James Brown Supplemental Memorandum in Support of Motion for a New Trial

8/9/2019 James Brown Supplemental Memorandum in Support of Motion for a New Trial

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UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

UNITED STATES OF AMERICA,

Plaintiff,

v.

JAMES A. BROWN,

Defendant.

CR. NO. H-03-363-2 (Werlein, J.)

DEFENDANT JAMES A. BROWNS SUPPLEMENTAL MEMORANDUM IN SUPPORT

OF HIS MOTION FOR NEW TRIAL, DKTS. 1004, 1020, 1030, 1061, 1160, 1201.

PORTER & HEDGES LLP

DANIEL K. HEDGES

Texas Bar No. 09369500

1000 Main Street, 36 Fl.th

Houston, TX 77002

Telephone: (713) 226-6000Facsimile: (713) 228-1331

SIDNEY POWELL, P.C.

SIDNEY POWELL

Texas Bar No. 16209700

TORRENCE E. LEWIS

IL State Bar No. 222191

3831 Turtle Creek Blvd. #5B

Dallas, Texas 75214

Phone: (214) 653-3933

Fax: (214) 319-2502

ATTORNEYS FOR DEFENDANT JAMES A. BROWN

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


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ii

TABLE OF CONTENTS

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v

I. The ETF-Highlighted Dolan 302 Produced March 30, 2010, ShowsThat The ETF Deliberately Withheld Clear Exculpatory Evidence of

Dolans Knowledge And Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

II. The ETF-Highlighted Production Proves Ruemmler Deliberately Withheld

From the Court-Ordered Summary Zrikes 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 Browns 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 ActuallyAgreedTo Oral Assurances That Enron Would Use Its

Best Efforts To Assist In Re-Marketing Merrills 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 WithheldThe 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



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iii

CHARTS:

Exculpatory Evidence That the Etf Itself HighlightedAsBrady Material but

Then Withheldfrom the Court-OrderedBrady Summary in 2004materials

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 CrucialBrady Material From Zrikes SEC Testimony . . . . . . . . . . 3

Zrikes Grand Jury Testimony Proves an EgregiousBrady Violation,

Misconduct and Browns Innocence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Zrikes 302 Proves EgregiousBrady Violations And ETF Misconduct at Trial . . . . . . . . . . . . . . 5

McMahons Raw Notes Prove an EgregiousBrady Violation And Browns Innocence . . . . . . . 6

ETF-Highlighted McMahon Raw Notes Contain Material it Recognized asBrady

and Which Belies Government Representations at Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Fastow Raw Notes Prove EgregiousBrady Violations And That Browns

Testimony Was True . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Tilney Raw Notes Prove EgregiousBrady Violations And Browns Innocence . . . . . . . . . . . . . . 9

The Belated Disclosure of Hoffmans Exculpatory Evidence Proves aBrady

Violation and Browns Innocence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

All Call Participants Verify Browns 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



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iv

Dolans 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



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vi

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



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New prosecutors began dribbling out realBrady material to the defense in December 2007 and1

again as recently as June 2010. Each time there is a production, startling newBrady 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 governments July 30,

2004, disclosure letter.

1

On March 30, 2010, Brown received a production of 1005 pages ofBrady material from Mr.

Stokes. Careful review of the electronic copy disclosed that the disk contains highlighting ofBrady1

material selected by the ETF itself in 2004. The highlighted material was the basis for the ETFs

summaries that this Court ordered to be given to the defense in 2004over government

objectionafter 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 McMahonthat 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

ofBrady material, told this court they had met theirBrady obligations and fought vehemently against

producing anything (Dkt.1168, Charts 1, 2). (2) They highlighted only selected material in a

veritable garden of Brady evidencemuch of their selections being vague, tangential or

marginalwhile working around clear, declarative, relevant exculpatory material even in the same

page, paragraph or document. (3) When orderedby the Court to produce summaries to the defense,

they further redactedeven theBrady material they had themselves highlighted and withheld the

crucial facts that they had highlighted as Brady. (4) They egregiously capitalized on their



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As soon as Zrike left the grand jury, having given truthfulBrady evidence which the ETF withheld,2

the ETF notified her counsel that her status changed from subject to target.

2

misconduct at trial by making assertions that were directly belied by the exculpatory evidence they

withheld. (5) And, to this day, despite Judge Sullivans 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 ETFs 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 herBrady

material been disclosed pre-trial as required) to the witness who Friedrich told the jury was2

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 Enrons 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 Enrons 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.



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Fuhs was acquitted by the Fifth Circuit after serving 8 months in a maximum security prison. All3

charges were recently dismissed in full against Bayly.

Matthew Friedrich was involved in both cases.See4

http://www.c-spanvideo.org/program/282050-3(last visited July 9, 2010) (Friedrich, bragging about the work of the Stevens prosecutors).

Neil A. Lewis, Tables Turned On Prosecution In Stevens Case, N.Y. TIMES, April 7, 2009,5

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

All are now free of prosecution except Brown. Prosecutorial misconduct deprived Brown of any3

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 exposedas it has been recently in

Broadcom, Stevens and other cases. Yet, theBrady violations here are as egregious as in the Stevens

prosecution, in which the government ultimately confessed itsBrady violations and dismissed rather

than face a hearing. Judge Sullivan referred the prosecutors for criminal investigation. As Judge4 5

Sullivans decisive acts exemplify, this Courts Article III independence and status as an equal

branch of government were created toprotectBrowns constitutional rights againstthe governments

wrongdoingnotto protect the government from its constitutional obligations and violations.

The governments misconduct violated at least two separate constitutional rules, either of

which requires a new trial. First, under the dictates ofBrady 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,

http://www.c-spanvideo.org/program/282050-3http://www.c-spanvideo.org/program/282050-3http://www.c-spanvideo.org/program/282050-3


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Evidence is material if the undisclosed information could have substantially affected the efforts6

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 Courts

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 courts

supervisory powers due to governments 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 defendantsrights in an individual case and primarily topreserve 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

ofBrady violations and/or under the five-factorBerry 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. Browns prior briefing on these matters is incorporated herein by

reference.

4

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

indictmentwhen the prosecutions 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



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The same result obtains when the State, although not soliciting false evidence, allows it to go7

uncorrected when it appears.Napue, 360 U.S. at 269, 79 S. Ct. at 1177.

See also United States v. Williams, 233 F.3d 592, 594 (D.C. Cir. 2000) ([t]he phrase 8

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 thejudgment 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 Browns 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

incompatible with rudimentary demands of justice.) (citation omitted); accord Tassin v. Cain, 517

F.3d 770, 776 (5th Cir. 2008). Because the integrity of our justice system relies on the presentation7

of truthful evidence for a jury to evaluate, the prosecutions 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 Dolans Knowledge And Actions.

Attached as Exhibit B-1 is the Dolan 302 as it was highlighted by the ETF itself. Those

highlights surroundbut omit or the disclosure altersthe 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 Browns 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.



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6

In an even more egregious and flagrant constitutional violation, in crafting her Brady

summary, Ruemmlerfurther omittedtheBrady material the ETF itself had highlightedthe 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: Dolans understanding was that ML

purchased an interest in the Nigerian Barges with the expectation that Enron would help ML find

a buyer for MLs 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 Merrills

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

II. The ETF-Highlighted Production Proves Ruemmler Deliberately Withheld From the

Court-Ordered Summary Zrikes 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 Zrikes 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

concealedincluding 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



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The ETF did not even list Hoffman as possessing Brady evidence. The withheld evidence of9

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.

McMahon did not recall any definite push to get the NBD done by year end. Merrill wanted10

Enron/Fastows 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

explain why. Charts 2-5, infra. There is no innocent explanation for this flagrant misconduct, and9

it was extremely prejudicial to Brown. Zrikes 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

toprepare the entire defensefrom 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 omissionsexacerbated

ten-fold by outrageous representations by the ETF at trial and belied by what they withheldscreams

injustice, and leaves no confidence in the jurys verdict. Charts 1-11, infra.

III. The ETF-Highlighted Brady Materials Prove That The Task Force DeliberatelyWithheld Exculpatory Evidence Of McMahon That Proves Browns Innocence And

ETF Misconduct At Trial.

The recently disclosed raw notes of McMahons 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. As with the Dolan summary,10

Ruemmler deliberately withheld statements the ETF had previous highlighted in obvious recognition

that it wasBrady 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:



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Contradicting the governments representation that Fastow told Merrill Lynch that LJM2 was11

always available to take out Merrills equity interest (Dkt.1168, Ex. I, at pp. 3-4; Tr. 6150, 6264), McMahon

said LJM2 was not mentioned on the call. McMahon [d]oesnt recall LJM being mentioned at all

regarding the transaction. Ex. B, DOJ-ENRONBARGE-000515 (two lines down from highlighted

omission). McMahon [d]oesnt believe LJM was ever mentioned on th[e] [Fastow/Bayly] call. Idat

000530. See id. at 000561 (same). Kelly Boots, who was forced to take the Fifth Amendment during the trial

8

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 ETFbut 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 ActuallyAgreedTo Oral Assurances That Enron Would Use Its BestEfforts To Assist In Re-Marketing Merrills 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 andthe 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] agreedthat 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. Dont recall any promise

that ENE would get them out. 000515 (Casette).

Andy saidEnron help remarket in next six months. Id. 000560 (Pitrizzi). Chart 1.11



15/163

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 Fastows office for the phone call.Id.

9

These highlighted yet withheld (and non-highlighted and withheld) raw notes prove Browns

innocence and contradict the governments concocted hearsay case on all counts. Remarkable in its

omissions, Ruemmlers pre-trial summary refers only to what Merrill wanted, and fails to state

what actually happenedthe crux of the defense: that Fastow agreedto these lawful, best-efforts

assurances on the phone call with Baylyand 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 thatno one guaranteed Merrill Lynch a rate-of-return, buy-out, or

specific price for the asset. The raw notes are unequivocalMcMahon, 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 Browns 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 McMahons statements, then soliciting, over



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Mary Flood, Star Witness in Enron Trial Could Testify Tuesday, HOU S.CHRON., October 4, 2004,12

attached hereto as Exhibit E. See also John C. Hueston,Behind the Scenes of the Enron Trial: Creating the

Decisive Moments, 44 AM.CRI M.L.REV . 197, 200-02 (2007) (ETF prosecutor; outlining critical nature of

Ben Glisan in the Enron trials).

McMahon stated: He reviewed the transcript of Mr. Fastow and former Enron treasurer Ben13

Glisans testimony in the Lay-Skilling trial, Mr. Glisans testimony in the trial of the Nigerian Barge case,

and the FBIs Form 302 of Mr. Fastows statements regarding the transaction. Based on that review and hisknowledge 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 Koppers testimony atBrown Iwas contrary to his own in many

respects. Dkt.1168, Ex. J,Newby, at pp. 1532-33. And in the Skillingtrial, Fastow said that Glisan and

Koppers 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

objection, the false or wrong hearsay testimony of Glisan, Kopper, and other Fastow subordinates

whom Fastow had admittedly misleada fact also concealed from Brown.

IV. Evidence Prosecutors Concealed Proves That Key Government Witnesses Gave Wrong

Or Perjured Testimony.

Glisan was the governments star witness inBrown I, with Kopper running a close second.12

Evidence concealed for years proves that Kopper and Glisans testimony inBrown Iwas 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 governments hearsay-only case and flat-out declares as false the

testimony of the Task Forces 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 Glisanthe only two upper-level

executives from Enron who testifiedaffected 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



17/163

See, e.g., Tr. 6159 (And during that conversation [between Glisan and McMahon], Mr. McMahon14

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

couldnt be found, which is exactly what Mr. Kopper testified to.).

The governments pre-trial, 6-sentence Brady summary regarding Merrill Executive Schuyler15

Tilney (participant in the Fastow/Bayly phone call) omits any reference to the best-efforts agreement.

Dkt.1168, Exhibit O, at p. 8.

11

pp.1-4. The Task Force relied heavily on their testimony in closing arguments. By pointing to14

Glisans testimony 52 times and to Koppers 27 times, the government exacerbated the egregious

concealment of the contradictory first-hand evidence of the Merrill-Enron call participants in this

hearsay-only casewhere 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 Forces contrived, hearsay, falsely-premised and falsely-presented

caseand 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 Tilneys interviews, which the

government has concealed sinceJuly 2002 and highlighted in 2004. Exhibit F, infra. Tilney flatly

contradicts the ETFs case and corroborates Browns testimony that Enron had only made best-

efforts assurances to find a third-party purchaser for Merrills equity interest. Chart 9, infra.

Despite highlighting aroundcertain facts, and omitting even its own highlighted ones noted below,

the Task Force withheld that Tilney told the government affirmatively that Fastow toldMerrill Lynch

that Enron will find a new home for Merrills equity interest. Ex. F, at 000704. Seeid. 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



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Tilney told the government (and the ETF withheld) that this sort of best effortsassurance was16

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. Seeid. at 000705 (looked @ investmentwas 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. Seeid. at 000677 (listing call participants, including Kathy

Zrike); 000726 (same). Kelly Boots, who was in Fastows 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

$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. Fastows representations did not include a

guaranteeorally or in writing.Id. at 000680. There was no legal obligation for E[nron] to do16

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, andBrown 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 agreementno promise or guarantee; (3) Fastow and McMahon (never indicted) both

contradict the governments Barge witnesses; (4) Fastows raw notes disclose that even he told

the government he made only a best efforts assurance; (5) Fastows raw notes explain why the



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Brown has requested all of this material, with specificity, for years, while the government17

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

testimony of government witnesses was wrong or perjured; (6) McMahon declared Glisans

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 ETFs 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 Browns 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 inBrown Icould not prepare for trial or make a

reasoned decision as to witnessesmuch less decide what to askwithout substantive disclosure by

the prosecution. Leka v. Portuondo, 257 F.3d 89, 103 (2d Cir. 2001); United States v. Carmichael,



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As in Stevens, Brown needs discovery into all communications between the government and all18

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

Forcewho highlighted and surgically redacted the originalBrady production. Brown is entitled to all this

evidence to understand the depth and severity of theBrady 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 itsBrady obligations but consistently (and still) opposes

further productions; (2) to make known all the details regarding the ETFs determinations to withhold this

information; and (3) to evaluate the nature and full extent of the Department of Justices 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).

Brown urges the court to reconsider its erroneous Speedy Trial Act determination and does not19

waive any existing or further challenges thereto (including as to the sham nature of any hearings).

14

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 governments distortions, misrepresentations, lies, and hearsay.18

In denying Browns Speedy Trial Act motion, Dkt. 1208, the Court stated that it expected19

to conduct initial hearings or additional hearings on these motions[,] including Browns 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 hearingthereon. Dkt.1208, at p. 12

(emphasis added). Indeed, the Court went on to state that Browns counsel expressly requested the

Court to set a hearing date for Browns 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 itselfto whitewash or sweep

under the rug. United States v. Omni Intl.Corp., 634 F. Supp. 1414, 1438 (D.Md. 1986) (courts

cannot become accomplices to such misconduct) (citation omitted). Despite Judge Sullivans



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15

actions, the Dept. of Justice still cannot recognizeBrady 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 Intl Corp., this Court cannot credit the

governments vehement opposition to a hearing and continued denials of past and current Brady

violations and obligations. As in Omni,

The AUSAs 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 AUSAs 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 federaljudiciary into such unbecoming conduct.

Omni Intl 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 itsBrady violations, move

to vacate Browns wrongful convictions on Counts IV and V, and dismiss all charges against Brown.

If it does not, Browns 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, 36 Fl. Texas Bar No. 16209700th

Houston, TX 77002

Telephone: (713) 226-6000 TORRENCE E. LEWIS

Facsimile: (713) 228-1331 IL State Bar No. 222191



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16

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



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1

CHART 1: EXCULPATORY EVIDENCE THAT THE ETF ITSELF HIGHLIGHTED AS

BRADYMATERIAL BUT THEN WITHHELD FROM THE COURT-ORDEREDBRADY

SUMMARY IN 2004MATERIALS DISCLOSED TO BROWN ON 03-30-10

DOCUMENTS WITH ETF

HIGHLIGHTING

PORTIONS HIGHLIGHTED BY ETF ASBRADYBUT

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 MLs 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.

DOLANs understanding was that ML purchased an interest in the NigerianBarges with the expectation that Enron would help ML find a buyer for MLs

interest in the Nigerian Barges. DOLAN stated that there was no obligation or

commitment that Enron would find a buyer or that Enron purchase MLS interest

if a buyer could not be found.

Raw Notes of Jeff McMahon

*The pre-trial summary says

what Merrill wanted only and

withholds repeated exculpatory

evidence highlighted by the ETF

in 2004 that Fastow agreedonlythat Enron would provide best

efforts.

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

for the 6 months after.

000494: Andy agreed E[nron] would help remarket [the] equity w/in next 6

monthsnofurther commitment

000513: Enron would use best efforts to help remarket the equity.

000514: A.F. agreedthat 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

Zrike

*The government made no

disclosure of any negotiation

between parties.

ETF withheld that Zrike testified: 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[or] problematic. Dkt.1168, Ex. F, at p. 75.

Case 4:03-cr-00363 Document 1217-1 Filed in TXSD on 07/09/10 Page 1 of 21


24/163

2

DOCUMENTS WITH ETF

HIGHLIGHTING

PORTIONS HIGHLIGHTED BY ETF ASBRADYBUT

OMITTED FROM JULY 30, 2004 SUMMARY DISCLOSURES

Raw Notes of Schuyler Tilney

from 2002

Ex. D, at 000675, 000703 Tilney wanted Bayly involved because in the event

the Marubeni deal fell through, he didnt 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



25/163

CHART 2

CONCEALED EXCULPATORY EVIDENCE DIRECTLY REFUTES PROSECUTORS

STATEMENTS AT TRIAL AND PROVES EGREGIOUS MISCONDUCT

1

Government Representations atBrown I. ETF ConcealedBrady Evidence Requiring New

Trial

Matthew Friedrich: If its just best efforts, then it

would have been okay. Tr. 4528, 4520. There is

nothing wrong with remarketing. Theres nothing

wrong with that. They could have gotten sale and a gain

treatment on this. If it was a remarketing agreement,

there wouldnt have been a problem with that. Tr.

6486.

Andrew Fastow: It was [Enrons] obligation to use

best efforts to find 3rd Party takeout. Fastow went on

to detail his sophisticated knowledge of a best efforts

agreement: Best Efforts - must do everything possible

that a reasonable businessman would do to achieve

result..... Best effort would be to find a 3rd Party to

accomplish buy out. Dkt.1168, Raw Notes, Ex. C, at

Bates #000263.

John Hemann: McMahon called Merrill Lynch and

he cut a deal . and what was the deal? . that wasthe guarantee that Merrill Lynch got from []

McMahon. Tr.402-404.

Kathryn Ruemmler: You know that Enron, through

its treasurer [McMahon] and chief financial officer

[Fastow], made an oral guarantee to these Merrill

Lynch defendants, that they would be taken out of the

barge deal by June 30th, 2000, at a guaranteed rate of

return. Tr.6144.

Hemann: The purpose of the handshake was to

confirm the deal that had been cut by Mr. McMahon.Tr. 404. See Tr. 6527-28 (Friedrich: same).

Ruemmler: 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. 6159. See Tr.6157-58 (same).

Ruemmler: So the key, . . . was Jeff McMahon. .

Trinkle told you . and Glisan told you that Jeff

McMahon confirmed to him that he gave that exact

guarantee. Tr. 6159-60. See Tr. 6218-19 (same).

Ruemmler: It was [Baylys] job to get on the

phone with Mr. Fastow and make sure that Mr.

Fastow ratified the oral guarantee that Mr. McMahon

had already given to Mr. Furst. Tr. 6168.

Jeffrey McMahon: Disc[ussion] between Andy

[Fastow] & ML [Merrill Lynch]. Agreed E[nron]would use best efforts to help them sell assets. Ex. B,

Raw Notes, DOJ-ENRONBARGE #000447.

NO - never guaranteed to take out [Merrill Lynch]

w/rate of return.Id. at 000493.

[A]t no time during the call [with Merrill Lynch]

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, McMahon Memorandum to

the SEC, Ex. D, at pp. 4-6.

000494: Andy agreed E[nron] would help remarket

[the] equity w/in next 6 monthsno further

commitment

000513: Enron would use best efforts to help remarket

the equity.

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.

* Yellow highlighting denotes material the ETF

highlighted and still withheld. The other material

included herein was Brady evidence that was also

withheld.



26/163

Government Representations atBrown I ETF ConcealedBrady Evidence Requiring

New Trial

2

Kathryn Ruemmler: [T]he written agreement

between Enron and Merrill Lynch had no re-marketing or best efforts provision. You heard

testimony . . . that there was some suggestion,

made primarily through Ms. Zrike, . . . that the

Merrill Lynch defendants believed that all that

Enron had committed to do was to re-market .

. . Merrill Lynchs interest in the barges; . . .

You can spend as many hours as you would like.

You will nowhere in those documents ever find

a reference to a re-marketing agreement or a

best-efforts provision. Its not there. Tr. 6151-

52.

Matthew Friedrich: The Merrill Lynch

Defendants take the uniform approach . . . that

all that was going on was just that it was a

remarketing agreement. Thats all it was. There

was no buyback. Its just a remarketing

agreement. But ask yourselves this simple

question: If its a remarketing agreement, if

thats all it is, why was it not put in writing? . .

. If it was a remarketing agreement, there

wouldnt have been a problem with that. If

thats all it was, why wasnt it put in writing?

Tr. 6486.

Matthew Friedrich: There is a suggestion . . .

that whats going on is sort of a good-faith

exchange between two parties as they try to

negotiate different legal documents that sort of

come back and forth, and sometimes language

comes in, sometimes its taken out, that kind of

thing. This is not the average business case. Thisis not a case where people are trying to . . . put

language into documents as some sort of good-

faithnegotiating process. Tr. 6493-94.

Katherine Zrike: Merrill tried to put the re-

marketing agreement in the written

agreement but Enron said it was

inappropriate and it could not commit to it.

The best efforts agreement for selling

Merrills position looked like Enron had to

buy back Merrills interest in the barges.

Merrill was putting in real equity with only

Enron to re-market its position. Zrike also

wanted a hold harmless clause for Merrill

but Enron rejected that because Merrill had

to be at risk.*** 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. Dkt.1168,

FBI 302, Ex. E, at pp. 10-11, 15,.

Everyone understood the rules, the accounting

rules and the accounting treatment. . . . we [] had

to be willing to own it until the thing got sold

orand keep the risk of what that entails on our

balance sheet andmaking sure that they arecomfortable with that. Dkt.1168, Grand Jury

Testimony, Ex. F, at p. 55.

Katherine Zrike: Merrill the Merrill Lynch

lawyers in my group and myself did ask that we

include a provision that two types of provisions

that we thought would be helpful to us. ... The

[second] thing that we marked up and we wanted

to add was a best efforts clause, ...that they

would use their best efforts to find a [third-party]

purchaser [for Merrills equity interest.***[T]heresponse 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] w ith Vinson & Elkins.

Id. at pp. 63-64, 69.



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New Trial

3

Matthew Friedrich: Lets move on to the

so-called advice of counsel defense and KathyZrike. Kathy Zrike was called as a defense

witness. She was completely devastating to the

defense. **** This was a case, not about reliance

on counsel; this was a case about defiance of

counsel. Tr. 6500.

John Hemann: And Im going to say this as

clearly as I can: There will not be evidence in

this case that any lawyer was asked if it was all

right for Enron to count this deal as income.

Tr. 419.

Matthew Friedrich: The key thing, the key

thing in a reliance [on counsel] defense is they

have to be in the loop. They have to know

whats going on. You have to disclose all the

material information to them The lawyer has

to know. They have to make a judgment. They

have to render advice. That didnt happen here.

The opposite thing happened. They were told

you couldnt do it and they did it anyway. And,

from that, you can infer bad intent on all their

parts. Tr. 6504 (Friedrich).

Matthew Friedrich: Mr. Schaeffer said that

nothing was hidden from Kathy Zrike, and

thats just not true. Things were hidden from

her time and time again. Tr. 6503.

Katherine Zrike: Zrike did point out the risks to

the DMCC, Davis and Bayly.... Zrike wanted themore experienced group of Merrill employees of

the DMCC to review it.... Zrike thought the

DMCC would allow the deal to be fully vetted....

[Zrike] wanted the deal looked at in detail. Zrike

made the decision to take the deal to the DMCC.

... She told Brown, who was not a member of the

DMCC, to attend the DMCC. Dkt.1168, Ex. E,

at p. 8.

Zrike took the lead in the [DMCC] 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 [at the

DMCC]. It went to the DMCC because thats

where I decided it would be best to be vetted.***I

wanted to get [the transaction] reviewed by

people who were familiar with transactions like

this -- structured deals, complicated ownership

interest -- that had some expertise in the area.

Dkt.1168, GJ Testimony, Ex. F, at pp. 123, 128.

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 for them to

take it as a sale and to book the gain or loss,

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.



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New Trial

4

Matthew Friedrich: Mr. Fuhs theres no

evidence that Mr. Fuhs made any effort to talkto a lawyer or had any reliance on a lawyer

about what was going on. Tr. 6539.

*THE GOVERNMENT MADE NO

DISCLOSURE WHATSOEVER FOR ALAN

HOFFMAN WHO HAS SIGNIFICANT

EXCULPATORY EVIDENCE.

Alan Hoffman: HOFFMAN had a discussion

with FUHS in which he mentioned that MLhoped to be out of the deal in a few weeks or

months. FBI 302 of Alan Hoffman, October 12,

2002, Dkt. 1204, Ex. A. at p. 3.

FUHS did tell HOFFMAN that Enron did not

have an obligation to find someone to purchase

MLs 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 HOFFMANs

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.



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New Trial

5

Matthew Friedrich: The fact that Fuhs is

sending lawyers documents with the badlanguage deleted out of the engagement letter

doesnt prove anything about his intent. . . .

reliance on advice of counsel doesnt mean just

some random attorney someplace getting a

document that has strike-out language. . . The

lawyer has to know whats going on; they have

to know all the facts. . . . theres no evidence that

Mr. Fuhs made any efforts to talk to a lawyer or

had any reliance on a lawyer about what was

going on. . . . [Fuhs] gets copies, for example, of

the engagement letter that had the offending

language included, and that shows you what he

knew at the time the deal was. Tr. 6538-39.

See also Dkt.1204, at p. 14 n.16 (The government

attributed all Fuhs wrongs to Brown: Mr.

Browns group was tasked with getting the deal

done, with actually getting the deal closed. Mr.

Bill Fuhs worked for Mr. Brown. His job was to

make sure that the deal actually got executed.

Mr. Fuhs, when it came down to actually getting

the stuff put together, was the guy who dealt

with Mr. Boyle at Enron. Tr. 6167.Even more

explicit and misleading is Ruemmlers argument

in summation: The engagement letter is

addressed to Mr. McMahon, again, consistent

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 hisunderstanding of the deal. Thats 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.

Gary Dolan: DOLAN was shown a copy of an

E-mail from WILSON to DOLAN dated12/23/1999 (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 draftof the engagement letter which stated that

Enron will buy or find affiliate to buy . . .

However, DOLAN did object to this

language and made the necessary changes.

Dolan knew that such an agreement would

be improper because such a transaction could

be viewed as a parking transaction.

Dkt.1168, FBI 302, Ex. G, at pp. 5-6;

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.Id. at p. 5.



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New Trial

6

Kathryn Ruemmler: And so what did they do,

ladies and gentlemen? They cut her [Zrike] out.They cut her out of this call on December 22nd,

and they cut her out of this call between Mr.

Bayly and Mr. Fastow. Ms. Zrike was never

present for these conversations in which this

verbal guarantee was discussed. Tr.6206.

Schuyler Tilney:Tilney believed that Katherine

Zrike, in-house counsel for Merrill Lynch was onthe Bayly/Fastow phone call. Exhibit B, DOJ-

ENRONBARGE-000678. See id. at 000677

(listing call participants, including Kathy Zrike);

000726 (same).

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 persons name was KEVIN COX), a female

who may have been an attorney and a senior

person from the Investment Banking side. Boots

FBI 302.



31/163

CHART 3: THE GOVERNMENT CONCEALED CRUCIAL BRADYMATERIAL

FROM ZRIKES SEC TESTIMONY

Governments Summary Pre-trial Brady

production regarding Katherine Zrike, from

July 30, 2004.

CONCEALED Evidence From Katherine

Zrikes SEC Testimony from October 29, 2003,

and November 18, 2003.

The government recast Zrikes actual statements tominimize and obfuscate, and did not disclose her full

knowledge:

Based on the representations that were made to her,

Zrike did not feel that there was a commitment by Enron

to guarantee Merrills takeout within 6 months.Dkt.1168, Ex. O, at p. 9.

Zrikebelieved that there was a business understanding

between Enron and Merrill that Enron would remarket the

barges.Id.

Zrike tried to make sure that Davis and Bayly understood

that this was a risk and that Merrill could end up owning

the barges and could lose its money. Zrikes focus was to

ensure that Merrills management understood that Merrill

was the owner of the barges and could be an owner for

longer than it expected because there was no obligation

for Enron to buy it back.Id.

Zrike said she gave Bayly her views that based on what

we know and the information we have this was not illegal.

Zrike initially said she gave no legal advice on the NBD

[Nigerian Barge Deal].Id.

Zrike said that she was comfortable this was not a made-

up transaction.Id.

The government has never disclosed Zrikes SECtestimony which contains specific exculpatory

evidence as to Brown:

[Zrike] knew that this transaction involved a rate of

return for the purchaser of this investment. Because thats

typical of any private equity that there is some rate of

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

stepping into the shoes of that third party for the short

period of time would be subject to, although this of course

is an anticipated rate of return, but that we were subject tobecause we might not ever get rid of the barges.Id. at pp.

123-24.

Zrike talked to [inside and outside counsel] about putting

in they will use their best efforts to close the transaction

with Marubeni....[B]est efforts is a very strong level of

commitment that the parties are committing themselves to

when they agree to a best efforts clause.Id. at 305-06.

We were making it clearto 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 allthe risks associated with that equity investment in order

for them to take it as a sale and to book the gain or loss,

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.Id. at 192.

There were two areas of other than obviously we

wanted it to look and be right, but my focus, I wasnt

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.



32/163

CHART 4: ZRIKES GRAND JURY TESTIMONY PROVES AN EGREGIOUS

BRADYVIOLATION, MISCONDUCT AND BROWNS INNOCENCE



July 30, 2004.

PREVIOUSLY CONCEALED Evidence From

Katherine Zrikes Grand Jury Testimony from

April 15, 2003, Disclosed to Brown on

December 12, 2007.

The governments summary was misleading, incomplete

and altered to minimize Zrikes actual testimony:



to guarantee Merrills takeout within 6 months.

Dkt.1168, Ex. O, at p. 9.



barges.Id.


that this was a risk and that Merrill could end up owning

the barges and could lose its money. Zrikes focus was to




for Enron to buy it back.Id.



Zrike initially said she gave no legal advice on the NBD[Nigerian Barge Deal].Id.

BROWNS GRAND JURY: In - - no, I dont - - the

short answer is no, Im not aware of the promise. Im

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 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 assurance is synonymous withguarantee, then that is not my understanding. If

assurance is interpreted to be 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. 3238-41).

[T]hey were not committing to do whatever it took.

They were committing to take and the business ended

up being a, you know, oral business understanding [to

assist in locating a third-party]. Dkt.1168, Ex. F, at pp.

10-11, 15.

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

risk that we would end up owning this barge and so and

from an exit perspective, we [] had to be willing to own it

until the thing got sold orand keep the risk of what thatentails on our balance sheet andmaking sure that they are

comfortable with that.Id. at 55.

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 [or] problematic. Id. at 75.

Merrill the Merrill Lynch lawyers in my group and

myself did ask that we include a provision that two

types of provisions that we thought would be helpful to

us. One would be to indemnify us or hold harmless ifthere was any sort of liability like a barge explosion of

environmental spill, loss of life, or something that was,

you know, a disaster scenario....The other thing that we

marked up and we wanted to add was a best efforts

clause, ...that they would use their best efforts to find a

[third-party] purchaser [for Merrills equity

interest.***[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. See also id. at 66-70 (same, includingAlan Hoffmans involvement negotiating with V & E).

It went to the DMCC because thats where I decided it

would be best to be vetted.Id. at 123, 128. Seeid. at 132-

33 (same).The[] [DMCC] declined to improve it -- toapprove it because it wasnt -- but I still got what I

wanted, which was some smart people looking at it . . .

Id. at 131.



33/163

CHART 5: ZRIKES 302 PROVES EGREGIOUS BRADYVIOLATIONS

AND ETF MISCONDUCT AT TRIAL



July 30, 2004, only 1.2 pages.


Katherine Zrikes 19 page FBI 302, Disclosed to

Brown on December 12, 2007.

The government recast Zrikes actual statements to

minimize and obfuscate her full knowledge and actions

and withheld her most important information.



to guarantee Merrills takeout within 6 months.

Dkt.1168, Ex. O, at p. 9.



barges. Id.

GOVERNMENT MISREPRESENTATION AT TRIAL:

Matthew Friedrich: The Merrill Lynch Defendants

take the uniform approach . . . that all that was going

on was just that it was a remarketing agreement.

Thats all it was. There was no buyback. Its just a

remarketing agreement. But ask yourselves this simple

question: If its a remarketing agreement, if thats all

it is, why was it not put in writing? . . . If it was aremarketing agreement, there wouldnt have been a

problem with that. If thats all it was, why wasnt it putin writing? Tr. 6486.

During the DMCC meeting, there was an agreement to

remarket Merrills position. The agreement was not put

in writing because that would have been overkill.

Merrill tried to put the re-marketing agreement in the

written agreement but Enron said it was inappropriate

and it could not commit to it. The best efforts

agreement for selling Merrills position looked like

Enron had to buy back Merrills interest in the

barges. Merrill was putting in real equity with only

Enron to re-market its position. Zrike also wanted a

hold harmless clause for Merrill but Enron rejected

that because Merrill had to be at risk. Marinaro or

Dolan may have told Zrike that a best efforts clause,

such as requiring Enron to buy back Merrills

position, is viewed by courts as too open ended.

Enron buying back Merrills position was not the deal

with Enron. All of the terms of the deal between the

parties were not in the document and this happens all

the time. Merrill and Enron had a businessmansagreement for Enron to get Merrill out of the deal. ***

Davis was not happy with the way that the transaction

came up at the last minute. Davis wanted Bayly to

approach someone at Enron more senior than Enrons

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 Merrillwanted 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.



34/163





Katherine Zrikes 19 page FBI 302, disclosed to



that this was a risk and that Merrill could end up owningthe barges and could lose its money. Zrikesfocus was to




for Enron to buy it back. Ex. O, at p. 9.



Zrike initially said she gave no legal advice on the NBD

[Nigerian Barge Deal]. Id.

Zrike did point out the risks to the DMCC, Davis and

Bayly.... [Zrike] wanted the deal looked at in detail. Zrikemade the decision to take the deal to the DMCC.... She

told Brown, who was not a member of the DMCC, to

attend the DMCC. Id. at p. 8.

She wanted the deal explained to the business people who

would challenge the deal. She wanted to know if the deal

had an economic value and that it was not a sham. She

wanted the reaction of the DMCC team especially

regarding Enrons earnings management and the

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 Enrons earning per share (eps) forthe year. Zrike was told by a banker that Arthur Andersen

had looked at the deal and knew of Merrills 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 Enrons 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 Enrons

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 Merrills

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 regardingMerrill not getting a guaranty.Id. at p. 12.

Merrill thought of the deal as a relationship builder.Id.

at p. 5.

Page 2



35/163





Katherine Zrikes 19 page FBI 302, disclosed to


GOVERNMENT MISREPRESENTATIONS AT TRIAL:

Kathryn Ruemmler: [Y]ou know Merrill Lynch was

certainly not in the business of owning power barges in

Nigeria. No dispute about that. Fourth, Merrill Lynch did

no due diligence on the deal, even though the barges

were an extraordinarily risky investment. They didnt do

anything. Tr. 6149.

John Hemann: [T]he evidence will prove in this case

that Merrill Lynch didnt care much about the actual

barges. Because no matter what the barges looked like, no

matter what condition they were in, whether they sank orblew up or were taken over by pirates, they were out in

six months and they were out with a profit that they had

been promised. Tr. 405-06.

Zrike thought the due diligence was sufficient forthe size of the deal.Id. at p. 6.

ZRIKES CONCEALED GRAND JURY TESTIMONY:

Its more ofthis could cost more than our loss of the $7

million that was the investment in the barge. It could

lead to loss of life, litigation, money, entanglement,

complications. . . Dkt. 1168, Ex. F, at p. 47;

Brown was skeptical of