Arthur Andersen

The SCOTUS overturned the Arthur Andersen Enron related conviction today, and that has Arianna pissed:

The sour cherry atop this icky sundae is todays announcement that that the U.S. Supreme Court has overturned the conviction of one-time accounting giant Arthur Andersen. Andersen, you may recall, was one of the key players in the Enron debacle, guilty of (among many other things) obstructing justice by shredding thousands of financial documents. Sure, the conviction was overturned on a technicality — in this case, bad jury instructions — but how come these guys always seem to skate by on technicalities?

So the divide is getting wider, average Americans are finding it harder and harder to get by… and the guilty are let off the hook on a technicality. Its Back to the Future, Corporate American Style.

For all intents and purposes, Arthur Andersen was destroyed by this conviction and other Enron fall-out.

Which, I guess, gives them plenty of time to skate.

*** Update ***

Rick, in the comments, reminds of the other aspect of the Huffington post (in the Huffington Post, no less!) that was silly- it wasn’t a technicality:

The ruling today zeroed in on the fact that jurors were told they could convict Andersen even if they found that the accounting firm “honestly and sincerely believed that its conduct was lawful.”

The opinion, by Chief Justice William H. Rehnquist, was practically forecast when the case was argued before the court on April 27. During the arguments, the justices peppered government lawyers with hostile remarks.

Justice Antonin Scalia, for example, called the government’s theory “weird,” and Justice Sandra Day O’Connor remarked: “If this thing is so confusing, how is a businessperson supposed to know what to do? How’s a lawyer to know?”

It was clear that the Houston jury that convicted Andersen on June 15, 2002, had trouble sifting the evidence. The panel deliberated for seven days and at first declared itself deadlocked before deliberating three more days and finding the firm guilty of one count of obstruction.

Upholding this ruling would have been a disaster for everyone.

And, just because I have to since I have a comments section, let me state that my belief that this was a screwed up set of jury instructions in no way absolves Arther Andersen for their shitty accounting practices that allowed Enron to do all the crappy things they did. If the public at large really knew all the crap that banks and others did to let this get this far, there would be fireworks.

21 replies
  1. 1
    Rick says:

    Overturning verdicts on technicalities is as American as Apple Pie. Not, as Zsa Zsa Huffington would have it, Baklava.


  2. 2
    John Cole says:

    I didn;t even think it was a technicality- it was a way fouled up jury charge that virtually ensured a guilty verdict.

    At least from my reading…

  3. 3

    After a bit of thought, the Jury instructions were an interpretation of the law and, that being struck down, I’d say isn’t a technicality.

    It sounds like one though.

  4. 4
    frontinus says:

    You’d be right, John.

    Pretty scathing opinion and unanimous.

    The Huff is a lemming. Keep an eye out for the BusHitlerMcSmirkyChimp-Justice-Department-intentionally-botched” meme.

  5. 5

    If Arthur Andersen was denied its due process rights, then overturning the conviction is a pretty good thing to do. The government could retry the case, what what’s the point? As you said, John, the company is obliterated and thus there is little reason to.

  6. 6

    Is it true that they can retry? I don’t think so. I think that’s it. Otherwise you’re being tried for the sasme crime twice, whoch is verboten.

    Looks like the only punishment they’ll get is a ruined image and a destroyed firm. Not sure we could ask for much more.

  7. 7
    slickdpdx says:

    And, as Huffington and others would be quick to suggest, such “technicalities” are the foundation of a just legal system. They often work to the benefit of regular people and, even, violent criminals as well.

  8. 8
    slickdpdx says:

    I should have said “in other contexts” after “quick to suggest”. Sorry. P.S. Great post.

  9. 9
    Libertine says:

    If the jury was told they could convict even if they thought the company complied wit the law then the SCOTUS ruled correctly. The saddest thing is that either Arthur Anderson was destroyed as a company based on incompetence of the government or the American people were denied justice for the same reason.

  10. 10
    tim says:

    Justice Sandra Day O’Connor remarked: “If this thing is so confusing, how is a businessperson supposed to know what to do? How’s a lawyer to know?”

    I generally agree with the thrust of the remarks here, but this stood out. Can’t make rules that businesspeople or lawyers can’t understand, but somehow such questions never come up in SCOTUS rulings regarding, say, blue collar types or even beat cops.

  11. 11
    Libertine says:

    And the court was unusually in lock step on this case. It was a 9-0 ruling…a legal “no-brainer”.

  12. 12
    Rick says:


    Though I’m still aglow from your hat tip, I, per usual, contributed *nothing* to the enlightenment you state.


  13. 13
    Doug says:

    >>Is it true that they can retry? I don’t think so. I think that’s it. Otherwise you’re being tried for the sasme crime twice, whoch is verboten.

  14. 14

    You amaze me with your hypocrisy. Here we have a judge who made a completely false interpretation of the law, gave bad jury instructions, and it ended with the destruction of one of America’s oldest accounting firms, sending thousands into unemployment.

    And yet, per you, it’s wrong for Republicans to try to get strict constructionists onto the appeals court?

    Now, if there were instances of AA breaking the law as you seem to believe, why was this particular case tried, when it utterly hinges on the bad jury instructions? I’m not trying to absolve either Enron or AA of criminal activity, but it’s ridiculous that one effed-up judge can wreak that much havoc with a stinking interpretation.

    Don’t give me that “I know more than you do” answer, either. If there are fireworks in the offing, then hit us with them. We’re adults.

  15. 15

    I looked it up as best I could, found what looked like a reasnable page (I don’t have my sources sorted out here) the quote is in the annotations as the constitution is unclear:
    In this country, the common-law rule was in some cases limited to this rule and in other cases extended to bar a new trial even though the former trial had not concluded in either an acquittal or a conviction.
    Link here:

    While you’re right that we shouldn’t applaud the extrajudicial guilty verdict, if justly AA was innocent. I think it’s the universal consensus that AA was destryed not because of the court case but because of their association with Enron, a debacle that they were either complicit in, or unacceptably hands off about. The market enacted this revenge, not the courts, whose case was subject to higher standards.

  16. 16
    John Cole says:

    You amaze me with your hypocrisy. Here we have a judge who made a completely false interpretation of the law, gave bad jury instructions, and it ended with the destruction of one of America’s oldest accounting firms, sending thousands into unemployment.

    I am sorry- at what point was I cheering fucked up judges? I thought by pointing out this was pretty clearly not a teechnicality I was actually pointing out all the things you just hammered me for being a hypocrite about.

    Fill me in, please. Arthur Andersen was pretty much DOA before any charges were even filed, if I remember correctly.

    I wold also look at who the judges were, first, before claiming the nuclear option might help things.

  17. 17
    Kimmitt says:

    One issue here is that while Arthur Andersen shareholders took an absolute bath, the folks who were involved with the fraud by and large suffered very little.

  18. 18
    Bekim says:

    Arthur Andersen could be re-tried without any violation of the constitutional prohibition against double jeopardy, but it’s an expensive proposition and the prosecutors may choose not to do so.

    Scott, the chances that the judge in the original trial thought up those faulty jury instructions all by him/her self are approximately zero. The usual procedure is for the attorneys for both sides to bring their preferred jury instructions to a conference with the judge. The attorneys and judge then work out which instructions to offer. If this set of instructions slipped by both the judge and Andersen’s legal team, we may wonder about their competence, but it has absolutely nothing to do with their politics.

  19. 19
    Geek, Esq. says:

    No doubt that this case will go into the next edition of every major criminal law textbook.

    Though, an argument can still be made that belief of legality should be an affirmative defense.

  20. 20
    CalDevil says:

    Enron and the destrruction of Arthur Andersen were the greatest things ever to happen to the accounting industry in this country.

    Just ask any of the smaller publicly held companies that find themselves at the mercy of the big 4 and the affiliate members of their oligopoly.

    Sarbanes-Oxley has turned the traditionally money-losing auditing practices of the big accounting firms into a serendipitous goldmine.

    The negative consequences to the productivity (read: profit making ability) of American companies and the impact on their investors (read: everyone of us owning stock, or having a 401k or pension plan) is another issue entirely.

    Who cares about the companies and their investors (who must be evil if they’re looking to make money), as long as the accountants and lawyers are getting rich?

  21. 21

    NFLLiberal: When an appellate court overturns a verdict like this–for reasons of due process like not getting a fair trial–a new trial can begin. Indeed, the Court’s opinion says that “the case is remanded for further proceedings consistent with this opinion.”

    I know it’s tempting to view this as simply letting a player in the Enron travesty off the hook, but consider that affirming the holding (or just not granting cert) would have allowed for a significant expansion of executive power. The addition of “impede” to the statute’s criteria–upon the insistence of and agreement with the Gonzales Justice dept., I might note–is especially concerning:

    These changes were significant. “[D]ishonest[y]” was no longer necessary to a finding of guilt, and it was enough for petitioner to have simply “impede[d]” the Government’s factfinding ability. “Impede” has broader connotations than “subvert” or even “undermine,” and many of these connotations do not incorporate any “corrupt[ness]” at all. Under the dictionary definition of “impede,” anyone who innocently persuades another to withhold information from the Government “get[s] in the way of the progress of” the Government.

    Hmm let’s see…do I want more executive power (when there is perhaps too much already) simply in order to make sure somebody pays the piper for covering up Enron? Nah.

    Also, for those who agree with me, I think this should serve as a perfect example of why Tom DeLay-style judicial intimidation is not only abhorrent, but completely off-the-mark in its assessment of the judiciary. Ideologically liberal and idologically conservative judicial rulings often do not match the political platforms of the parties. Bush’s attempt to pack the court with “constructionists” could very well backfire, if they’re worth their salt. I am imagining a SC ruling in 2012 seriously curtailing the executive’s war powers…now that I would like to see.

    What worries me is that Bush will appoint some movement conservative hyper-activist (they do exist) who doesn’t belong anywhere near the Supreme Court.

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