The accounting firm Arthur Anderson was the outside auditor for Enron Corp., a Texas-based oil and natural gas energy conglomerate. In 2001, news reports started to surface that Enron was in financial trouble. As Enron’s outside auditor, Arthur Anderson had all Enron’s financial records, and Arthur Anderson has certified Enron’s financial statements and SEC disclosures. Arthur Anderson set up a “crisis management” team to deal with what it expected would be coming if the Enron problems did not resolve. From August to October, the guidance from the “crisis” team to the rest of the company regarding Enron was to “follow our document retention policy, that’s why we have one.” The policy had very specific procedures in terms of document destruction. It was also very specific about when any ongoing document destruction must be halted. On November 8, the SEC served a subpoena for Enron’s financial records on Arthur Anderson. On the morning of Nov. 9, a company-wide email ordered a halt to any document destruction underway pursuant to the company’s policy.
Andrew Weissmann was appointed by Pres. Bush to head up a DOJ Enron Task Force to look into all possible instances of illegality connected to Enron’s accounting scandal. Several members of Robert Mueller’s Special Counsel’s Office were part of the Enron task force of attorneys selected by Mueller to handle a series of criminal prosecution coming out of the scandal.
Weissmann decided that Arthur Anderson’s destruction of some Enron records was criminal obstruction of justice, and indicted the company on a single count of having violated 18 U.S.C. Sec. 1512(b)(2)(A). That statute reads as follows:
Arthur Anderson took the case to trial and was convicted by a jury. The accounting firm stopped auditing public companies on Aug. 31, 2002, and wound down its operations. Its demise turned the Big Five into the Big Four: Deloitte Touche Tohmatsu Ltd., Ernst & Young LLP, KPMG LLP and PricewaterhouseCoopers LLP. Because federal regulations do not allow a convicted felon to audit publicly traded companies, Arthur Anderson had to surrender its firm CPA license, and went out of business, with 85,000 people losing their jobs.
The conviction was affirmed on appeal, but the Supreme Court voted to take the case up and look at a particular legal issue involving the jury instructions given by the District Court Judge.
The manner in which jury instructions are written is a key determination in most criminal jury trials. Nearly all the instructions read to the jury are “standardized” and are the same in case after case. But in every case, the instructions given to the jury on the specific charges in the indictment, and the meaning of some of the terms in those charges, are hotly contested issues between the parties, with the District Judge having the final say on how the instruction will read.
At issue in Arthur Anderson’s case was the meaning of the words “knowingly …. corruptly persuades another person ….”, within the context of the instructions given by Arthur Anderson’s “crisis management” team for the firm to follow the normal “document retention policy” until there was a specific justification to not follow the policy as it was written.
Some who were involved in the case, or who wrote about it later, point to Weissman’s hyper-aggressive legal theory on the question of whether “corruptly persuades” included a need for the jury to find there was a “consciousness of wrongdoing” needed to determine that someone at Arthur Anderson acted “corruptly.” Weissmann argued such proof was unnecessary. You could phrase Weissman’s argument in the following hypothetical Q&A:
Q: So if the company had a policy to destroy client documents under certain circumstances in the ordinary course of business, that policy predated the Enron problems, and the company was destroying Enron documents consistent with that policy, they were committing a crime BEFORE they received a subpoena for the records?
Q: Following a policy for any client not in the news would be ok, but following the same policy for Enron prior to getting a subpoena sends you to jail or puts you out of business — even when you stop the moment you get the subpoena?
The Supreme Court said the correct answer was “No.”
“[K]nowledge” and “knowingly” are normally associated with awareness, understanding, or consciousness. [Dictionary definitions omitted] “Corrupt” and “corruptly” are normally associated with wrongful, immoral, depraved, or evil. [Definitions omitted] Joining these meanings together here makes sense both linguistically and in the statutory scheme. Only persons conscious of wrongdoing can be said to “knowingly … corruptly persuad[e].” And limiting criminality to persuaders conscious of their wrongdoing sensibly allows §1512(b) to reach only those with the level of “culpability … we usually require in order to impose criminal liability.”
The outer limits of this element need not be explored here because the jury instructions at issue simply failed to convey the requisite consciousness of wrongdoing. Indeed, it is striking how little culpability the instructions required. For example, the jury was told that, “even if [petitioner] honestly and sincerely believed that its conduct was lawful, you may find [petitioner] guilty.” App. JA–213. The instructions also diluted the meaning of “corruptly” so that it covered innocent conduct. Id., at JA–212.
That is “Law According to Weissmann.” And that is why I consider Andrew Weissman to have been an unethical prosecutor and am embarrassed by the fact that we held the same position. The middle bolded passage is just stunning to me — the fact that Weissmann would have pushed for that language to be in a jury instruction says all I need to know about him:
“even if [Arthur Anderson] honestly and sincerely believed that its conduct was lawful, you may find [Arthur Anderson] guilty.”
That pretty much accurately describes third-world “show trial” requirements. That’s how people end up in Chinese prisons.
The Supreme Court Justices who joined in rejecting “Weissman’s Law” were:
- Chief Justice Rehnquist — wrote the opinion.
- Justice Scalia
- Justice Thomas
- Justice O’Connor
- Justice Kennedy
- Justice Souter
- Justice Stevens
- Justice Ginsburg
- Justice Breyer
Not a single Justice wrote a concurring opinion. Not one wrote separately to say “I agree with the outcome, but I disagree with the opinion of the Chief Justice for the following reasons….”
Every Justice REJECTED Weissmann’s view of “criminality” without hesitation.
And Robert Mueller, as Director of the FBI, named Weissman to be “Special Counsel to the Director” the same year the Supreme Court decided the Arthur Anderson case. Six years later, Mueller made him General Counsel for the FBI, the Bureau’s top lawyer.