White Collar Crime Prof Blog

Andersen Brief Filed

Petitioner Arthur Andersen filed its Brief in the United States Supreme Court and without doubt this will be an interesting case.  The Summary of the Argument states:

"It is plain as day that the Government did not charge Andersen with obstruction of justice for discarding documents during the relevant time period because no official proceeding of the SEC was pending.  . . ."

A paragraph later we see:

"The United States attempted to evade that settled law by instead charging Andersen with 'witness ampering' on the remarkable theory that although it was perfectly lawful for Andersen to have a document retention policy that preserved only the final audit work papers, and perfectly lawful for Andersen's employees and professionals to follow that policy, it was somehow a serious felony for Andersen's in-house attorney and supervisors to remind its employees of the policy."

The legal arguments within this brief cover issues regarding the word "corruptly,"  whether the instruction on the "requisite nexus to an official proceeding," was proper, and the Rule of Lenity.  But a message is also being sent -  how far can the Government go... and did they go too far this time?

The Brief. Download andersen_merits_opening_brief.PDF

(esp)

Cert Granted in Arthur Andersen Appeal

The Supreme Court granted cert today in Arthur Andersen v. United States (order list here). See also SCOTUS blog for a discussion of the nine cases in which the Court granted cert today.  The question presented is: "Must Arthur Andersen's conviction for witness tampering under 18 U.S.C. 1512(b) be reversed because the jury instructions misinterpreted the 'corrupt persuasion' and 'official proceeding' elements of the offense?"  The definitions of those terms are notoriously vague (i.e. broad) and the case gives the Court a chance to give a little bit more guidance in the area.  That said, a decision favorable to Andersen could trigger a congressional response.  We will try to post the briefs as soon as possible after they are filed. (ph)

As We Enter 2005 -What to Expect

2005 may be another year with white collar issues in the news.  CNN notes some of what to expect in 2005 in an article titled, "The Return of the $6,000  Shower Curtain."   Some of the things they include, as well as others to expect this year are:

1. First up is the trial of Richard Scrushy that starts in early January.

2. Oral argument in Martha Stewart's case, and perhaps a decision from the Second Circuit. Martha Stewart will finish serving her sentence and the question will be what role will she play in helping with reforms for women in prison.

3. The Arthur Andersen LLP. Petition for Certiorari before the Supreme Court will be accepted or denied.

4. "Ex-WorldCom CEO Bernard Ebbers Jr. will face charges in New York federal court. . ." (CNN)

5.  "Tyco International honchos Dennis Kozlowski and Mark Swartz are due to answer for the second time [on] criminal changes . . ." (CNN)

6.  And yes, maybe some movement on cases involving Enron related individuals, like Ken Lay. 

And a lot more. . .

Wishing everyone a happy, healthy, and peaceful new year!

(esp)

Rowland, Stewart, and White Collar Crime

Co-blogger Peter Henning has an op-ed piece in this a.m.'s Hartford Courant titled, "Would You Risk Your Career For Small Change."  He states, that "We often see white collar crimes in which prominent individuals risk their livelihood and reputation for seemingly trivial amounts."  He points out some of the differences from white collar and street offenders.   

Our opinions on Martha Stewart, however, differ.  Where Professor Peter Henning states that "she will be forever known as a felon who lied to the government," I say that her appeal is pending, so lets hold on that judgment. And even if the conviction stands, will she be forever known as he describes, or as someone who has accomplished so much for homemakers throughout the world.  More importantly, will she become known for being someone who helps with reforms on the incarceration of  women?  The feds spent a good bit of taxpayer time and money on this prosecution, and the question in the future may be- was it worth it?

(esp)

Government's Response to Andersen's Petition for Cert

The November 5th entry talked about the Petition for Certiorari filed by the defense in Arthur Andersen LLP v. United States.  The government has since filed a brief in opposition, breaking down the defense's one issue into five separate issues and claiming that two of the five issues were not raised by the defense in the court below.

The Court, if they accept this case, will have to determine what is the appropriate line between a  valid document retention policy and corrupt behavior that merits obstruction of justice charges, and the instructions of law that should accompany charges of obstruction of justice.

The statute involved in this case is 1512 (b), but the statute has been amended since this decision and section 1519 has been added to the obstruction statutes, allowing document destruction cases to be prosecuted without proof of corrupt persuasion.   Prosecutors in the Andersen case did not have the benefit of the new language in the existing statute and as such were forced to bring this action claiming that individuals "corruptly persuaded" others to destroy documents.  The government in its response to the Petition for Certiorari filed by Andersen argues that because of the addition of section 1519 to the obstruction statutes, the case is one "of little continuing practical importance." Whether this response by the government will be successful considering the high profile nature of the Andersen indictment and trial, remains to be seen.

This is not the first time the term "corruptly" as used in an obstruction statute is a key issue in a case.  In the case of United States v. Poindexter, the D.C. Cir. found the phrase "corruptly influences" to be unconstitutionally vague and reversed the conviction.  Congress responded to this decision by adding a definition section to section 1515, the definitions statute for the obstruction statutes, that defined "corruptly" for purposes of section 1505.  But the Andersen case proceeded under section 1512 and not section 1505.   The government in its response to Anderson's Petition for Certiorari states that "to the extent it is relevant at all, Poindexter and the ensuing events provide further evidence of Congress's intent that, in the context of the obstruction of justice statutes, corruptly should mean acting with an improper purpose."

(esp)

Addendum - Thanks to Mike for letting us know that there is a copy of the brief available at this site - http://www.usdoj.gov/osg/briefs/2004/0responses/2004-0368.resp.html

What's Happening With Arthur?

On September 14, 2004, a Petition for Certiorari (2004 WL 2070872) was filed by Arthur Andersen, LLP requesting the Supreme Court grant review of its case and conviction. The sole issue before the Court is:

"Whether Arthur Andersen LLP's conviction for witness tampering under 18 U.S.C. § 1512(b) must be reversed because the jury instructions upheld by the Fifth Circuit misinterpreted the elements of the offense, in conflict with decisions of this Court and the Courts of Appeals for the First, Third, and D.C. Circuits."

The Petition raises a fascinating question as the Indictment in Andersen charged the company with "knowingly, intentionally and corruptly persuade and attempt to persuade other persons." The Petitioners argue two deficiencies in the instructions:

1. First they contest the court’s instructing the jury on what the term "corruptly persuades" means. “Andersen repeatedly objected to the court's determination that ‘corrupt’ persuasion could be equated with an ‘improper purpose,’ and argued that the term requires proof of improper means of persuasion or inducement to unlawful acts, or at least conscious wrongdoing.”

2. Second they contest the court’s denial of an instruction that would have “ensure[d] that the jury would be required to find a close nexus between an employee's reminder to follow the document retention policy and any future SEC proceeding. . . . The district court instead instructed the jury that the Government did not have to prove that the "corrupt persuader" had any particular proceeding in mind or knew that a future subpoena was likely.”

This case raises serious questions of the line between valid document retention policies and corrupt behavior that merits obstruction of justice charges.

(esp)