that the original draft of the
engagement letter obligated Enron to take Merrill out of the NBD eventually.
This was contrary to Dolan's understanding of the transaction. Dolan stated that
he believed there was no obligation or commitment that Enron would find a buyer
or that Emon purchase Merrill's interest if a buyer could not be found. Dolan
expressed the view that this was merely an oral understanding between Merrill
and Enron that ifMarubeni did not purchase Merrill's interest then Enron would
help Merrill find another buyer.
Dolan did not believe there was a cap on how much money Merrill could make on
their investment in the NBD.
Gerald Haul:h
There was an expected rate ofretum of 13% t015% for the NBD. Haugh had no
knowledge of an agreement between Enron and any Merrill employees to buy
back Merrill's position or of a guaranty given by Enron.
Hughes did not remember giving Colpean a bad review. Later in 2000, Colpean's
function at Enron International disappeared. Hughes recalled going to lunch with
someone from Enron North America and giving that person a good
recommendation of Colpean.
Hughes was asked why Enron would "inherit" Merrill's interest in the NBD if a
buyer could not be found by Enron for the NBD, as has been written by Hughes to
Glisan in an Enron email in May 2000. Hughes stated his group would inherit the
barges because of assurances Hughes understood Fastow gave to Merrill. Hughes
always understood that Fastow gave assurances to Merrill that they would be out
of the Nigerian barge deal by June 30th. Hughes thought that Fastow was telling
Merrill that Enron would do everything it could to take Merrill out. Hughes did
not understand initially that his group would have to buy the barges back if no
buyer was found. When Hughes responded to the Glisan email, HUghes stated
that he understood that Fastow made assurances to Merrill. Hughes did not
5
JUL-30-2004 15:41 DOl/FRAUD 2023533165 P.1Vl1
Zrike recalled a meeting in Davis' office attended by herself, Davis) Bayly) and
others. rilneyand Furst joined by phone. The participants in this discussion
walked through various risks of owning the NBD. There was a discussion about
materiality and the year-end nature of the trade. Zrike said that she was
comfortable this was not a made-up transaction. Either Tilney or Furst said that
the NBD was not being done to meet eamings expectations. Zrike, when asked
about her handwritten notation concerning the NBD to the effect of "relationship
loan that looks like equity" initially said it was just her jotting down her internal
concerns.
Very truly yours,
ANDREW WEISSMANN
Director, Enron Task Force
By: 1~1''1c=!-I~
Matthew ~ Friedric~
John Hemann
Kathryn H. Ruemmler
Enron Task Force
10
TnTAI P. 11
Marked-up Dolan 302 color code

Green = ETF disclosed Barge I
Red Box = Language ETF inserted to minimize or obfuscate
Yellow = Crucial Brady Evidence ETF failed to disclose
EXHIBIT B-2
1'0-302 (Rcv. 10-6-95)
• J •
FEDERAL. BUREAU Of INVESTIGATION
I)atc of tnlllscflption 11(04(2002
GARY CLARK DOLAN, / /

- -
was interviewed at the Bond building in
Washington, D.C. DOLAN was represented by RICHARD WEINBERG,
FELICIA GROSS, and MARJORIE J. PIERCE. Also present during the
interview was Assistant United States Attorney (AUSA) Andrew
Weissmann and Securities and Exchange Commission (SEC) attorney
Kevin Loftus. After being advised of the identity of the
interviewing agent and the nature of the interview, DOLAN provided
the following information:
DOLAN received a B.A. from University of Michigan in 1976

and a J.D. from Wayne State University in 1980. In September 1980,
DOLAN worked at Merrill Lynch (ML) as an attorney in their
Corporate Law department for eight years. DOLAN then transferred
to ML's Municipal Markets department and worked their for two to
three years. Then, DOLAN transferred to ML's Emerging Markets
department where he worked for approximately three years. From
April 1999 to present, DOLAN has worked at ML's Investment Banking
(IB) department.
DOLAN's responsibilities in the IB department include

providing legal advice to ML's private equity placement group,
structured leasing finance group, and IB department. Specifically,
DOLAN drafted private placement agreements, drafted engagement
letters, drafted deal documents, and attended equity committee
(ECC) meetings for the Private Equity Placement group. DOLAN
attended Structured Leasing Committee meetings as well as drafted
deal documents for the Structured Leasing group. Among other
things, he drafted engagement letters for the IB department.
The first time DOLAN ever performed any work related to

Enron was in the summer of 1999. The Enron work related to ML's
Private Equity Placement group and an investment vehicle called
LJM2. ML was hired as an underwriter by LJM2 to help place the
fund. Regarding LJM2, DOLAN reviewed the engagement letter,
drafted deal documents related to the formation of a feeder fund
for ML employees which enabled them to invest in LJM2, reviewed the
InvcstiglltiQn on ~1!,J0,,"/,-,2fC4L/,-,2~0i.!0,,"2L_ "' Wa shi ng t on , D . C .
File ~ 196C-HO 59147 Datc dicH!ted not dictated

by SA Orner J. Meisel/ojm
This document contains neithcr rccommendations nor eondusiuns of thc fBI. It is the property of thc fBI and is loaned to your agcncy:
it and its contents lire not to be distributed outside your agency.
1'!J-)02a(Rc:v 1(}.6.9S)
196C-HO-59147
(onlmUlllIOO offD-)02 of _--"G"'alaryct---"C....l"'alar..,k......D"'o"'l"'a"'n'- ."" 1 0 /24 /2002 . P", _",2__
private placement memorandum (PPM), and attended the ECC review

meeting related to LJM2.
DOLAN organized a conference call (sometime between the

summer of 1999 and the spring of 2000) between Enron and potential
ML employees who were eligible to invest in LJM2. DAVID SULLIVAN,
a ML banker, helped DOLAN organize the conference call. The call
lasted less than one hour but more than five minutes. ML possibly
recorded the conference call for potential ML investors who could
not attend the call. If a tape was made, it would have been kept
for only one week. FASTOW and someone else who DOLAN does not
recall spoke on behalf of LJM2. The purpose of the conference call
was to make a presentation to the potential ML investors about
LJM2. DOLAN does not recall if there were any conversations about
the possible conflict of interest related to FASTOW being the
General Partner of LJM2 and Enron's CFO.
KATHY ZRIKE, DON SCHNEIDER (head of Human Resources for

ML Investment Banking), and a couple of senior business people at
ML decided who at ML could invest in LJM2. DOLAN's role was to
prepare and review drafts of documents and E-mails related to ML's
solicitation/indication of interest for the LJM2 investment. After
the LJM2 investment closed, DOLAN received update letters from
LJM2's General Partner and DOLAN forwarded these letters to the ML
investors in LJM2. DOLAN worked on LJM2 issues at ML until
approximately August 2002. EILEEN PORTER subsequently took over
these functions from DOLAN.
In November 2001, various ML investors in LJM2 expressed

concerns they had about LJM2 to DOLAN. DOLAN contacted a female
employee (does not remember her name) at LJM2 a couple of times and
she told DOLAN that the ML LJM2 investors are more nervous than
they should be. DOLAN does not remember if this conversation
happened before or after Enron declared bankruptcy.
In November or December 2001, MICHAEL KOPPER held a

conference call for the ML LJM2 investors. This conference call
was initiated because ML's LJM2 investors were concerned about
LJM2's future prospects based on the collapse of Enron. KOPPER
described what investments were being held in the LJM2 portfolio.
KOPPER discussed the valuations of the assets being maintained in
LJM2 and there was discussion about the prospect of the banks
accelerating LJM2's loan obligations.
Nigerian Barge:
FD-302a (Rev. 10-6-95)
196C-HO-59147
Conlinualion of Fl).302 of _----'G"a"rc;y"-CU1"'a..

rlSk'--J,D1l;ou1,..agn'--- . On 1 Q! 2 4 ! 2 0 0 2 . I'ag<: _~3L_
DOLAN first became aware of the prospect of ML investing

in an Enron project in Nigeria sometime before Christmas 1999 when
he attended a conference call. This conference call was held in
ZRIKE's office and JIM BROWN was also present during the conference
call. DOLAN took notes during this meeting and still maintains a
copy of the notes. BROWN described the Nigerian Barge transaction
to the group. BROWN stated that Enron approached ML about
purchasing an interest in the Nigerian Barges and described the
project as a floating power source for Nigeria. BROWN stated that
Enron initially planned to sell an interest in the Nigerian Barges
to a company called Marubeni, but Marubeni was not ready to
purchase it until early 2000. Enron wanted to sell an interest in
the Nigerian Barges by year end 1999 so they could generate
earnings for the fourth quarter of 1999. Enron proposed that ML
purchase an interest in the Nigerian Barges and that ML would only
have to hold it for a short period of time. BROWN stated that the
purchase price for ML would be small and that ML would earn a fee
from Enron for entering into the transaction.
BROWN stated that there was going to be a conversation

between ML executives (DAN BAYLY and ZRIKE) and Enron executives
whereby ML was going to seek assurances from a senior officer at
Enron that if ML purchased an interest in the Nigerian Barges,
Enron would help ML find a buyer for their interest if Marubeni did
not purchase ML's interest. Enron had told ML that Marubeni was
going to purchase ML's interest in the Nigerian Barges by February
2000.
he understood
Deal. DOLAN stated that Enron was merely providing a "moral
undertaking" to find a buyer for ML's interest in the Nigerian
Barges. DOLAN stated that the agreement could not be in writing
he believed and it was an oral agreement that had no formal legal significance.
DOLAN understood that ML would hold their investment in the
Nigerian Barges for up to six month. Dolan had a sense that Enron
would not give ML any assurances in writing and ML would not ask
Enron for such a request.
that
DOLAN had a subsequent conversation with BROWN in which
BROWN conveyed that he was concerned with the commercial risk ML
was taking on the Nigerian Barge transaction. BROWN was worried
about the potential environmental risk associated with owning power
plants and ML's liability issues. BROWN wanted to ensure that the
deal documents addressed these environmental and liability risks.
NBD
FD-)02a (Rev 10-6-95)
196C-HO-59147
COOlmual,on ofFD-)02 of _---"G"'a"'ry.>c-"'C"'l"'a"'rJ>k.......D"'o"'l"'a"'n'-- ."" 1 0 (24/20 Q2 . P"" _-,4,-_

the NBD
BROWN complained about the Nigerian Barge transaction.
BROWN stated that it was not his transaction and he was being stuck
with handling it because the transaction fit into the type of work
his group handled. The Nigerian Barge transaction was a deal which
was initiated by MLts bankers in Texas. BROWN also complained
because his group was not earning any fees for handling the
transaction and that the deal was being consummated close to the
end of the year.
DOLAN stated that ML was not in the business of

purchasing power plant barges in Nigeria and that is why they
originally decided to place the deal in ML's leasing unit. DOLAN
was not involved in ML's approval process or what internal ML
committee should review this transaction.
DOLAN does not remember when he learned that ML's Debt

Markets Committee (DMCC) either reviewed or was going to review the
Nigerian Barge transaction. DOLAN did not attend the DMCC meeting
and he does not know why it was being reviewed by the DMCC.
Typically, BROWN took transactions he worked on to the Lease
Advisory Committee. However, the Nigerian Barge transaction was
taken to the DMCC.
DOLAN was shown a copy of notes (bate stamped MD03740S)

which DOLAN acknowledged was his notes. DOLAN read his notes to
the agents as follows: Dolan was asked about a handwritten M document
in which he wrote:
"Enron owns Nigerian Barge Co. has oil barges they will
build power plants on top and would sell power to Nigeria. Enron
wants to sell equity in project to book accounting gain. ML
Houston to put $7 million into. $40 million in fees last year and
this. ML to buy stock in BargeCo for $7 million and if goes into
service earns 22\ return. Approved by executive committee. Dan
BAYLY, Kevin Cox, Kathy Z, and EVP (executive vice president) who
promises we will be taken out within 6 month. Did LLC to be owned
MLMLM. $7 million to buy stock in. LLC will borrow $21 million
from different Enron subsidiary. No recourse. We to buy $28
million in stock. Pref A, Pref B, common - we buy 20\ of voting
rights (2/10). We get next 3 years cash flow from Barge operation.
Book $12 million gain at year on the stock. Nigerian Co. is in
existence. DMCC @ 12:00 today 12/22. 10:30 am (ML suggestion).
Dan BAYLY business group at Enron. Cookies for Santa. $250
advisory fee. It
F~302a(Rcv 1~9S)
196C-HO-59147
COI1\1nuallOfl orl-l>-30l or _--->G"a..rv"""--'C,....l"a..r"k.......D"'o"l...a"'n-'- .On 10/24/2002 .I'lI&e _~5,,-_
The name "Cox" in DOLAN's notes refers to a ML employee

who was a senior person at ML who dealt with commitment issues.
The name "Cox" references that either Cox was on the call or that
Cox was supposed to be on the call with Enron. The reference "EVP"
refers to Executive Vice President at Enron. The word "promises"
refers to the assurances made by Enron regarding finding a buyer
for ML's interest in the Nigerian Barges. DOLAN explained that
"promise" could mean that the conversation where Enron made
assurances to ML already happened; not that it was going to happen
in the future. "40M in fees" is a reference to the fees earned by
ML from Enron.
DOLAN has no reason to believe that "DMCC @ 12:00 today

12/22" on bates stamp page ML037406 is not accurate with respect to
the date the DMCC meeting was held. DOLAN is not sure if "Book
$12M @ year on the stock" refers to the amount Enron was able to
book due to ML's investment in the Nigerian Barges.
Sometime close to the end of the fourth quarter 1999,

DOLAN reviewed and made comments to a draft of the Nigerian Barge
engagement letter between ML and Enron. The purpose of the
engagement letter was to memorialize the agreement between ML and
Enron so if there were any questions about the deal in the future,
it would be in writing. The engagement letter also insured that ML
would receive their fee for entering into the Nigerian Barge
transaction.
DOLAN also had a conversation with JEFF WILSON about the

engagement letter. DOLAN believes WILSON helped draft the
engagement letter. DOLAN requested that WILSON delete some of the
language in the engagement letter. Generally, ML engagement
letters use general terms to describe a deal because the deal terms
can subsequently change. The Nigerian Barge engagement letter was
too specific and DOLAN wanted the letter to be more general.
as to the draft engagement letter in his files,
Furthermore, DOLAN made changes to some of the terms
related to the deal that were provided in the engagement letter
because DOLAN did not believe that those were the actual terms.
DOLAN stated that the original draft of the engagement letter
obligated Enron to eventually take ML out of the Nigerian Barge
transaction. This was contrary to DOLAN's understanding of the
transaction and DOLAN believed that such an agreement would be
improper because such a transaction could be viewed as a "parking"
transaction.
engagement
letter
f'l)·302a (Rcv. 10.6·95)
196C-HO-59147
Continuation of F()·302 of _-'G"a"'rl,yIC-C"""l"'aJ;r"k'-'D<So,.,l"a"'n"- . On 1 0 /2 4 ! 2 00 2 . Page _-,6,--_

he believed
DOLAN's understanding was that ML purchased an interest
in the Nigerian Barges with the expectation that Enron would help
ML find a buyer for ML's interest in the Nigerian Barges. DOLAN
stated that there was no obligation or commitment that Enron would
find a buyer or that Enron purchase ML's interest if a buyer could
not be found. This was merely an oral understanding between ML and
Enron that if Marubeni did not purchase ML's interest then Enron
would help ML find another buyer. Dolan expressed the view that
DOLAN was shown a copy of an E-mail from WILSON to DOLAN

dated 12/23/1999 (bate stamped ML034707). This E-mail contained a
copy of the proposed changes to the engagement letter made by
DOLAN. DOLAN acknowledged that the handwriting on the page is his.
DOLAN does not remember talking to anyone at Enron about the
changes he made to the engagement letter. However, DOLAN did
receive handwritten comments from someone from Enron. Enron did
not object to the language in the original draft of the engagement
letter which stated that "Enron will buy or find affiliate to buy.
t1 However, DOLAN did object to this language and made the
necessary changes.
DOLAN acknowledged that he had seen the interoffice

memorandum bate stamped MD037390 through MD037395 at the time the
Nigerian Barge transaction was being consummated. DOLAN does not
remember seeing the appropriation request bate stamped MD037396
until he prepared for his interview with the FBI.
DOLAN did not remember what ML's rate of return was for
the Nigerian Barge transaction. ML was also paid a fee by Enron
for entering into the transaction. DOLAN did not believe there was
a cap on how much money ML could make on their investment in the
Nigerian Barges.
Sometime in January or February 2000, DOLAN had a meeting

with ALLAN HOFFMAN, an attorney not from ML, where they discussed
the formation of a ML entity which would house the Nigerian Barges.
ML formed a Cayman company for tax purposes. DOLAN was in charge
of forming the Cayman company for ML.
In June 2000, DOLAN was contacted by JOE VALENTI, or

someone who worked for VALENTI, who told DOLAN that ML was selling
their interest in the Nigerian Barges. DOLAN was asked to review
the documentation and draft the resolutions. DOLAN does not
remember if he knew that the purchaser was LJM2.
EXHIBIT C
,
Case 4:03-cr-00363
,i,
Document 1217-7 Filed in TXSD on 07/09/10 Page 2 of 34 .1
1
i,J 2 UNITED STATES GRAD JURY

3 SOUTHERN DISTRICT OF TEXAS
4 HOUSTON DIVISION
5
7 RE: INVESTIGATION OF ENRON

8
.9 BE IT REMEMBERED that on the 15th day of

10 April, 2003, beginning at 9: 42 a. m., in the Federal
11 Building, 515 Rusk Avenue, Houston, Texas, the United
12 States Grand Jury convened, at which time the following
13 proceedings were had and testimony adduced as
14 hereinafter set forth.
15
16
17
18
19
20 TESTIMONY OF KATHERINE ZRIKE

21
22
23
24
ORIGINAL
25
MINNIE CADENA-MECHE, CSR, RPR

Tel: (281)996-,5698 Fax: (281) 996-5699
Case 4:03-cr-00363 Document 1217-7 Filed in TXSD on 07/09/10 Page 3 of 34 10
1 , chance to ask us those questions and also, I'm going to
2 ask you, as we go forward, it's much easier, your rights
3 and obligations, when you understand them.
4 The first thing is that you i lL notice
5 there i S a microphone in front of you.

6 A. Yes.
7 Q. And that i s not recording - - or maybe --
8 actually maybe it is also recording, but the main
9 purpose of it is to proj ect your voice, There i s a very
10 bad vent system here. So it's hard in the back of the

11 room to hear, so if I can ask you to keep your voice up
12 and speak into the microphone so everybody can hear you.
13 A. Okay.
is .
14 Q. First, in terms of your rights as a grand jury
15 witness, you have a right to be represented by counsel
,16 in connection with th~ grand j ~ry appearan~e, In other
17 words, even though you're a lawyer, you also, like
18 everyone else, enjoy the right to have counsel in

19 connection wi th the grand jury appearance. Your
20 at torneys cannot be present, as you know, in the grand
21 jury. But as I understand it, you have counsel here and
22 they are right outside in the room next door; is that
23 correct?
24 A. That i s correct.
25 Q. Could you identify for the record your

Tel: (281) 996-5698 Fax: (281) 996-5699
1 counsel?
2 A. Robert Ramano.
3 Q, And does he also have a colleague of his, an
4 associate, helping him today?
5 A. He does, but I don i t remember her name. I 1m
6 sorry. I just met her recently.
7 Q. And in addition to Mr. Ramano and his
8 colleague, do you also have - - is there also company
9 counsel here today?

10 A. Yes, there is.
11 Q. If you could, just identify them for the
12 record.
13 A. Charlie Stillman, who is our outside counsel
14 for Merrill Lynch, and an internal counsel, Rick
15 Weinberg.
16 Q. And is he somebody you know because you're
17 also in-house counsel?
18 A, Yes. He is involved in our practice
19 li tigation and regulatory practice. He bears
20 acquaintances and colleagues.
21 Q. And so, Mr, Ramano is
your personal counsel
22 and their company counsel, correct?
23 A. Correct.
24 Q, And is it fair to say, without telling us what
25 was said, that f you met with counsel in connection with

Tel: (281) 996-5698 Fax: (281) 996-5699
15
1 to advise you that if you were to lie or obstruct the
."-'-::--.'"
2 grand jury investigation and you were prosecuted and
3 convicted, because they are criminal statutes, they
4 carry with it a possibility of jail. Do you understand
5 that?
6 A, Yes.
7 Q. Do you have any questions at all about your
8 rights or obligations?
9 A. No. r appreciate you going over them again.
10 Q. Now, let me also go over with you - - as I
11 mentioned to you, I'm not going to give you all of the
12 caveats I told you upstairs but your counsel has asked
13 me wi th respect to your status whether you were a
J. j
14 witness, subject, or a target and you were told that you
15 are a wi tness .
16 I already talked over with your counsel
17 one area where I had concern with respect to information
18 that we've learned from your interview, but the main
19 thing I want to make sure you understand is you
20 understand that the representations to your status - - as
21 of your status today is not a prediction as to what the
22 future holds. Do you understand that?
23 A. Yes, I understand.
24 Q. Do you have any questions at all about that?

25 A. No. I appreciate the information,

Tel: ( 2 81 ) 996 - S 6 9 8 Fax: ( 2 81) 996 - 5699
1 ourselves against being responsible for whatever
.~.
2 disaster could strike or someone, you know, suitig us for
.. )
3 a big fire that blows up things.

4 So we' would - - you know, we would have
5 approached it differently and - - 'as well as asking our
6 bankers to approach the economics and the bona fides of
7 the deal differently, I believe.
8 Q. One of the things you talked about was the
9 risks that if, for instance, the barge blew up. Even
10 though this is a smaii investment from the perspective
11 of Merrill Lynch as a whole, is it fair to say that
12 there were - - there could be risks in owning a barge in
, !
13 terms of various liabilities that could come from it,
j
p 14 including environmental risks, all sorts of things that
15 could happen in a country that is viewed by Merrill
16 Lynch and other financial institutions as a risky area
17 to invest in?
18 A. Yeah. I think we were very concerned in the
19 group that vetted this as well as our legal department
20 about that sort of reputational risk from the disaster
21 scenario where - - you know, we all remember the Bhopal
22 incident - - where, yes, you lose your investment like
23 the barge blew up.

24 So you don't have the barge anymore. Yet,
25 you've got loss of lives; you've got environmental

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47
1 pollution which could cost you a lot more; you i ve got a
....~-..~4
2 country that is, you know, very corrupt or known to be
,: )
3 corrupt on issues associated with how that barge

4 business is being run.
5 Being 100" percent owner of it and not
6 being - - you know, we're not actually in the business of
7 running the barge, electrical barge. So what could be
8 attributed to Merrill Lynch as being responsible for,
9 all sorts of issues. And those were raised and
10 discussed in our consideration of this.
11 Q. I s there anything that goes beyond the
12 representational risk that could also go to that optimal
, ¡
13 economic risk?
i /
.~, .~
14 A. You're absolutely right.
15 ' 'Q. So, it's not just
16 A. It,' s not just --
17 Q. - - Merrill Lynch trying to look
18 A. Right. It i S more of this could cost more than
19 our loss of the $7 million that was the investment in
20 the barge. It could lead to loss of life, litigation,
21 money, entanglement, complications beyond __
22 Q. Now, did you understand at any point that
23 either Mr. Davis or anyone else at Merrill Lynch said,
24 "Okay. We'll go into this investment, but it needs to
25 be made clear to Enron that we're in it for $7 million
MINNIE CADENA-MECHE, cSR, RPR

Tel: (281) 996-5698 Fax: (281) 996-5699
55
1 finding a buyer, isn't -- what better way, since frankly
.~.~.
2 we're doing the misaccommodation, according to you, why
3 not hold their feet to the fire as a way to really keep

4 them interested, which is -- and if they don't find a
5 buyer, they will deal with the consequences of what
6 happens if they have to buy it back?
7 A. That i s just not my understanding of how the
8 conversations were. Everyone understood the rules, the
9 accounting rules and the accounting treatment. Everyone
10 appreciated that - - people were talking about this as a
11 worst-case scenario. There was no real expectation that
12 any of this was going to be happening. The focus was on
13 the fact that this would be gone in January to Marubeni.
/ 14 I was trying to make sure that Mr. Davis
15 and Mr. Bayly understood that this was a, true risk that
16 we would end up owning this barge and so - - and from an
17 exit perspective, we either had to be willing to own it
18 until the thing got sold ,or - -' and keep the risk of what
19 that entails on our balance sheet and - - making sure

20 that they are comfortable with that in the context of
21 making the decision.
22 Q. Now, one of the things you said in 'your last
23 answer was about people focusing on and thinking that

24 Marubeni would come through and this would be gone in a
i
25 month or so. But isn't the isn't one of the

Tel: (281) 996-5698 Fax: (281) 996-5699
63
i ask Enron for such a provision?
....,~~-.
.i ,j 2 A. Merrill - - the Merrill Lynch lawyers in my

3 group and myself did ask that we include a provision
, 4 that - - two types of provisions that we thought would be
5 helpful to us.
6 One would be to indemnify us or hold us
7 harmless if there was any sort of liability like a barge
8 explosion or an environmental spill, loss
of life, or
9 something that was, you know, a disaster scenario; and
10 that was the first thing we talked to them about.
11 The second, it may have been around the
12 same time. You know, we marked the agreement up one
13 time and sent it back to them.
,i .J/'I
l¡
14 The other thing that we marked up and we
,15 wanted to add was a best efforts clause, what i s called a
16 best efforts clause that they would use their 'best
17 efforts to find a purchaser to conclude the purchase
18 with the - - another third-party purchaser besides
19 ourselves and that - - realizing that from our
20 perspecti ve as Merrill Lynch lawyers that this was
21 not this was stil 1 a - - was not a guarantee, it was
\
22 not an absolute, but that at least would give us an
23 angle, it would give us a legal angle to get them to
24 focus on that obligation if, in fact, we saw them not
25 paying attention to what was the business deal.

Tel: ( 2 81) 996 - 5 6 9 8 Fax: ( 2 8 1) 9 96 - 5 699
64 .
In the context of working through the
draft of the agreement, you know, our counsel -- itls
gone through a merger. I, think it was Whitman, Breed &
Abbott. Is that right?

Q. I cannot answer questions.
A. Okay. But it was an outside law firm, outside
lawyer that was doing a lot of the negotiations with a
couple of guys on our staff; and the response from the
Enron legal team was that that - - both of those
provisions would be a problem or could be viewed by the

accountants as undermining the true sales tax because,
first of all, with thè indemnity, it

was a bit of a
13 ,stretch but we tried. It would - - it would insulate
, )
¡,'
14 Merrill from any risk of loss, which was the whole point
15 of there being a true sale. And so, it would negate
16 that treatment; and it certainly made sense that the
17 response would be that.
18 Now, you know, we tested what if we put
19 the damages in caps. You know, we tried to keep it __
20 we were trying to be creative to protect Merrill, but
21 they kept coming back to the fact that it really had to
22 be a true passage of risk and that - - any risk
23 whatsoever.
24 On the
other side of - - the other part of
25 this was the best efforts clause, the concern that that
CADENA-MECHE, CSR, RPR

MINNIE
Tel: (281) 996-5698 Fax: (281) 996-5699
1 that you're still under oath, right?
""'j )
2 A. ' Yes.
3 Q. When we broke, we were talking about a best
4 efforts provision, among other things, and discussions
5 that you were having with counsel regarding that.
6 Were there people on your staff who were
7 working on the legal aspects of that deal?
8 A. Were there people?
9 Q. Yes.
10 A. Yes.
ii Q. Who?
12 A. There were two lawyers that were involved sort
J ..
13 of al ternating because it was during the Christmas week.
14 One was Frank Marinaro, and the other was a lawyer named
15 Kerry Dolan.
16 Q. And when were you dealing wi th Alan Hoffman as
17 your outside counsel?
18 A. Alan Hoffman was our outside counsel that they
19 dealt wi th. I don't believe I ever talked to Alan
20 directly.
21 Q. Now, in terms of the best efforts provision,
22 did you have any conversation either directly or
23 ,indirectly with your staff or outside counsel regarding
24 whether there would be any accounting problem in having

,
¡
,I
25 a re-marketing agreement?

Tel: (281) 996-5698 Fax: (28i) 996-5699
67
1 A. wi th the discussions we had wi th my staff, who
.-~':~--' ~..
2 I believe were reflecting Alan i s discussions wi th the
) )
3 other law firm and Alan' 8, you know, acquiescence in
4 that position or at least understanding where they were

5 co~ing from, in that a re-marketing agreement or
6 approach to use best efforts to find another purchaser
7 could be problematic for the accounting, there couldn't
8 be any contractual obligations in that regard.
9 Q. So was it - - I i m just making sure I - - make
10 sure I've covered this, which
is : Was there a
11 discussion that you were aware of, whether you
12 participated'in it directly or not, regarding whether
, )
13 Merrill Lynch could, consistent with accounting rules,
1-,'
14 have an agreement whereby Enron would be obligated to
15 try to re-market Merrill's position in the barges?
16 A. The discussion was on the context of the
17 the answer is no. There was not a discussion that a
18 re-marketing, per se, of our agreement of our equity
19 interest would lead there to be a problem under the true
20 sale rules. The discussions that were had wi th the
21 lawyer, our lawyer and my staff~ were that any
22 contractual obligations that would require Enron to use
23 their best efforts to take action to sale - - to sell the
24 equi ty interest on our behalf could be viewed as then
25 being obligated to buy it back.
MINNIE CADENA-MECHE, CSR, RPR,

Tel: (281) 996 -5698 Fax: (281) 996 -5699
68
1 Q. Well, what if that was just in the contract,
/:.~.?:-_.- -- '.
2 that it's not an obligation to buy it back, it's an
) )
3 obligation to re-market it to a third party?

4 A. I think, you know, their perspective is they
5 didn't want any risk that __
6 Q. Did that come Up? Did that come up?
7 A. I think we - - we tried a lot of different, you
8 know, ideas to try to get some - - something, you know,
9 contractual that we could go to court, as they say, and

10 get enforced; and the answer was that anything that
11 could be used that could be taken to require them to buy
12 it in the event that they were unable to find a third
13 party would' not be acceptable and that's
I...
14 Q. Okay. So--
15 A. why the language was not put into the
16 agreemen t .
17 Q. Okay. I i m not that smart. So let me - - this
18 can't be something that, I've come up with.
19 How about an agreement that obligates them

20 to try to re-market but it doesn't require them, as a
21 worst-case scenario, to buy it back?
22 In other, words, you have to help us as if
23 you were you were getting a real estate broker to
24 help you find a place, but it doesn't mean your real
/1
25 estate broker is going to have to buy your apartment.

Tel: (281) 996-5698 Fax: (281) 996-5699
69
1 It's just somebody who's going ,to be required
,.-----:
2 contractually to assist you to re-market but not to
j )
3 actually buy it back. Why not put, that in the

4 provisions?
5 That i s the sticking point, the - - that
6 Enron buying it back as opposed to assisting and going
7 and finding a third-party buyer.
8 Why isn't the solution to a lot of bright
9 people, "Well, fine. Just put that in the agreement"?
10 A. I think that was our approach in that we were
11 trying to do what we could to get - - consistent with
12 what the, business deal was to get some protection, and
, 13 we were not successful in negotiating that end with
i,
, )
Vincent & Elkins.

i.
,14
15 You i II have to talk to Alan and others who
16 were directly involved in their ~ - that dialogue.
17 I i m hearing the reports back and trying,
18 then, to telling them to 'go back and try it this way
19 and that way and not engage in the dialogue.
20 Q. Okay.
21 A. So I can i t really answer your question
22 specifically
23 Q. Okay.
24 A. - - more specifically.
/
25 Q. Let me break it down, then. Do you have a

Tel: ( 2 81) 99 6 - 5698 Fax: ( 2 81) 996 - 5 6 9 9
70
i recollection of any discussions regarding what I i lL call
~.,~... ~
2 "the Weissmann Proposal," which is the re-marketing
;¡ )
3 agreement with a provision that says it doesn't require
4 Enron to buy it back?
5 A. You know, I cannot -- I can't tell you that
6 that was not a thought. The only part that I 1m
7 hesitating on -- the re-marketing idea, I'm not
S brilliant on either; but I did focus on that.
9 Whether I would actually go - - is the tail
10 end that's bothering me, without any agreement from
11 Enron to buy it back. I don't know if I combined those
12 two concepts.
13 Q. Okay.
)
i /
~l .
14 A. The focus
15 Q. Do you remember
16 A. The focus I remember is that they will use
17 their best efforts to find a purchaser to close the
1S transaction with a third party, to finish, for a period
19 of time. I don't remember specifically, you know,
20 cutting off - - adding that last piece that you
21 mentioned.
22 Q. To solve the problem?
23 A. To solve the problem, yeah.
24 Q. Now, did you get any advice directly or
,/
25 indirectly, whether you sought it out yourself versus

Tel: (281) 996:-,5698 Fax: (281) 996-5699
73
1 purchaser. But you said it a little broader than that
/---...
2 in your questio~.
Ji ,)
3 Q. So what i s the "no" part? You said there was a
'4 yes and no.
5 A. The "no" part is that they could do whatever
6 it took to get us out of the investment. That was __
7 they were not committing to do whatever it took. They
8 were committing to take -- and the ñusiness ended up
9 being a, you know, oral business understanding as,
10 II Look ~ We understand you i re not only going to hold this
11 and that we have to find another buyer if Marubeni does

12 come through, does not happen. II
'i
13 That was the extent of my understanding.
, /i
;.1
14 It was more than an understanding. It was
15 representations that were made to me about what they
16 were willing to do.
17 Q. And who made those representations to you?
18 A. You know, these were made in the context of
19 various discussions about the deal; but they came from
20 the banking team, Mr., Tilney and Mr. Furst~ at various
21 points in time o.f our discussion.
22 Q. Let me ask you - - this may be a tough

23 question. It may not. And I don't mean it to be rude,
24 but if there are issues going on in this transaction
25 that to your mind - - and I understand from our interview

Tel: (281) 996-5698 Fax: (281) 996-5699
1 several months ago that these were going on in your mind
,-~-'"
2 about, you know, "I don i t want people to think this is a
j )
3 sham transaction. I want to make sure that this is

4 complete and that there i s nothing nefarious going on
5 here. And this is Merrill Lynch. It i S a maj or
6 financial institution. We i re not going to do anything
7 close to the line."
8 If all of that is going on as, I take it,
9 the senior sort of lawyer 'on the deal, why wasn't
10 something like this -- "there are ,going to be no oral
11 understandings, oral commitments. Nothing is going to
12 exist between the parties that isn't in writing in the
13 signed purchase agreement because I'm not going to have
\ .'
J/~
14 anyone coming back and saying thåt there's some other
15 part of this deal. We don' t lik~ the deal. So I don't
16 want anyone coming back and questioning what's going on.
17 So there is going to be nothing that is not in writingll?
18 A. There was some of that discussion when we were
19 trying to negotiate the terms of the purchase agreement
20 itself; and I was looking at it from the perspective of
21 I don't want anyone at Merrill Lynch
coming to me and
22 saying, "Why can't we get rid of this barge? II
23 This is was our - - this was our
24 business deal. This was our basis for us going forward
25 and doing a short-term investment.

Tel: (281) 996-5698 Fax: (281) 996-5699
75
i The fact that they would not put in
"/.-;-"-
2 writing an obligation
to buy it back, to ,indemnify us,
) )
,3 all those things were consistent wi th the business deal
4 and were not things that I felt were nefarious and were
5 problematic.
6 My focus was more on the fact that our
7 management and - - understand that we are owners of this
8 and could be owners of this for longer than the period
9 of time that they thought -_
10 Q. But --
11 A. because there was no obligation for them to
12 buy it back.
13 Q. Wasnlt it clear --
, ,.
I,..
14 A. That was made clear from Day 1. r
15 Q. Wasn It it clear to Merrill Lynch and to you

16 that Enron was agreeing that Merrill Lynch would only
17 hold this for a certain period of time, not that Enron
18 would necessarily be the one that's going to buy it
19 back? I mean, there are other ways of disposing of the
20 Merrill Lynch interest. But wasn't it clear that
21 Merrill was only committing on a short-term basis?
22 Wasn i t that something that Merrill made clear to Enron?
23 A. That was the basis of having - - that we bought
24 the investment, yes.
25 Q. And that provision, all I'm trying to focus on

Tel: (281) 996 -5698 Fax: (281) 996 - 5699
82
1 Q. And, Rick is Mr. Weinberg?
, ./~-;_._.-.
2 A.
ii ,) Mr. Weinberg.
3, Q. Was it your unders tanding that there was any
4 commitment or representation by Enron to Merrill Lynch
5 in connection with this deal that was not contained in
6 the purchase agreement?
7 A. I'm sure there were representations that were
8 made that aren i t in the purchase agreement; but whether
9 or not they are representations that we can bring an

10 action against, the answer is no.
11 Q: And that i s because as a lawyer you i re thinking
12 if it's oral, it i s going to be difficult to bring a
").
)
13 lawsuit?
l(
14 A. Well, and also the more explicitly most
15 discriminate has in its boilerplate that it would say
16 that the purchase agreement contains all of the
17 representations which the company - - in this case, Enron
18 and, Merrill gave some representations, too. But it can
19 be, you know, liable for.
20 So, you know, there are statements that
21 ~re made. Representations in the general sense are
22 discussed during diligence that mayor may not
get put
23 into the binding contract.
24 Q. Have you ever heard of lawsui ts being brought
25 based on oral agreements or alleged oral agreements that

Tel: (281) 996-5698 Fax: (281) 996-5699
94
1 And, you know, while it was not optimal
~~~
2 from my perspective as a lawyer, from a legal/illegal
,) !I
3 perspective, I couldn't say, Oh, this is -- stop, you
4 know, that -- that was not necessarily called for.
5 Bu t I was - - I was not very happy that I
6 had not had an opportunity to weigh in on how that had
7 ended up get ting resolved.
8 Q. Is there anything else that you recall in your

9 conversation with Mr. Colin?
10 A. No. I can't think of anything specific.
11 Q. Or generally.
12 A. Or generally? We may have talked a little
13 more about it but that i s the gist of, you know, the
,;
¡ ,,'
f
14 discussion and that i s when he told me that, you know,
15 this is all I really know and that we, you know - - we

16 were purchased at basically the price we had in plus
17 some cost funds, something mino~ on top.
18 Q. Did you have any understanding about how the
19 barge investment fared during the six-month period or
20 seven Merrill owned it; in other words, whether there
21 were any problems that caused it to increase or decrease
22 in value?
23 A. The only thing that I i earned - - and I don't
.24 think it was in June. I think it was more sort of by my
25 keeping tabs on it and having had some conversation in

Tel: (281) 996 - 5698 Fax: (281) 996 -5699
1 Q. And just in terms of the deal being approved
".--'-..~
2 by a committee, there are different mechanisms within

3 Merrill for doing that; is that correct?
4 A. That i S correct.
s Q. And one is an app~opriation request?
6 A. Right.
7 Q. And the other types of deals can go to the
8 DMCC; is that correct?
9 A. Right, which is - - stands for IIdebt market
10 commitment committee. II
11 Q. And then there i s
12 A. But those are loans.
13 Q. And then is there al so a STRC commi t tee?
i,:.
14 A. Right, there's a - - and STRC stands for
15 II special transaction review còmmittee."
16 Q. And this didn't go to the STRC, did it?
17 A. No, it did not.
18 Q. This went to the DMCC?
19 A. It went to the DMCC because that's where I
20 decided it would be best to be vetted, yes.
21 Q. Okay. And here you wrote STRC, question mark.
22 A. Well, because I don i t know much - - did not and
23 I do now, but normal ly the commi t tees that is investment
24 banking that I deal the most wi th are two: DMCC, which

(
25 is for financings of the tradi tional loans, issuances of

Tel: (281) 996-5698
Fax: (281) 996-5699
.
1 A. Well, it's not the sole. The main reason, if
c"?'-"""
2 i could answer it this way, is that I wanted to get it
3 reviewed by people who were familiar with transactions

4 like this - - structured deals, complicated ownership
5 interest - - that had some expertise in the area and they
6 could be convened within 24 hours to 48 hours depending

7 on when they got the materials
8 Q. And that piece --
9 A. - - and to be reviewed.
10 Q. And that piece was necessary in order to
11 accomplish this by year-end, which is what Enron was
12 seeking to do?
13 A. I think it was the best way to go, yeah, for
~-
14 that reason, for a lot of reasons, including timing.
15 Q. Now, just in terms of looking at this as an
16 outsider, are we supposed to think it's a coincidence
17 that some things where the issue is loan versus equity
18 that the committee that's reviewing it is the debt
19 markets committee," because, you know, to match up .the
20 names --
21 A. Well, it's not a coincidence.
22 Q. - - and you sort of - - you sort of think,
23 well in trying to decide whether this was internally
24 viewed in some ways as a loan, one might think, "Well,
25 it did end up in front of the debt markets commitment
MINNIE CAENA-MECHE, CSR, RPR

Tel: (281) 996-5698 Fax: (281) 996-5699
1 the buck.
2 Q. Well, don't you think that some people in the
)
3 DMCC don't you think that what was- - you took away
4 from the bottom-line discussion in terms of -- not the
5 substantive issues that we're raising but in terms of
6 their position with respect to approval was that they
7 were saying both as an institutional matter in terms
8 what DMCC does and in terms of this sort of last minute
9 nature of a year-end deal that they weren't particularly
10 enamored of doing, that they were saying, "You know
11 what? Here's an easy out for us," which is, "You want
12 to deal with this? Go to the right people because we're
13 the wrong committee for approving this"?
)
14 A. That's not the impression that I got. I mean,
15 I think that that would not -- that's not the spirit in
16 which it was - - that the discussion was had in. We
17 talked for at least an hour.
18 Q. Well, why didn't somebody say, "Wait a second.
19 This purview committee is not just debt. The reason we
2 0 came to you is because you don't deal just with debt.
21 In fact, I can think of at least, for instance, two
22 other deals which were supposed to be equity, in
23 short-term equity. So that is your purview. So you

24 can 1 t actually pass the buck. You're supposed to deal
25 with this"?

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1 A. Well, that's, in essence, what I said, is that
2 we
i ,I
3 Q. Okay.
4 A. -- I -- you know, I had asked that this
5 meeting be convened to look at this and they stayed and
6 they continued to review it. No one walked out of the
7 room saying, "I'm not wasting my time."
8 They appreciated -- from the get-go I told
9 everyone it was going to be going up to Mr. Davis, that
10 I wanted someone other than the DLT to look at it and to
11 provide input and their issues. They had a chance to
12 read the document.
13 And this was a way for me, as one of the
ì
14 control people, and for our commitments chairman, who I
15 know Mr. Davis would turn to, to get some, you know,
16 neutral, not - invol ved input; and it was done quickly.
17 Q. Can we just focus on the issue of the role of

18 the DMCC because it sounds like they just disagreed,
19 then, ultimately with your view that they were the
20 appropriate body to pass on it because at the end of the
21 day, it sounds like they said, "No, we're not"?
22 A. And that was communicated to Mr. Davis.
23 Q. Okay. So--
24 A. But they did they did - - we did ask them
25 where -- did you have any strong feelings that we should

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143
purchase price set with Marubeni and they were going to
be selling it to Marubeni at that price that -- whatever
that was would be what we would get, whatever the spread

was; and if it was going to be for a month hold or a
two-month hold or three-month hold, however long it
was - - I don i t know how to calculate what that rate of

return would be on the 7 million, but the business and
the understanding I had and that everyone had at the
meeting where this was considered was that we were
buying it, in essence, what Marubeni was buying it at; .

we were a placeholder until Marubeni could get their act
together and buy it for the price they had negotiated.
Q. If you look at the "f~es" line, one of the

things that we've done is we've looked at that and then
we looked at some internal Merrill Lynch documents where
people are assessing 15 percent interest to Enron within
Merrill. ,Do you have any information at all about why
people would be assessing the exact rate of interest
that appears on the Appropriation Request?
A. I have no -- other than someone may have used

this as a basis to provide for some - - for the reason
for assessing it. This was held in our books as equity
and it was booked on our books as equity and it was
treated as equity. I don't know anything about
assessing any interest at all.

Tel: (281) 996-5698 Fax: (281) 996-5699
146
1 Q. - - where it says: "Dan Bayly will have a
2 conference call with senior management of Enron

3 confirming this commitment to guarantee the ML takeout
4 wi thin six months. II
5 Now, is it your testimony that you didn't
6 see that at any - - that sentence at any time prior to

7 the deal closing?
8 A. No. I saw that after - - before the deal
9 closed was between Christmas and New Year's. The deal
10 closed on the last day of the week of 2000 -- I mean,
11 1999, whatever date that was.
12 And when I came back from Christmas break,
13 I saw this and was - - I focused on it. You know, I
14 hadn't really focused on anything other than the
15 appendix where all the structure and the things were
16 laid out. That's not correct, because it's not -- we're
17 not - - they are not committing to guarantee our
18 takeout I don't like the use of the word. But when I
19 read it in the context of the prior sentence which

20 didn't read "Enron will facilitate our exit from the
21 transaction with third-party investors,'" Dan -- "Dan
22 Bayly will have a conference call with senior management
23 of Enron confirming this commitment to guarantee (our)
24 takeout wi thin six months. II

25 So the fact that they were going to help

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147
.
1 us re-market it and get us out within six months, that
2 was not my understanding. I thought it was three,

3 that - - you know, I'm not comfortable with it, plus this
4 document was never viable in my view. It was not a

5 record of the deal, did not reflect the transaction.
6 Q. Okay. Well, was there a commitment to

7 re-market or not?
8 A. There was a business understanding to

9 re-market it. There was a business arrangement. You
10 know, when you say the word "commitment," it sounds like
11 a legally binding commitment.

12 If Enron had done nothing to help us
13 re-market it, we would have -- we would be pretty much
~-¿
14 annoyed and angry and we could shake our fist at them
15 but there's not going to be much recourse to us to get
16 them to do their job other than just sort of threatening

17 to sell it to somebody that they wouldn't want to be a
18 partner wi th.
19 So there was no commitment in a legally
20 binding way; but, yes, there was a business
21 understanding that that's what was going to happen. It

22 was the whole point. I mean, how can you be a temporary
23 bridge to permanent equity and not be the permanent
24 equity? That was the basis for the deal.

25 Q. Could you turn to Exhibit 78, please?
Tel: (281) 996-5698 Fax: (281) 996-5699
A. 37378?
Q. No, I'm sorry. Exhibit 78 tab and ML 6887 is
the Bates number on the bottom right.
A. Okay.
Q. Have you ever seen this document before?
A. No. No, ' I haven't.
Q. And Gary Colin is a senior official at Enron;
is that correct? I'm sorry, Merrill Lynch.
A. No. He's Merrill Lynch CFO, chief financial
officer, of investment banking.
Q. So, he's a senior official at Merrill Lynch?

A. Uh-huh.
Q. I'm sorry. You have to --
A. Yes, he was. Sorry.
Q. For our court reporter, "uh-huh" doesn't work.
A. Yes, he was.
Q. And do you know it Mr. Colin raised any issues
with respect to this e-mail, whether it was
inappropriate to be accruing interest on this investment
at 15 percent from the date of closure at 12-29-99
through the date of the - - the day before the e-mail,

which is May 3rd, 2000?
A. I don't know what Gary mayor may not have

done. I never saw it before.
Q. And if you could, turn to Exhibit 82. Have

Tel: (281) 996-5698 Fax: (281) 996-5699
1 Q. Okay. I just want to -- let me make sure

2 because I think we've had some miscommunication about
ji
3 what it is that I'm asking you.
4 A. Okay.
5 Q. So, let me just try again.
6 A. Try again.
7 Q. And I 'm taki~g all responsibility for my
8 question not being clear enough.
9 My question is: What is your basis of

10 knowledge for the statement that the reason this wasn't
11 sent out was because it was incorrect?

12 In other words, I think you've explained
13 to us that you understand that this is incorrect; it's
14 not your understanding of the deal; that this person,
15 you know, may have been trying to just clear it off the
16 books or do something; but that this document, as you
17 see it, is not your understanding of the deal and from
18 your perspective, it's wrong.

19 What I'm trying to find out is about your
20 earlier statement where you said this - - your
21 understanding was that this draft was not sent out
22 precisely because it was not reflective of -- accurately
23 reflecting the deal?
24 A. It's more - - the basis for it is discussions

25 that I had with attorneys in the group who found out
,

Tel: (281) 996-5698 Fax: (281) 996-5699
155
about it and had said -- maybe it was Rob Furst or
someone said, "Hey, you i re asking me to sign this. This
is incorrect. II And that's when we found out that this
had been prepared and it had been - - this person was
acting on their own and with their own steam to sent
something out and hadn't really bothered to get it
approved and get it vet ted and it wasn't a correct
representation of what was happening both from the
perspecti ve of characterizing the deal and from the

obligations that they had under the contract to take
action to buy it.
Q. And when was that, this what you're just
telling us?
A. I think it was, you know, after the fact that

this sort of, who did this? You know, not at the
time that I -- because I really wasn't involved in
the
Q. When you say "after the fact, " can you - -
A. I mean after July, after July.
Q. Of 2000?
A. Of 2000.
Q. And can you be any more precise than that

because "after July of 2000" could include anytime up
24 until today? So can you --

25 A. Well, it wasn't like yesterday but it was

Tel: (281) 996-5698 Fax: (281) 996-5699
156
1 like, you know, around the - - I don i t know. It could
2 have been in July. It could have been right around

3 August; but it was sort of post the transaction and, you
4 know, looking at where we were and what had happened.
5 And frankly, Mr. Weissmann, it could have

6 been after this whole investigation. I just remember
7 looking at this going, "Wow. That's not good. This
8 does not look good," and then I was told it wasn't sent.
9 So it's a combination of -- I just don't
10 think it was before June.
11 Q. Also, you, at some point, felt like you wanted
12 to speak to counsel. I don't know if there's an issue
13 pending, but if you need an opportunity to speak to
14 counsel now --
15 A. I i ve answered you now. So --
16 Q. Great.
17 A. That's the last time you're going to trick me
18 into doing that.

19 Q. No. I mean, seriously, this is really not
20 about -- I mean, there's privilege --
21 A. I mean, I don't have a problem telling you
22 that I don't think it's -- it's not -- it's not anything

23 other than this is just another situation where
24 something was prepared and it wasn't sent out, and

25 that's basically all I know other than I was glad that

Tel: (281) 996-5698 Fax: (281) 996-5699
158
1 A. Correct. That's a fair way to say it.
2 Q. Okay. And in terms of the group, in addi t ion
3 to the two individuals that you mentioned, is there
4 anyone else who would be in that group of people who
5 you think that -_.
6 A. At that point in time that was pretty much the
7 only people that I had ever, you know, talked to about
8 this just as keeping up with what i s going on.
9 Q. Now -- so, basically, for this document, it's

10 just this document exists but it just isn't consistent
11 with your view of the transaction and somebody was just
12 off -- you know, not on the same page?
13 A. Correct.
14 Q. And in terms of the other document involving
15 15 percent interest being accrued, that would suggest to
16 you somebody else - - or maybe it's the same person.
17 It's just another reflection of they just didn't get it
18 right?
19 A. Well, it wasn't the same person but -- and the
20 fact is if it had been - - it wasn't the same person.
21 My view is that it didn't comport with

22 what I understood the deal was; and I certainly didn i t
23 like some of the language in it and, therefore, it would
24 have never been circulated. If that's the way we would
25 have gone, it would have been absolutely correct and
.

Tel: (281) 996-5698 Fax: (281) 996-5699
1 legal issues with respect to -- not sort of risk issues

~--
.,-:~
2 but whether it was -- any legal issues were involved, so
3 you gave a legal opinion?

4 A. I gave legal advice that I didn't see any
5 actions here - - in looking at the year-end trade and
6 the - - you know, whether there was a part because those
7 things were specifically considered -- that this
8 transaction did not - - well, this - - it was a right
9 avenue to consider. It didn't lead to their - - in my
10 view, there was not a part and this was not a sham
11 transaction.
12 Q. Okay. Who' asked you for that legal advice?
13 A. It was in the context of the Mr. Davis
/' /,
14 discussion. You know, it was there -- "What are your
15 views, Kathy, about this transaction?"
16 And I talked about the fact that we had
1 7 gotten comfortable on two important, sort of what we
18 call legal issues: One is the earnings management,
19 whether or not there is some facilitation of them moving
2 0 or taking earnings when they shouldn't; and the other is
21 the parking aspect.

22 But I talked about the fact that there
23 were other legal issues associated with the deal and the
24 way it was structured in that they wanted to understand
25 the risk, and that gets to the point you told me not to

Tel: (281) 996-5698 Fax: (281) 996-5699
187
i talk about.
.."- -0.
,~-- -..
2 Q. Okay. And did you give that opinion in any
3 other form, or was it only with Mr. Davis?
4 A. I remember explicitly talking about it with
5 Mr. Davis and I also remember explicitly talking about
6 the same issues with Mr. Bayly, but I don't think he
7 asked me, "What's your legal opinion or view on this?"
S It was, "Give me a brief."
9 Q. Okay. Did you give him --

10 A. So i did.
11 Q. your legal opinion?
12 A. I gave him my legal views on an opinion on the
13 fact that based on what we knew and the information we
14 had and - - this is not illegal.
15 Q. Now, during your interview with the Department

16 of Justice and the SEC, do you remember talking about
17 whether you gave any legal advice?
18 A. Yes.
19 Q. And do you know if you said the same thing, in
20 essence?
21 A. I think I was trying to make it
22 Q. And I don't mean word f or word.
23 A. I don't know that you accepted the point; but
24 I was trying to make a point about giving
a legal
25 opinion, that we don't give in the written sense but in

Tel: (281) 996-5698 Fax: (281) 996-5699
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James Brown Supplemental Memorandum in Support of Motion For A New Trial

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James Brown Supplemental Memorandum in Support of Motion For A New Trial

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Case 4:03-cr-00363 Document 1217 Filed in TXSD on 07/09/10 Page 1 of 22

UNITED STATES DISTRICT COURT

UNITED STATES OF AMERICA, §

DEFENDANT JAMES A. BROWN’S SUPPLEMENTAL MEMORANDUM IN SUPPORT

PORTER & HEDGES LLP SIDNEY POWELL, P.C.

DANIEL K. HEDGES SIDNEY POWELL

1000 Main Street, 36th Fl. TORRENCE E. LEWIS

ATTORNEYS FOR DEFENDANT JAMES A. BROWN

I. The ETF-Highlighted Dolan 302 Produced March 30, 2010, Shows

II. The ETF-Highlighted Production Proves Ruemmler Deliberately Withheld

1. Enron Never Promised Or Made Any Guarantee To Merrill That It Would

V. The ETF-Highlighted Evidence Proves That Prosecutors Deliberately Withheld

VI. Brown Is Entitled To Discovery, An Evidentiary Hearing, and A Dismissal. . . . . . . . . 13

Concealed Exculpatory Evidence Directly Refutes Prosecutors’ Statements

Zrike’s Grand Jury Testimony Proves an Egregious Brady Violation,

ETF-Highlighted McMahon Raw Notes Contain Material it Recognized as Brady

The Belated Disclosure of Hoffman’s Exculpatory Evidence Proves a Brady

Neil A. Lewis, Tables Turned On Prosecution In Stevens Case,

Order of Dismissal - Stevens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . A-2

Excerpts of Transcript of Hearing, United States v. Stevens,

Dolan’s 302 Showing ETF Omissions and Alterations

ETF Highlighted McMahon Raw Notes Produced March 30, 2010 . . . . . . . . . . . . . . . . . . . . . . D

Mary Flood, Star Witness in Enron Trial Could Testify Tuesday,

ETF Highlighted Tilney Raw Notes Produced March 30, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . F

Giglio v. United States,

United States v. Andrews,

United States v. Bayly,

United States v. Burnside,

United States v. Carmichael,

United States v. Chapman,

United States v. Cuffie,

United States v. Dollar,

United States v. Espinosa-Hernandez,

United States v. Hamilton,

United States v. Manners,

United States v. Omni Intern. Corp.,

United States v. Quinn,

United States v. Ramming,

United States v. Smith,

United States v. Wall,

United States v. Wallach,

United States v. Williams,

John C. Hueston, Behind the Scenes of the Enron Trial:

18 U.S.C. § 3161 (h)(1)(D) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

raises a host of new questions that mandate an evidentiary hearing.

veritable garden of Brady evidence–much of their selections being vague, tangential or

adamantly oppose a hearing on the issues.

misrepresentations, and deliberately-created misunderstandings or outright lies that were belied by

minimum, Brown is entitled to a new trial and to a hearing on this motion.

United States v. Dollar, 25 F. Supp. 2d 1320 (N.D. Ala. 1998).6

99, 120 (D.D.C. 2008) (Bates, J.) (citation omitted).8

participation in the transaction. See Ex. B-2, infra.

exculpatory facts since as early as 2004:

1. Enron Never Promised Or Made Any Guarantee To Merrill That It Would

V. The ETF-Highlighted Evidence Proves That Prosecutors Deliberately Withheld The

the case pre-trial.17

VI. Brown Is Entitled To Discovery, An Evidentiary Hearing, and A Dismissal.

A hearing is essential because of the evidence of prosecutorial misconduct which bears

involving allegations of ..., prosecutorial misconduct.”); cf. United States v. Espinosa-Hernandez,

reasoned decision as to witnesses–much less decide what to ask–without substantive disclosure by

evidentiary hearing on his Motions for New Trial and To Dismiss.

violations and obligations. As in Omni,

Dated: July 9, 2010 Respectfully submitted,