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The judge hearing Arthur Andersen’s obstruction of justice case agreed Wednesday to look at notes taken by lawyers for David Duncan, who is expected to be the prosecution’s star witness, before deciding if Andersen’s defense lawyers should get them. Andersen’s lawyers want the notes to bolster their case that Duncan — who was the lead Andersen partner on the Enron Corp. account — never said he committed a crime by destroying Enron documents until the time he agreed to plead guilty to obstruction of justice. The notes could help them impeach Duncan. But lawyers for Duncan were in court Wednesday asking U.S. District Judge Melinda Harmon to quash a subpoena issued by Andersen’s defense team. The Andersen lawyers want the notes before Duncan testifies in the trial, which began Monday in Houston. Duncan pleaded guilty April 9 and told Harmon he admitted he violated the law in connection with his role in Andersen’s destruction of Enron documents. Harmon told Duncan’s lawyers during a noontime hearing Wednesday to bring the notes to her by the end of the day. She indicated she would try to rule by noon today. Houston’s Barry Flynn told Harmon the only notes they have are privileged and “sacrosanct” and should not be turned over to Andersen’s lawyers. Flynn, of Barry Flynn & Associates, said it’s a particular problem because Duncan is not only involved in the criminal case against Andersen, but is a defendant in numerous civil cases stemming from Enron’s downfall, including class action litigation also pending before Harmon. “This case, for Mr. Duncan, is the beginning of a long road,” Flynn told Harmon. Samuel Seymour, a partner in Sullivan & Cromwell in New York who represents Duncan, told Harmon that releasing the notes would be extremely prejudicial to the former Andersen partner. But Charles Rothfeld, a member of Andersen’s defense team, said they are not seeking notes of privileged communication between Duncan and his lawyers, but notes the lawyers took when Duncan was interviewed by congressional and law enforcement investigators. He said they are no longer privileged because “once they introduce the government into the equation, there is no attorney-client work-product.” The subpoena served on Duncan on May 1 seeks all documents and notes in the possession of Duncan’s lawyers reflecting statements Duncan made to federal officials from Jan. 14 through the present and any reflecting the factual statement he made in connection with his guilty plea on April 9. They also seek Duncan’s proffers to the government, he said. Rothfeld, a partner in Chicago-based Mayer, Brown, Rowe & Maw, said the notes they have received from prosecutors and agents of the Federal Bureau of Investigation recounting meetings with Duncan both before and after he was fired by Andersen on Jan. 15 may not tell the full story. “This category of material is crucial to the defense,” Rothfeld said. “April 9 is the first time, we believe, Mr. Duncan told anybody he committed a crime,” Russell “Rusty” Hardin Jr., Andersen’s lead defense attorney, said. The hearing on the subpoena came after a morning of testimony by two officials from the Securities and Exchange Commission. Spencer Barasch, associate district administrator at the SEC’s Fort Worth office, testified the agency opened an informal investigation into Enron on Aug. 28 after workers in the office read news reports about the company in The Wall Street Journal. But he testified it wasn’t until Oct. 17, after other news reports, that the office sent a letter to former Enron General Counsel James V. Derrick and Chief Financial Officer Andrew Fastow seeking information from the company. The investigation was transferred to the Washington, D.C., office of the SEC around Oct. 22 for manpower reasons. Under cross-examination by Hardin, Barasch testified officials in his office never contacted Andersen in connection with the Enron investigation, but only because the probe was transferred out of the office. Andersen faces a criminal charge of obstruction of justice. Prosecutors allege the accounting firm destroyed documents after it knew the SEC was investigating Enron’s financial reporting. Brenda Sapino Jeffreys is a senior reporter at Texas Lawyer.

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