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Now that Arthur Andersen got its wish for a speedy trial on an obstruction of justice charge for shredding Enron Corp. documents, defense attorney Russell “Rusty” Hardin of Houston faces the daunting task of preparing his case in less than six weeks. But so do prosecutors, who have the burden of proof and are already distracted by Hardin’s effort to prevent them from bringing Andersen employees before a grand jury in Houston that’s hearing evidence on the collapse of Enron. Hardin says his trial preparation will rely on the basics. He says he needs to get a handle on the massive number of documents that Andersen has been producing to various federal agencies. He also will go back and review the testimony of witnesses who appeared before congressional committees looking into the downfall of Enron, and those who gave interviews to the Department of Justice and other federal agencies. “It’s just a logistical effort,” says Hardin, of Rusty Hardin & Associates. “The only complicating factor is the tremendous number of documents involved and the tremendous amount of witnesses. We really had no choice. We have to have a quick trial in order to get a resolution of this,” he says. Bryan Sierra, a spokesman for the DOJ, says, “We can’t go into details before we present our case. But we are mindful of the trial date, and we are ready to go. We will comply with the timetable set by the court.” Andersen is clearly in a precarious position. The indictment alone would threaten the Chicago-based firm’s viability. But it’s also facing defections of scores of clients, which could entail layoffs and disgruntled partners who want to take their clients and go elsewhere. Andersen is also a defendant in numerous civil suits, including dozens of securities fraud and shareholder litigation cases that have been consolidated before U.S. District Judge Melinda Harmon in Houston. And the company is in a management crisis, with the resignation of Joseph Berardino, the firm’s chief executive. A reorganization plan proposed by former Federal Reserve Board Chairman Paul Volcker sets a high bar by calling on the government to dismiss the indictment and litigants to settle civil litigation with Andersen. A court-ordered mediation among Andersen and lawyers representing plaintiffs in the civil litigation and Enron was continuing at press time on March 28 in Chicago before mediator Eric Green. But the criminal charge is one of Andersen’s most pressing problems. The firm was indicted March 7 by the grand jury, but the indictment wasn’t unsealed until March 14, after lawyers for Andersen turned down an offer from prosecutors to plead guilty to obstruction of justice. By March 20, Andersen pleaded not guilty to the charge, and Hardin told Harmon, who also presides over the criminal case, that his client wanted to go to trial as quickly as possible because the very existence of the firm is at stake. “If I had a choice, I’d say, ‘Let’s get a jury here tomorrow,’” Hardin told Harmon, who set the trial for May 6, which is later than Hardin wanted, but earlier than the desire of the lead prosecutor. Hardin, an assistant district attorney in Harris County for 15 years, says he’s been waiting his entire career for a client who truly wants a speedy trial. “If I had my choice, this is what I normally would do, but no client [until now] is ever willing to do it. I think lawyers over-discover both civil and criminal cases,” he says. But it’s essential for Andersen, he says. “We believe very strongly the company is not guilty or we’d be crazy to do this. We’d just be rushing a conviction,” he says. Lead prosecutor Samuel Buell, an Assistant U.S. Attorney in Boston, did not return a telephone message by press time. But three former federal prosecutors in Texas who now work the other side of the bar say Hardin was smart to ask for a quick trial. Michael E. Clark, former chief of the criminal division of the U.S. Attorney’s Office in the Southern District, says he’s always thought that, in the right case, pushing for a quick trial is a wonderful strategy for defense attorneys to catch prosecutors unprepared. Lawrence Finder, a former U.S. Attorney in the Southern District, says Hardin was clever because prosecutors are rarely ready to go to trial the day the indictment is released. Buell, the prosecutor, did tell Harmon he needed at least 60 days to prepare for trial and to prepare up to 30 witnesses, but Harmon decided to give the lawyers less than seven weeks to get ready to pick a jury. Hardin says he’s working on the case with assistance from two lawyers at his firm — Andrew Ramzel and Anthony Drumheller — and lawyers from Mayer, Brown, Rowe & Maw in Washington, D.C., and Davis Polk & Wardell in New York. FACE-OFF With the trial setting behind them, Hardin and Buell likely will have their next face-off over Hardin’s effort to prevent prosecutors from using the grand jury to collect evidence for the trial. The motion Hardin filed March 25 asks Harmon to quash the grand jury subpoenas issued to two Andersen employees March 22 and to prevent prosecutors, until the trial is over, from questioning witnesses before the grand jury about the matters alleged in the Andersen indictment. Hardin argues that the 5th U.S. Circuit Court of Appeals has repeatedly held that prosecutors may not use a grand jury for the primary purpose of strengthening a case or for discovery. While the government’s response was not filed by press time, Buell argued at a hearing March 20 that it’s “both common and proper” for the government to use a grand jury after an indictment. He wouldn’t say if he expects to file a superseding indictment that would name more defendants, but a DOJ task force is using the grand jury to investigate the downfall of Enron. The company filed a Chapter 11 in December, just weeks after its stock tanked following news in October it was posting a $618 million loss for the third quarter and then revealed it would reduce shareholder equity by about $1.2 billion. Hardin says his position is the government is using the grand jury to conduct discovery for the case against Andersen. “They chose to indict this case without calling any witnesses to the grand jury [until] the day after they unsealed the indictment,” he says. “Our contention is they are doing it for no other reason but to bolster the trial case. It’s improper.” Finder, the former U.S. Attorney in Houston, says prosecutors aren’t supposed to bolster their cases with additional grand jury testimony, but it’s difficult sometimes to draw a line of demarcation. “What may happen is the court may be called upon to review the original grand jury testimony … even if it doesn’t lead to a new indictment,” he says. “The remedy would be suppression of the new evidence. That’s a tough call.” THE BIG QUESTION Defense attorneys who are former prosecutors say the prosecution might have the hardest task because they have the burden of proof. “They are the ones under the gun. The defense gets to sit back and listen and prepare their defense. The defense doesn’t have to do opening statements until the government rests,” says Finder. Hardin agrees, “You get as much information as you can from the government, and then watch it come out.” The indictment alleges that Andersen partners and employees working on the Enron account began a massive document-shredding program after the firm learned from then-client Enron that the Securities and Exchange Commission had begun an inquiry into its off-balance sheet partnerships. Hardin says Andersen did not commit a criminal act, and neither did former Andersen partner David Duncan, who was the lead partner on the Enron account until he was fired for conducting the shredding program. The big question at trial, according to Hardin, is whether Andersen destroyed documents with the intention of impeding the SEC investigation. Former prosecutors turned defense counsel say the government may grant immunity to one or more of the Andersen employees who participated in the shredding operation in return for testimony at the trial. Duncan, for one, has talked to prosecutors. His attorney, Gandolfo “Vince” DiBlasi, a partner in Sullivan & Cromwell in New York, declined to comment. Robert Davis, a partner in Hughes & Luce in Dallas who is a former criminal tax prosecutor for the Department of Justice in Washington, D.C., isn’t so sure a quick trial was a smart move. He says the government may have an easier hill to climb in general compared to the defense. “The defense cannot appear to influence testimony,” Davis says. “The extent to which they can talk to former and present employees and bring them under the tent is limited. It’s a very delicate process,” he says. “It’s not a business for wimps.” The prosecution also may have an easier time because people who could be indicted may be more willing to cooperate. “People will naturally be concerned to please the prosecution,” he says, adding they might make deals. Clark, now a partner in Houston’s Hamel, Bowers & Clark, says the case is conceptually fairly easy for the prosecution because of the paper trail. But he says the prosecutors face the problem of having to pick the right witnesses quickly to build their case. “To go in and blindly immunize somebody is something you don’t want to do unless you don’t have a choice,” Clark says. “It doesn’t look good to a jury to use Mr. Big to get Mr. Little.” At the hearing before Harmon on March 20, Buell wouldn’t say if he expects to bring out a superseding indictment. That could delay Andersen’s trial setting because new defendants could, and are likely to, ask for a continuance. But Hardin told Harmon that even if the government issues a new indictment, he wants his trial setting. Christopher Bebel, a partner in Shepherd, Smith & Bebel of Houston and a former SEC and DOJ prosecutor, says the government is probably gambling on a new defendant asking for a continuance. But Bebel says Andersen is also taking a gamble. “What will happen is Andersen will move for severance,” he says. “And if it doesn’t get that severance, it will stay in limbo and in purgatory for that period of time.”

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