Arthur Andersen and the Innocent Criminals

The importance of a guilty mind


If Arthur Andersen were a man on death row, he could be released after his conviction was overturned. But the accounting firm, which was ruined by a 2002 witness tampering indictment that scared away its clients, is beyond saving.

As a law professor told The New York Times, "The government gave the corporation a death sentence, and the corporation died." Andersen, which once had 28,000 employees in the United States, has been reduced to a skeleton crew of 200.

The U.S. Supreme Court's unanimous decision overturning Andersen's conviction nevertheless can do some good if it reminds legislators, prosecutors, judges, and jurors of a crucial legal principle: Without mens rea, a "guilty mind," there is no crime. The Justice Department's insistence that Andersen could commit a crime without intending to do so resulted in the embarrassing reversal of a conviction that was supposed to demonstrate the government's seriousness about cracking down on corporate malfeasance in the wake of the Enron scandal.

On October 10, 2001, when Andersen officials began reminding employees to follow a pre-existing company policy of destroying unneeded documents, suspicions about shady accounting practices at Enron, one of Andersen's clients, had been in the news for more than a month. The Securities and Exchange Commission formally opened its investigation of Enron on October 30, and nine days later it served Andersen with a subpoena for Enron-related records, at which point the shredding stopped.

Since the SEC investigation had not officially begun when Andersen started destroying its documents, the government could not charge the company with obstructing justice. Instead it accused the firm of violating the Victim and Witness Protection Act, which makes it a crime to "knowingly" and "corruptly" persuade someone to withhold documents from an "official proceeding."

When the Supreme Court heard oral arguments in the case, Justice Antonin Scalia took issue with the government's application of this provision. "It doesn't make any sense," he noted, "to make unlawful the asking of somebody to do something which is itself not unlawful, so that the person could do it, but if you asked [him] to do it, you're guilty, [while] he's not guilty….That is weird."

Equally weird was the government's argument that Andersen could be convicted even if its officials honestly believed their conduct was lawful, a position that became part of the jury instructions. "It is striking how little culpability the instructions required," the Court noted in an opinion by Chief Justice William Rehnquist. The Court also found that the jury instructions had "diluted the meaning of [corrupt persuasion] such that it covered innocent conduct."

To obtain a conviction, the Court concluded, the government needed to prove criminal intent. Alarmingly, that requirement sometimes seems to be falling by the wayside, especially in high-profile cases where prosecutors' desire to send a message overrides the demands of fundamental fairness.

After the 1989 crash of the Exxon Valdez in Prince William Sound—by all accounts an accident—the oil company faced felony charges of "discharging hazardous substances and refuse without a permit" and "killing migratory birds without a license." The indictment, notes Hoover Institution scholar Paul Craig Roberts, implied that "Exxon intentionally ran its tanker aground in order to discharge hazardous oil and kill migratory birds."

Martha Stewart, who completed a five-month prison term in March, may have intentionally misled federal investigators looking into her sales of ImClone stock. But the alleged action that supposedly justified the investigation—selling stock based on what her broker had told her about other clients' sales—had never before been defined as insider trading, so she couldn't have known it was illegal. That's assuming it was; Stewart ultimately was not even charged with insider trading. To add insult to injury, prosecutors accused her of committing "securities fraud" by proclaiming her innocence (a charge that was tossed out by the judge).

This year McLean, Virginia, physician William Hurwitz, whom the Justice Department accused of facilitating drug abuse by writing inappropriate painkiller prescriptions, was sentenced to 25 years in federal prison. The prosecutors successfully argued that Hurwitz could be found guilty of drug trafficking "regardless of whether he had a good faith belief that he was fulfilling a legitimate medical purpose."

A prosecutor can hardly be faulted for doubting a defendant who says he did not mean to break the law. But a prosecutor who insists it doesn't matter cares about winning more than he cares about justice.