Former Big Five accountant Arthur Andersen LLP was denied a fair trial last year by a judge who undercut the firm's efforts to defend itself against a charge of destroying Enron Corp.-related documents to thwart investigators, a lawyer said Thursday.
Maureen Mahoney, Andersen's lead appellate lawyer, told a three-judge panel of the U.S. 5th Circuit Court of Appeals that U.S. District Judge Melinda Harmon in Houston wouldn't let the firm show jurors that many more documents were preserved than destroyed.
She also said Andersen partners didn't have fair warning that an investigation was coming, and prosecutors were allowed to present prejudicial evidence of previous run-ins with the Securities and Exchange Commission.
Elizabeth “Liza” Collery, the government's appellate lawyer, countered that the shredding began “to beat the subpoena they knew was coming from the SEC,” which started probing Enron's finances several weeks before the energy company collapsed in 2001.
One of the appeals judges, Patrick Higginbotham, noted that when a felon dies while a criminal appeal is in progress, the case dies too.
“In a practical sense, that's happened here,” Higginbotham said of the withered accounting firm, left with just 250 of 28,000 U.S. employees on the payroll and little more than a shattered reputation to save.
A jury convicted Arthur Andersen on a charge of obstruction of justice in June 2002 for shredding and doctoring Enron-related documents.
