Anaya Nolan
Arthur Andersen was an accounting firm that was convicted of obstruction of justice in 2002 for shredding documents related to the Enron audit. The company was charged under 18 U.S.C. § 1512(b)(2)(A) and (B), which made it a crime to knowingly... corruptly persuade another person. In 2005, the Supreme Court unanimously reversed Andersen's conviction because of errors in the trial judge's jury instructions.
| Characteristics | Values |
|---|---|
| Convicted of | Obstruction of justice |
| Convicted for | Shredding documents related to the Enron audit |
| Charged under | 18 U.S.C. § 1512(b)(2)(A) and (B) |
| Convicted by | Jury |
| Convicted on | 15 June |
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What You'll Learn
Obstruction of justice
Arthur Andersen was convicted of obstruction of justice in 2002 for shredding documents related to the Enron audit. The company was charged under 18 U.S.C. § 1512(b)(2)(A) and (B), which made it a crime to "knowingly... corruptly persuade another person".
The conviction was later overturned by the Supreme Court, which found that the jury instructions were too vague to allow a jury to find that obstruction of justice had occurred. The court held that the instructions were worded in such a way that Andersen could have been convicted without any proof that the firm knew it had broken the law or that there had been a link to any official proceeding that prohibited the destruction of documents.
The opinion, written by Chief Justice William Rehnquist, also expressed skepticism of the government's concept of "corrupt persuasion", which refers to persuading someone to engage in an act with an improper purpose without knowing that the act is unlawful.
Despite the overturned conviction, the damage to Arthur Andersen's reputation was such that it did not return as a viable business.
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Shredding documents
In 2002, Arthur Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron. The company's conviction was overturned in 2005, but its reputation had already been damaged beyond repair.
In the case of Arthur Andersen, the company was charged with violating 18 U.S.C. § 1512(b)(2)(A) and (B), which makes it a crime to "knowingly... corruptly persuade another person". The specific charge was obstruction of justice, which occurs when an individual or entity interferes with the administration of justice, such as by destroying or altering evidence.
When shredding documents, it is important to ensure that you are not violating any laws or regulations. This includes understanding the retention periods for certain types of documents, as well as any specific requirements for your industry. For example, public companies and accounting firms must adhere to stricter regulations, such as those established by the Sarbanes-Oxley Act, to prevent fraud and protect investors.
It is also important to consider the method of document shredding. Proper disposal methods can vary depending on the sensitivity of the information and the applicable laws and regulations. For highly sensitive information, cross-cut shredders are often recommended, as they produce smaller particles that are more difficult to reconstruct. Additionally, using a secure document destruction service can provide an extra layer of protection, as these services typically offer secure collection, transportation, and disposal of confidential documents.
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Convicted felons auditing public companies
Arthur Andersen was convicted of obstruction of justice in 2002 for shredding documents related to the Enron audit, leading to its downfall. The company was charged under 18 U.S.C. § 1512(b)(2)(A) and (B), which made it a crime to "knowingly... corruptly persuade another person".
The Sarbanes-Oxley Act of 2002 was passed to establish stricter regulations for public companies and accounting firms, aiming to prevent another scandal like Enron. The Act prohibits convicted felons from auditing public companies, which effectively put Andersen out of business in the United States.
Andersen appealed its conviction to the United States Court of Appeals for the Fifth Circuit, which affirmed the district court's decision. The company then petitioned for a writ of certiorari to the Supreme Court, which was granted. In 2005, the Supreme Court unanimously reversed Andersen's conviction because of errors in the trial judge's jury instructions. The Court found that the instructions were too vague to allow a jury to find that obstruction of justice had occurred.
Despite the reversal of its conviction, the damage to Andersen's reputation was such that it did not return as a viable business. The Enron scandal and Andersen's involvement in it marked a swift and dramatic fall from grace for the company, which had once been a respected accounting firm.
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Vague jury instructions
Arthur Andersen was convicted of obstruction of justice in 2002 for shredding documents related to the Enron audit, leading to its downfall. The company was charged under 18 U.S.C. § 1512(b)(2)(A) and (B), which made it a crime to "knowingly... corruptly persuade another person".
However, the conviction was later overturned by the Supreme Court, which found that the jury instructions were too vague. The instructions were worded in such a way that Andersen could have been convicted without any proof that the firm knew it had broken the law or that there had been a link to any official proceeding that prohibited the destruction of documents. The opinion, written by Chief Justice William Rehnquist, also expressed skepticism of the government's concept of "corrupt persuasion". This refers to persuading someone to engage in an act with an improper purpose without knowing that the act is unlawful.
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Corrupt persuasion
Arthur Andersen was convicted of obstruction of justice in 2002 for shredding documents related to the Enron audit, leading to its downfall. The company was charged under 18 U.S.C. § 1512(b)(2)(A) and (B), which made it a crime to "knowingly...corruptly persuade another person". The Sarbanes-Oxley Act of 2002 was passed to establish stricter regulations for public companies and accounting firms, aiming to prevent another scandal like Enron.
The Supreme Court unanimously reversed Andersen's conviction in 2005 because of errors in the trial judge's jury instructions. The Court found that the instructions were too vague to allow a jury to find that obstruction of justice had occurred. The instructions were worded in such a way that Andersen could have been convicted without any proof that the firm knew it had broken the law or that there had been a link to any official proceeding that prohibited the destruction of documents.
The opinion, written by Chief Justice William Rehnquist, also expressed skepticism of the government's concept of "corrupt persuasion". This refers to persuading someone to engage in an act with an improper purpose without knowing that the act is unlawful. In the case of Arthur Andersen, the firm's employees were instructed to destroy documents relating to Enron after Andersen officials learned they would soon be investigated by the Securities and Exchange Commission.
The indictment was served by Michael Chertoff, who was subsequently appointed Secretary of Homeland Security by President George W. Bush. Despite the reversal of its conviction, Arthur Andersen's reputation was damaged beyond repair and it did not return as a viable business.
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Frequently asked questions
Arthur Andersen was convicted of obstruction of justice for shredding documents related to its audit of Enron.
The Supreme Court unanimously reversed Andersen's conviction because of errors in the trial judge's jury instructions. The instructions were deemed too vague to allow a jury to find that obstruction of justice had occurred.
The case led to the passing of the Sarbanes-Oxley Act of 2002, which established stricter regulations for public companies and accounting firms to prevent another scandal like Enron.
