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News
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Fired Andersen partner to testify
Firm settles Baptist claims as trial on obstruction charge gets under way.
May 6, 2002: 7:22 PM EDT

NEW YORK (CNN/Money) - Arthur Andersen LLP reached a $217 million settlement with a trust for the Baptist Foundation of Arizona Monday, while attorneys picked jurors in the criminal trial against the firm in Houston.

As expected, the Justice Department plans to call fired Andersen partner David Duncan, who has agreed to serve as a government witness, and Andersen in-house counsel Nancy Temple. Andersen auditor Michael Odom and Duncan's secretary, Shannan Adlong, will also testify.

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The Justice Department did not previously make public who it would call to testify in the case against Andersen, which stands accused of shredding Enron Corp. documents while on notice of a federal investigation.

Duncan, who will testify against his former employer, is the Justice Department's star witness. On April 9 he pled guilty to overseeing the shredding of Enron documents in an attempt to thwart a federal investigation.

The legal teams are slated to present opening arguments Tuesday.

Jury selection was completed just before 6 p.m. CT, with nine men and seven women chosen to serve as the 12 jurors and four alternates.

Separately, Judge Edward Burke in State Superior Court in Phoenix approved Andersen's settlement with the Baptist Foundation of Arizona. The deal would resolve all civil claims against the firm for its audits of the BFA. Andersen in March backed out of its $217 million proposed settlement with the BFA trust due to an insurance problem.

The agreement settles all claims from BFA investors, the BFA bankruptcy trustee and state regulatory bodies, Andersen said.

"We made a decision to settle this matter, without admitting or denying any fault, in a way consistent with our firm's plan to resolve this matter for the benefit of all parties," the firm said in a statement Monday.

Ties to Enron

Attorneys for both sides took just one day to select the jury.

At one point, prosecutor Matt Friedrich asked the 106 potential jurors if any of them had ties to Enron, the Houston-based energy trader which filed the largest bankruptcy in U.S. history in December. About 21 people raised their hands.

Friedrich then quizzed the jurors as to their own experiences and asked if any of them had ever owned a business or made a "big mistake" at work. "How many of you were asked to shred documents?" he said to the potential jurors. No one raised their hand.

Rusty Hardin, Andersen's lead lawyer, called Friedrich's question "sneaky" and told jurors to wipe it from their minds. "Why do you think he asked you that?" Hardin said. "Once you throw a skunk in the jury box it's hard to remove."

The Texas lawyer provided a bright contrast to the government's team. DOJ prosecutors, dressed in typically dark suits, formally addressed the jury pool while Hardin appeared in a beige suit with a yellow tie and chatted with applicants as if at a cocktail party.

Hardin, a former prosecutor, is well known among Houston residents and has a reputation for being an aggressive trial lawyer. Hardin led the team that beat former Guess jeans model Anna Nicole Smith's attempt to wring $2 billion from her late husband's estate. (A judge later gave her $89 million in a related case.)

Hardin told jurors that he needed to know whether any of them were biased and asked if any of the jurors would find it hard to be impartial.

As expected, the Houston attorney took pains to distinguish Duncan's actions and the firm's culpability. Under the doctrine of respondeat superior, corporations generally are held liable for the acts of their employees, and Duncan has admitted that he directed the shredding to thwart a government investigation.

The current case against Andersen is not about the audit advice the firm provided Enron but whether Andersen employees corruptly persuaded others to shred Enron documents as a way to keep them away from the Securities and Exchange Commission, Hardin said.

The government must prove that Andersen employees sought to destroy documents and establish their intent at the time of the shredding.

For Andersen to be guilty of obstruction, "Duncan has to do it with the intent that Andersen wouldn't get caught, not just to benefit himself," Hardin said.

A deadline

U.S. District Court Judge Melinda Harmon recently denied Andersen's lawyers' request for more time, and the trial is set to end May 29 when Harmon will leave for vacation.

This gives Andersen less than three days to present its defense. "That doesn't leave much time to put on a defense," Hardin said. "All I want is equal time."

Harmon Monday reiterated her commitment to ending the trial by May 29. But she said the case will continue if its goes over that deadline.

"I have booked a vacation but if we're not finished, I'm not going to do it," she said. "I'm not going to interrupt this case."

Harmon is best known for putting Vanessa Leggett in jail when the crime writer refused to turn over her notes in a 1997 murder case.  Top of page


--CNNfn's Jen Rogers and Brett Gering contributed to this story






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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.