Legal Experts Mull The Impact of an Andersen Acquittal

As the Andersen shredding trial enters its fifth and possibly final week, legal experts are already discussing the implications for the Department of Justice (DOJ) and for Enron, if Andersen should be acquitted.

The discussions follow a week of testimony in which a number of Andersen partners and staff explained their varying interpretations of the firm's document retention policy. An informal poll conducted by the Wall Street Journal shows the public is split just about 50/50 in its unofficial verdict as to Andersen's guilt or innocence. Critical closing arguments and jury instructions could come as early as this week.

Less Leverage, More Limited Charges

If Andersen is found not guilty, experts say it will have two important results for Enron and the DOJ:

  1. It will lessen the DOJ’s ability to use fear of conviction to persuade targets to cooperate its ongoing investigations into Enron's collapse and other matters. Criminal defense attorney Kent Schaffer told Reuters that white-collar defendants are particularly afraid of prosecution and are often led by their lawyers to believe that the federal government cannot be beat. "Because of that, you see guilty pleas and 'cooperation' from people who may not really be guilty," he said. "Should the government lose this first battle, it may make future targets stop and think that their situation is not quite so bad."

  2. It will limit the charges that can be brought against Enron or its officers. Robert Mintz, a former federal prosecutor who now practices white collar criminal defense at the firm of McCarter & English, explains how and why. He says that David Duncan's assertion that Andersen properly accounted for Enron's more questionable dealings has given Enron a key defense: that it relied on the professional advice of its auditors. "I would expect the government to shy away from any of the bookkeeping practices ultimately sanctioned by Andersen," he says, "and instead develop a case that emphasizes the financial dealings at Enron that were concealed from the Andersen accounting team."

"If Arthur Andersen is acquitted," explains Mr. Schaffer, "it can have a devastating effect on the subsequent Enron investigation. It probably was not a wise move for the government to proceed so quickly."

-Rosemary Schlank

You may like these other stories...

Here's a CPA who truly walks the walk. On March 15, Frank Ryan, CPA, departed San Diego, California, with plans to be in Ocean City, Maryland, by July 2 to teach a course at the Maryland Association of CPAs’ (MACPA...
When Theodore J. Flynn first joined the Massachusetts Society of CPAs (MSCPA) in 1970, it was a different world and a different profession.  The "Big Eight" were still headquartered in Boston. Vietnam War...
Accountant Rickey Charles Goodrich had it a little too good. Many bean counters would kill to serve as financial guru to the likes of Pearl Jam. Goodrich was hired in 2005, and the following year, he became the CFO of Curtis...

Upcoming CPE Webinars

Apr 17
In this exciting presentation Excel expert David H. Ringstrom, CPA shares tricks that you can use with pivot tables every day. Remember, either you work Excel, or it works you!
Apr 22
Is everyone at your organization meeting your client service expectations? Let client service expert, Kristen Rampe, CPA help you establish a reputation of top-tier service in every facet of your firm during this one hour webinar.
Apr 24
In this session Excel expert David Ringstrom, CPA introduces you to a powerful but underutilized macro feature in Excel.
Apr 25
This material focuses on the principles of accounting for non-profit organizations' revenues. It will include discussions of revenue recognition for cash and non-cash contributions as well as other revenues commonly received by non-profit organizations.