Peter Henning, Wayne State University Law School:

"On Tuesday, November 9, the jury in the Enron/Merrill Lynch trial concluded that the loss caused by the defendants' fraudulent misconduct was $13.7 million. A story in the Houston Chronicle (Nov. 10, 2004) reviews the jury's verdict. The government argued for a loss calculation of $43 million, and the defendants who participated in the sentencing phase (two opted out) presented an expert who quantified the loss at approximately $125,000. In addition to the loss calculation, "The jurors made additional determinations that could lengthen three of the defendants' sentences: Bayly, Brown and Furst all broke a private trust with Merrill Lynch; Brown and Furst had managerial or leadership roles; and Brown and Furst used more than minimal planning in the deal." The sentencing phase was the result of the uncertainty created by the Supreme Court's decision in Blakely that throws into doubt whether the Federal Sentencing Guidelines, which rely on an assessment of the effect of the defendant's conduct and the person's role in the offense to determine the ultimate sentence, are constitutional when the judge makes those decisions. Whether the jury can—and should—play the deciding role will be determined by the Court in the near future.

Based on the jury's verdict and loss determination, a rough estimate of the likely sentence range is: the base offense level for an economic offense (§ 2B1.1 of the Guidelines) is 6, and then the $13.7 million loss adds 20, resulting in an offense level of 27. Assuming the judge accepts the jury's loss determination and the defendants are in Criminal History Category I—which is likely—then the sentencing range would be 70 to 87 months. A defendant would have to serve at least 85% of the sentence, meaning that he would be in a federal correctional institution for at least 5 years, give or take a couple months and the possibility of serving the last few months in a halfway house. The additional jury findings regarding certain defendants can increase the offense level by an additional two to six points, again assuming the judge accepts them, resulting in a sentence as high as 135 to 168 months. Two defendants were also convicted of false statement (§ 1001) charges, which may affect their sentences. Given that the defendants went to trial, an Acceptance of Responsibility credit is off the table. If the Feeney Amendment restrictions on downward departures still apply when the sentencing occurs, then the judge will likely have to give the Guidelines sentence prescribed by the Sentencing Table. The sentencing is set for next March, by which time the Supreme Court should have decided, at least generally, the issues related to the constitutionality of the Federal Sentencing Guidelines procedures. All of this may go out the window and U.S. District Judge Ewing Werlein could have complete discretion to sentence them within the statutory maximum set by Congress." [November 10, 2004; White Collar Crime Blog has more]