Inasmuch as I had to appear at an hearing in federal court early this morning, I stuck around after my hearing to attend the sentencing hearing of former Merrill Lynch executive Daniel Bayly in connection with the Enron Nigerian Barge case, which has been a regular subject on this blog over the past year.

To say the least, I’m glad I stuck around.

In one of the most impressive judicial performances that I have witnessed in my 26 year legal career, U.S. District Judge Ewing Werlein, Jr. — in the face of widespread public and political expectation that anyone who had anything to do with Enron should be punished severely — rejected the Enron Task Force prosecutors’ pleas to punish Mr. Bayly with up to 15 years of prison and sentenced the former Merrill Lynch executive to 30 months in prison, six months of probation, a $295,000 restitution award, and a $250,000 fine.

Later in the afternoon, Judge Werlein sentenced former Merrill executive James Brown — who, unlike Mr. Bayly, also faced conviction on perjury and obstruction of justice charges over the barge deal — to 46 months of prison and similar financial penalties as the ones assessed to Mr. Bayly.

Inasmuch as Mr. Bayly is the first defendant to be sentenced after being convicted at trial of an Enron-related crime, the far shorter sentence than the punishment that the prosecutors recommended was a bitter blow to the Task Force prosecutors, who did not attempt to hide their displeasure with Judge Werlein’s ruling after the hearing.

Clearly in full command of the legal issues and evidence before him, Judge Werlein carefully stated his findings and conclusions, which included the following:

He categorically rejected the prosecution’s controversial $44 million “market loss” theory as being contrary to the U.S. Supreme Court’s recent decision in Dura Pharmaceuticals v. Broudo, in which the Court rejected the price inflation theory of causation that the Task Force prosecutors used in calculating the $44 million in market loss.

He declined to adopt the jury’s $13.7 market loss theory, essentially on the same grounds as he rejected the government’s theory.

He ended up calculating market loss at $1.4 million, which was the total profit that Merrill and the Enron-related partnership ultimately made on the Nigerian Barge deal.

He rejected the prosecutors’ pleas for an upward adjustment of the sentence under the advisory sentencing guidelines “to make an example out of Mr. Bayly for Wall Street.”

He granted a downward adjustment of the sentence under the sentencing guidelines because of Mr. Bayly’s exemplary professional and personal record. “I may have never had a defendant before me who had a more glowing and extraordinary record of being a good citizen,” noted Judge Werlein.

Although he noted the jury conviction of fraud, Judge Werlein observed that — in the constellation of of Enron fraudulent conduct that former Enron CFO Andrew Fastow orchestrated — Mr. Bayly’s involvement in the barge transaction was relatively benign and not central to Enron’s transactions.

He noted that the Enron Task Force had obtained plea bargain sentences for two Enron executives who were central to Enron’s more wide-ranging fraudulent conduct — 10 years for Mr. Fastow and five years for former Enron treasurer Ben Glisan — and that those sentences were less than the one that the prosecution was recommending for Mr. Bayly, who was a bit player in Enron’s questionable conduct.

Then, as if to punctuate his rulings, Judge Werlein firmly rejected the prosecution’s over-the-top call at the end of the hearing for Mr. Bayly to be taken into custody immediately, and allowed Mr. Bayly to report to prison voluntarily in accordance with a date to be scheduled in the near future by the Bureau of Prisons.

Judge Werlein delivered his rulings in his customary conscientious and professional manner that exuded the careful consideration that this man of extraordinary depth gave to the issues before him.

After the hearing, I happened to get on the same elevator as Mr. Bayly and several members of his family. After having lived through a nightmarish prosecution and clearly expecting the worst when they came to court today, Mr. Bayly and each of his family members — several of whom had tears in their eyes — were clearly touched by Judge Werlein’s courage, grace and fairness in sentencing Mr. Bayly.

Later, as I drove back to my office after the hearing, I reflected on Ewing Werlein, Jr. and the remarkable judicial performance that I had just witnessed.

When I moved to Houston as a young college student over 30 years ago, one of the first Houston families that my family and I met was that of Mr. and Mrs. Ewing Werlein, Jr., who hired a couple of my younger sisters to babysit their daughter and son. I recall my late father observing to me at the time: “Tom, if you want to become a gentleman, Mr. Werlein would be a fine model for you to follow.”

Several years later, after finishing law school and becoming a young attorney in Houston, I learned quickly that Ewing Werlein, Jr. — then a partner at Vinson & Elkins — was one of the most respected lawyers in the Houston bar and a model for young lawyers.

Over a decade later, Judge Werlein’s son, Ken, became an associate pastor at my family’s church here in The Woodlands before going on to start his own church in northwest Houston. O

One of Ken’s finest sermons during his time at my family’s church was one that he gave on Father’s Day in which he lovingly described his father’s tender mentoring of his son and daughter.

Finally today, in the face of virtually unprecedented public animus toward anyone or anything having to do with Enron, Judge Werlein has shown judges everywhere the model of what a judge should aspire to be.

That’s quite a fine legacy in my book.