In a unanimous decision Wednesday, the 5th U.S. Court of Appeals in New Orleans affirmed a Houston jury’s obstruction of justice verdict against the accounting firm Arthur Andersen LLP, which was convicted in 2002 for its mishandling of Enron Corp.-related documents.

The accounting firm was given the maximum sentence in October 2002 — five years probation and a $500,000 fine — for obstructing justice in a case that stymied the federal investigation of Enron (see Daily GPI, Oct. 17, 2002).

In a prepared statement, Andersen spokesman Patrick Dorton said, “We are disappointed by the appellate court ruling. However, given the constraints of the appellate process, we were not surprised by this decision.”

Dorton continued, “We continue to believe strongly that the criminal prosecution of a firm of 28,000 people was unjustified and the ensuing collapse of Arthur Andersen was an undeserved tragedy for its employees, clients and the business community at large.”

Andrew Weissman, lead attorney in the Andersen case and now director of the Houston-based Enron Task Force, said, “The conviction of Arthur Andersen was an important milestone in promoting responsible corporate behavior and respect for the law. The Enron Task Force is gratified that the Court of Appeals affirmed the conviction.”

Writing for the court, Judge Patrick E. Higgenbotham said, “We are not persuaded that this conviction is flawed by reversible error and we affirm the judgment of conviction.” He wrote, “Today we decide one of the many cases arising from the rubble of Enron Corp., which fell from its lofty corporate perch in 2001 wreaking financial ruin upon thousands of investors, creditors, and employees. Like a falling giant redwood, it took down with it many members of its supporting cast. Our present focus is upon one of those, Arthur Andersen, LLP, then one of the largest accounting and consulting firms in the world.”

Andersen appealed to the circuit court on three main complaints about U.S. District Judge Melinda Harmon’s rulings: improper admission of evidence about Andersen’s past troubles with the Securities and Exchange Commission; improper jury instructions; and improper refusal to allow Andersen to present certain evidence to counter government presentations.

The Enron Task Force argued that all of Harmon’s rulings were legally sound. The government argued that even if any judicial ruling was in error, it was harmless, and would not have altered the outcome of the trial.

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