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Arthur Andersen avoids criminal rap
Justice Department says it won't retry the accounting firm for shredding Enron documents.
November 23, 2005: 5:48 AM EST

WASHINGTON (CNN) - The criminal case against accounting firm Arthur Andersen over the shredding of documents related to collapse of energy giant Enron Corp. has come to an end after the Justice Department formally announced it would not pursue the matter in the wake of an adverse Supreme Court ruling.

In a filing Tuesday with the 5th U.S. Circuit Court of Appeals in New Orleans, prosecutors said it was "in the interests of justice not to re-prosecute (Arthur) Andersen on the pending charge."

While Chicago-based Arthur Andersen will avoid a criminal conviction, its entanglement with Enron, and the subsequent criminal case, have taken a hard toll on the once-mighty accounting firm, now a shell of its former self with just a few hundred employees. Prior to the controversy, it had 25,000.

Arthur Andersen was Enron's accountant prior to its 2001 collapse. In June 2002, a federal jury in Houston convicted the accounting firm of obstruction of justice for destroying Enron-related documents after being notified of a federal investigation into accounting irregularities and fraud inside the energy company.

Arthur Anderson was fined $500,000 and put on probation for five years.

The lead partner on the Enron account in the accounting firm's Houston office, David Duncan, who was fired after the document shredding came to light, pleaded guilty to obstruction of justice and cooperated with the government's case against his former employer.

Arthur Anderson appealed its conviction "to clear the good name" of the company. In June, the Supreme Court unanimously overturned the conviction, ruling that the trial judge erred by giving jury instructions that did not specify that prosecutors had to prove Arthur Andersen knew it was breaking the law.

Tuesday's decision by the Justice Department means that prosecutors won't retry the case.

-- from CNN Justice Producer Terry Frieden

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Click here for more about Enron's settlement with the Feds.  Top of page

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