After more than four weeks of exhaustive and often complex testimony, the outcome of Andersen’s obstruction-of-justice trial may turn this week not so much on the evidence but on the skill of the lawyers’ closing arguments and the precision of the judge’s jury instructions.
So far, neither side can boast a knockout. A trial that at the beginning appeared to be rock solid for the government has proven tricky and tenuous.
For a case that had led to the dismantling of Chicago-based Andersen, one of the best-known names in American business, the testimony has been remarkably technical, said Christopher Bebel, a former federal securities attorney. “That makes it tough for the jury,” he said.
Both sides rested Tuesday. How convincing the prosecution and defense are in wrapping up their cases Wednesday–and whether U.S. District Judge Melinda Harmon keeps the juror’s focus to narrow points of law–could sway the panel of mostly working-class Texans, according to legal experts and attorney teams from both sides.
At issue: Did Andersen officials join in a conspiracy last fall to shred more than a ton of documents relating to its faulty accounting of Enron Corp. as the disintegrating energy giant faced a federal probe into more than $1 billion in losses?
For the prosecution, stern-faced Assistant U.S. Atty. Sam Buell, known for his skill in mob cases, will attempt to hammer home this theme: If one person at Andersen “corruptly persuaded” staff at Andersen to break the law, then the partnership is guilty.
Buell may be hard-pressed to weave a tapestry of covert intent, as the evidence failed to show that anyone at Andersen directly said “destroy documents,” and there was no trail of correspondence that specifically ordered shredding.
“Much of this case comes down to what was in people’s heads,” co-prosecutor Andrew Weissmann said last week.
For the defense, flamboyant Texan Rusty Hardin–a former door-to-door Bible salesman with a preference for tailored clothes of light hues–the summation boils down to this: Andersen was trying to correct its accounting errors, and no one at the firm intended to evade the law. Nothing of consequence was shredded, and the government failed to prove otherwise.
Hardin will spin the jurors, likely returning to his folksy opening trial comparison to the children’s book “Where’s Waldo?” that describes a search for an elusive character.
Duncan the key
Hardin needs to overcome the testimony of David Duncan, convicted former Andersen lead auditor on the Enron account, who pleaded guilty to obstructing justice and solemnly told the jury that he was trying to skirt federal regulators by signaling to his staff that they should shred documents. In Hardin’s view, Duncan was pressured into a plea agreement and is a very reluctant shredder.
“Where’s the corrupt persuader?” Hardin asked, during one of his many daily sidewalk appearances before the press. “No one convinced me that Duncan filled that role.”
Although attorneys on both sides privately think that most jurors have made up their minds, legal observers said a few still may be on the fence.
One of the prosecution’s key points in closing arguments will be to portray Andersen as a repeat offender. Evidence introduced in the trial showed faulty past audits of Waste Management Inc. and Sunbeam Corp.–errors that drew fines, lawsuits and SEC sanctions.
“Arthur Andersen is a recidivist,” Gerald Treece, a Houston-based law professor, said in summarizing the government’s point. “That is powerful stuff.”
Hardin, however, could continue on his trial theme that the government is a bully that intimidated at least three possible crucial Andersen witnesses to keep them from testifying and forced Duncan to plead guilty. Strong federal hands are not appreciated in these parts, Treece said.
“This isn’t Chicago,” said Treece, a professor of constitutional law at the South Texas College of Law. “This is Texas. There is a dislike here of the federal government. There is a total distrust of the federal government. Many Texas jurors believe you have to keep both eyes on the federal government at all times.”
Still, the government could pull off a victory, especially as it emphasizes to jurors that Andersen, intentionally or not, broke the law.
“In that courtroom the government has a 98 percent rate of conviction,” said David Berg, a Houston lawyer who handles some white-collar defense cases. “This is the death penalty capital of the world, and these are very conservative jurors here.”
The Texas card
But Hardin is clearly a wild card. He has repeatedly sparred with Harmon, mocked the prosecution and courted the press. Some jurors seem to show open disdain for him.
Hardin’s theatrics, however, serve a defense purpose, said Patricia McEvoy, a principal at Chicago-based Zagnoli, McEvoy, Foley, a litigation-consulting firm. In his closing statements, Hardin may fly the proverbial state flag, she said.
“I think he is playing the Texas card,” McEvoy said. “He is trying to send the message to the jury that `I am one of you and they are from out of town, out of state or damned Yankees.”‘
But Andersen has a huge hurdle standing between it and acquittal–the firm has admitted it shredded documents and erased e-mails. On a potentially damaging videotape, senior partner Mike Odom is shown boasting to his staff in the Southwest that “it’s great” if paperwork is shredded before a lawsuit is filed or a subpoena issued.
“Their defense is, `Yes, we threw away documents, but we allowed them to be retrieved, and what we threw away were things we did not think were significant,”‘ said Thomas Ajamie, a securities lawyer in Houston.
Separately, Andersen’s insurance carrier on Tuesday began to transfer the remaining $205.7 million of a $217 million settlement resulting from its auditing of the Baptist Foundation of Arizona. The now-bankrupt foundation ran an investment fund that lost $570 million belonging to 13,000 mostly elderly investors.
