Arthur Andersen LLP v. United States

Brief Fact Summary.

Arthur Andersen LLP (Defendant) was found guilty of persuading its employees to destroy documents related to an investigation of Enron Corporation, one of its clients.

Synopsis of Rule of Law.

A court must find consciousness of wrongdoing when convicting an individual under a statute that makes it a crime to “corruptly persuade†another to withhold or alter documents for use in an official proceeding

Facts.

Arthur Andersen LLP (Defendant) provided Enron Corporation with accounting services.  In 2001, an article in The Wall Street Journal suggested improprieties at Enron, and the Securities and Exchange Commission (SEC) opened an informal investigation.  Defendant formed an Enron “crisis-response†team, which included in-house counsel Nancy Temple.  Les than one month later, one of Defendant’s partners, Michael Odom, held a general training meeting where he urged everyone to comply with Arthur Andersen’s (Defendant) document retention policy.  This policy called for a single file that “should contain only that information which is relevant to supporting our work†(everything else should be destroyed).  In the meeting, Odom stated “If [documents are] destroyed in the course of [the] normal policy and litigation is filed the next day, that’s great . . . We’ve followed our own policy, and whatever there was that might have been of interest to somebody is gone and irretrievable.â€Â  One week later, the SEC notified Enron that it had opened an investigation and requested certain information and documents.  On the same day, Temple sent an email to Defendant’s Enron team reminding them to follow the document policy and attached a copy of it.  There were several more meetings and all were followed by extensive destruction of paper and electronics related to Enron.  Two weeks later, the SEC served Enron and Arthur Andersen (Defendant) with subpoenas for records, and Defendant’s employees were told, “No more shredding . . . We have been officially served for our documents.â€Â  Defendant was then indicted in the Southern District of Texas for persuading its employees to destroy documents related to the SEC investigation.  The district court found Defendant guilty, and the court of appeals affirmed.  The U.S. Supreme Court granted certiorari, focusing on whether the lower court’s jury instructions properly conveyed the elements of a “corrupt[t] persua[sion]†conviction

Issue.

Must a court find consciousness of wrongdoing when convicting an individual under a statute that makes it a crime to “corruptly persuade†another to withhold or alter documents for use in an official proceeding?

 

Held.

(Rehnquist, C.J.)  Yes.  A court must find consciousness of wrongdoing when convicting an individual under a statute that makes it a crime to “corruptly persuade†another to withhold or alter documents for use in an official proceeding.  Only individuals conscious of wrongdoing can be said to knowingly and corruptly persuade another.  Limiting criminality to persuaders conscious of their wrongdoing, complies with the level of culpability usually required in order to impose criminal liability.  Importantly, “persuading†an individual with the intent to cause that individual to withhold documents or testimony from a government proceeding is not inherently wrong.  For example, an attorney may persuade a client to withhold documents or testimony, that are subject to, the attorney-client privilege.  Reversed and remanded

Discussion.

Although this case does not involve a criminal charge brought directly against an attorney, Temple was a major player in the case.  The government focused on an email Temple sent to Odom that read: “It might be useful to consider reminding the engagement team of our documentation and retention policy.  It [would] be helpful to make sure that we have complied with the policy.  Let me know if you have any questions.â€Â  Temple also attached a copy of Arthur Andersen’s (Defendant) retention and destruction policy.  The head of Enron’s engagement team testified he saw the communications from Temple as encouraging him to destroy documents.  Temple argued that her statements were taken out of context.  Ultimately, as in other crimes affecting the administration of justice, guilt is determined by the intent of the accused.