Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Defense lawyer Russell “Rusty” Hardin holds a markedly different hand for the start of Arthur Andersen’s trial than the one he held just seven weeks ago, when he sought a speedy trial for his client. Andersen goes to trial in federal court in Houston today on a criminal charge of obstruction of justice for destroying documents of former client Enron Corp. Since U.S. District Judge Melinda Harmon set the trial date for the case against Andersen, lead defense attorney Hardin has faced a number of setbacks, including the on-and-off settlement talks with the government that fell apart and the guilty plea by David Duncan, the lead Andersen partner on the Enron account. He will testify for the government, presumably to say he ordered shredding after he learned the government was investigating Enron’s finances. Given the turn of events, the quick trial date could backfire. But despite all of that, a number of defense attorneys in Texas say Hardin can win an acquittal for Andersen. The criminal case will turn on voir dire and on Hardin’s cross-examination of Duncan, six trial lawyers say. “If Rusty can get that jury to hate Duncan more than what Arthur Andersen is alleged to have done, he’s got a shot,” says Brian Wice, a criminal defense lawyer in Houston. Tom Mills, a defense attorney in Dallas, says Hardin will have to attack Duncan’s credibility. Mills says Hardin needs to show the jury that Duncan’s current story — that he ordered document shredding even after he knew the Securities and Exchange Commission was investigating Enron — differs from the story he told Andersen lawyers months ago. But Michael E. Clark, former chief of the criminal division of the U.S. Attorney’s Office in the Southern District of Texas, says jury selection is key. “Rusty doesn’t need a unanimous jury, so he probably will spend a lot of attention in jury selection — depending on what he is allowed — on people who would be willing to consider other reasons for document destruction than guilt,” he says. Samuel Buell, an Assistant U.S. Attorney in Boston, will be the government’s lead trial lawyer. At the prosecutor’s table with Buell will be special attorneys Andrew Weissmann and Matt Friedrich. Hardin says he’s calling the shots in Andersen’s defense, although he’s working closely with lawyers from Andersen defense firms Davis Polk & Wardwell of New York and Chicago-based Mayer, Brown, Rowe & Maw. TIME LINE The events leading up to the Andersen indictment, which charges the firm with illegally shredding Enron documents after it should have known the SEC was investigating the Houston energy trading company, were swift. On Jan. 10, Andersen announced that employees had been shredding Enron documents. The company asked the government’s Enron Task Force to conduct an expedited investigation into the document destruction. On Jan. 15, Andersen fired Duncan, the lead auditor on the Enron account. But by March 1, the Task Force had informed Andersen it would seek an indictment, and despite settlement negotiations, the indictment was handed down on March 14. Andersen pleaded not guilty to the criminal charge on March 20 and Hardin told Harmon that neither Andersen nor Duncan engaged in shredding with the intent of hindering the SEC investigation into Enron’s financial reporting. He asked for a trial as quickly as possible because the very existence of the firm is at stake. But on April 9, Duncan pleaded guilty to obstruction of justice and agreed to testify for the government. He told Harmon that he ordered shredding after he knew about the SEC investigation. That’s a different story from the one Duncan told Andersen lawyers before he was fired, according to Hardin, who says, “They love this case because Duncan has pleaded guilty.” But Hardin says it comes down to intent, and he’s not convinced Duncan intended to obstruct justice. “I truly believe there isn’t anyone out there that is going to say they were obstructing, destroying documents to keep them away from the SEC,” he says. Duncan’s lawyer, Gandolfo “Vince” DeBlasi, a partner at Sullivan & Cromwell in New York, declines comment. Because prosecutors had not furnished him with a witness list, Hardin said Wednesday that he isn’t sure who will testify for the state, other than Duncan. He declines to speculate if the prosecutors will turn any other witnesses by promising them immunity in return for testimony. Buell declines comment. Clark, a partner at Houston’s Hamel Bowers & Clark, says he wouldn’t be surprised if prosecutors lined up some lower-level Andersen employees, and granted them immunity in return for testimony at trial. However, Andersen’s defense team may have difficulty securing Andersen witnesses who would testify that there was no intent to obstruct the SEC investigation by shredding documents. With the grand jury still investigating, potential witnesses run the risk of indictment. “He’s going to have a hard time locating witnesses who will be willing to contradict Duncan’s recollection of what took place during the key meetings,” says Christopher Bebel, a partner at Houston’s Shepherd, Smith & Bebel and a former SEC and DOJ prosecutor. “If these people own up to being at these meetings and these people say something that implicated them or admit to something under cross-examination, they inch closer to being indicted.” Bebel says lawyers for those potential witnesses would advise their clients to take the Fifth Amendment to avoid testifying. Hardin says he won’t know for sure whom he will call as a witness until after the government presents its case, adding, “a lot of their witnesses may be ours, so cross may accomplish a lot.” Miriam Rozen contributed to this story.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Advance® Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]


ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.