WASHINGTON – With a conviction against Enron Corp.'s accountants, prosecutors can focus more closely on the bankrupt energy trader, a more complex target.
Yet some legal experts say the successful prosecution of Arthur Andersen LLP, convicted Saturday of obstruction of justice, will not necessarily bolster the government's case against Enron and possibly could hurt it.
"It's good news for the prosecution, but not big news for the prosecution," said David Yellen, dean of Hofstra University Law School.
Ira Lee Sorkin, an SEC official before he went into private law practice, called the Andersen and Enron cases "apples and oranges." The Andersen trial, Sorkin said, "had nothing to do with the financial machinations of Enron."
For the prosecutors, he said, "I don't think it gives them momentum."
Robert Mintz, a former Justice Department prosecutor, said the trial "limited in some measure the potential charges the government might be able to bring against Enron down the road." Some Andersen testimony "will come back to haunt the government in any subsequent Enron trial," he said.
The government's star witness against Andersen, David Duncan, acknowledged in a dramatic moment during the trial that "I obstructed justice" by directing the document shredding as Andersen's senior auditor on the Enron account.
Duncan also stood firmly behind the soundness of Enron's accounting practices, however, which Andersen had blessed in its audits, Mintz noted.
That allows Enron to continue to use the defense that it relied on the advice of its auditors from the Big Five accounting firm, he suggested.
The debacle of Enron, whose audit documents Andersen employees shredded by the ton last fall, has largely receded from public view as Andersen's high-profile criminal trial developed during the past five weeks.
More than six months have passed since eruption of the biggest-ever corporate bankruptcy in an affair tinged with political overtones. No individuals are under indictment in the Enron case — only the Andersen firm — in the continuing investigation by the Justice Department.
The Securities and Exchange Commission has been pursuing separately a civil investigation of Enron and Andersen's role as its longtime auditor.
Assets of Enron executives have not been frozen, and no civil lawsuits seeking fines or restitution have been brought by the SEC. Top executives and directors reaped hundreds of millions of dollars from selling their Enron stock in 2000 and 2001, as the company fell apart.
"This can only help us," Leslie Caldwell, the Justice Department official heading the Enron prosecution, said in Houston Saturday after the Andersen verdict. "It sends a strong message that we are going to get to the bottom of the Enron debacle, and those people responsible will be prosecuted."
During the Andersen trial, however, the going has been so slow in the Enron investigation and grand jury proceeding that, says a lawyer for a former company executive, "We're waiting to see what's coming."
With the trial over, the Justice Department and the SEC probably will assess what charges can be brought against Enron and company officials. Justice prosecutors may try to get former Enron insiders to cooperate and provide vital information in return for immunity or leniency.
Justice officials have bristled at criticism by some lawmakers that the Enron investigation is moving too slowly. They cite the case's extreme complexity and the need for prosecutors to build it layer upon layer.
"We've been moving forward with the Enron investigation throughout this trial," Caldwell told reporters Saturday.
The company entered bankruptcy on Dec. 2, toppled by a complex web of partnerships used to conceal more than $1 billion in debt from investors and regulators that improperly put up Enron stock as collateral. Besides Enron executives, prosecutors need to interview and compare the accounts of company attorneys, Andersen auditors, investment bankers and others.
Enron shareholders, who allege they were defrauded and filed suit to recover hundreds of millions of dollars from Andersen, haven't recouped a penny. Their attorneys' negotiations with the accounting firm have broken down. Nor have thousands of Enron employees who lost nearly all their retirement assets as the company stock plummeted.