United States v. Arthur Andersen LLP

United States Court of Appeals
Fifth Circuit
F I L E D
REVISED June 24, 2004
June 16, 2004
IN THE UNITED STATES COURT OF APPEALS
Charles R. Fulbruge III
FOR THE FIFTH CIRCUIT Clerk

No. 02-21200

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

ARTHUR ANDERSEN, LLP,

Defendant-Appellant.

Appeal from the United States District Court
for the Southern District of Texas

Before REAVLEY, HIGGINBOTHAM, and BENAVIDES, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

Today we decide one of the many cases arising from the rubble

of Enron Corporation, 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.

Arthur Andersen appeals from a judgment of conviction entered
in the Southern District of Texas upon a jury verdict finding it

guilty of obstructing an official proceeding of the Securities and

Exchange Commission, in violation of 18 U.S.C. § 1512(b)(2). The

indictment leading to the conviction was returned on March 7, 2002,

charging Andersen in a single count of corruptly persuading one or

more Andersen personnel to withhold, alter, destroy, or conceal

documents with the intent to impair their availability in an

official proceeding. That proceeding, which the government said

Andersen knew was imminent and inevitable, was an investigation by

the SEC into the relationship between Enron and Andersen, from whom

Enron obtained accounting, auditing, and consulting services.

Trial commenced on May 6, 2002, and the verdict was returned

on June 15, 2002. Writ large, the government says that Andersen,

in an effort to protect itself and its largest single account,

ordered a mass destruction of documents to keep them from the hands

of the SEC.

Andersen asks this court to reverse its conviction, urging

errors in four evidentiary rulings, misconduct by the prosecutor in

his rebuttal jury summation, and two legal contentions regarding the

required proof under § 1512(b)(2). The evidentiary rulings include

admitting extensive evidence regarding two unrelated SEC enforcement

actions against Andersen, excluding evidence of the volume of

documents Andersen did not destroy, and excluding impeachment

evidence. Regarding the proof required by § 1512(b)(2), Andersen

urges that given its element of “corruption,” the government had to

2
prove more than that it acted with an intent to impede the SEC.

Finally, Andersen asserts that the government had to prove that

Andersen intended to interfere with a “particular” proceeding.

We are not persuaded that this conviction is flawed by

reversible error and we affirm the judgment of conviction.

I

During the 1990's, Enron transformed itself from a natural gas

pipeline operator into a trading and investment conglomerate with

a large volume of trading in the energy business. Andersen both

audited Enron’s publicly filed financial statements and provided

internal audit and consulting services. By the late 1990's,

Andersen’s “engagement team” for its Enron account included more

than 100 people, a significant number of which worked exclusively

in Enron quarters in Houston, Texas. From 1997 through 2001 the

engagement team’s leader was David Duncan. He was in turn subject

to certain managing partners and accounting experts in Andersen’s

Chicago office. Enron was a valued client producing 58 million

dollars in revenue in 2000 for Andersen with projections of 100

million for the next year. Enron’s Chief Accounting Officer and

Treasurer throughout this period came to the employ of Enron from

the accounting staffs of Andersen, as did dozens of others. This

was a close relationship. Indeed, the jury heard evidence that

Andersen removed at Enron’s request at least one accountant from his

assignment with Enron after Enron disagreed with his accounting

advice.

3
 With Enron’s move to energy trading and rapid growth came

aggressive accounting, pushing Generally Accepted Accounting

Principles to its advantage. Part of this picture included Enron’s

use of “special purpose entities,” SPEs. These were “surrogate”

companies whose purpose was to engage in business activity with no

obligation to account for the activity on Enron’s balance sheet.

Four of these SPEs - called Raptors - play a large role in this

story. They were created in 1999 and 2001, with the assistance of

Andersen, largely capitalized with Enron stock. The Raptors engaged

in transactions with “LJM,” an entity run by Andrew Fastow, Enron’s

Chief Financial Officer. By late 2000 and early 2001, the traded

price of Enron’s stock was dropping and some of the Raptor’s

investments were also turning downward. Some of the SPEs were

profitable and some were experiencing sharp losses. But aggregated

they reflected a positive return to Enron. GAAP would not permit

such an aggregation of the four entities and Andersen’s Chicago

office told David Duncan that it would not - that it was a “black

and white” violation. That advice was ignored and the losses were

buried under the profits of the group in the public reporting for

the first quarter 2001. The slide of Enron stock continued,

dropping some 50% from January to August 2001.

The summer of 2001 brought problems to Andersen on other

fronts, and these “unrelated” events later become important to the

issues before us. In June 2001 Andersen settled a dispute with the

SEC regarding Andersen’s accounting and auditing work for Waste

4
Management Corporation. Andersen was required to pay some $7

million, the largest monetary settlement ever exacted by the SEC,

and Andersen suffered censure under SEC Rule 102(e). Then in July

2001, the SEC sued five officers of Sunbeam Corporation and the lead

Andersen partner on its audit.

Meanwhile, events at Enron began to accelerate. On August 14,

2001, Jeffrey Skilling, Enron’s CEO, resigned, pushing Enron stock

further downward. Within days, Sherron Watkins, a senior accountant

at Enron, formerly at Andersen, warned Enron’s Chairman, Kenneth

Lay, that Enron “could implode in a wave of accounting scandals.”

She also warned David Duncan and Michael Odom, an Andersen partner

in Houston who had oversight responsibility for Duncan. Chairman

Lay promptly asked Enron’s principal outside legal counsel to

examine the accused transactions. And by early September, senior

Andersen officials and members of its legal department formed a

“crisis-response” group, including, among others, its top risk

manager and Nancy Temple, an in-house lawyer in Chicago assigned to

Enron matters on September 28, 2001.

Possible proceedings became a reality on November 8, 2001, when

Andersen received an SEC subpoena. The time line between September

28 and November 8, from a possibility of a proceeding to fact, is

important and we turn briefly to that narrative.1

1
The indictment alleged that the acts of obstruction took place between
October 16 and November 9, 2001.

5
 On October 8, Andersen contacted a litigation partner at Davis,

Polk and Wardwell in New York regarding representation of Andersen.

The following day, Nancy Temple discussed the problem of Enron with

senior in-house counsel at Andersen. Her notes from this meeting

refer to an SEC investigation as “highly probable” and to a

“reasonable possibility” of a restatement of earnings. Her notes

also recorded, “without PSG agreement, restatement and probability

of charge of violating cease and desist in Waste Management.” Two

days later, on October 10, Michael Odom urged Andersen personnel to

comply with the document retention policy, noting “if it’s destroyed

in the course of normal policy and litigation is filed the next day,

that’s great . . . we’ve followed our own policy and whatever there

was that might have been of interest to somebody is gone and

irretrievable.”

On October 12, Temple entered the Enron crisis into Andersen’s

internal tracking system for legal matters, labeling it “government

regulatory investigation,” and asked Odom if the engagement team was

in compliance with Andersen’s document policy. Odom forwarded the

email to Duncan in Houston.

Meanwhile, Enron was facing an October 16 date for announcing

its third quarter results. That release had to disclose a $1.01

billion charge to earnings and, to correct an accounting error, a

$1.2 billion reduction in shareholder equity. Enron’s draft of the

proposed release described the charge to earnings as “non-

recurring.” Andersen’s Chicago personnel advised that this phrase

6
was misleading, but Enron did not change it. With one exception,

Andersen took no action when its advice was not followed: Temple

suggested that Andersen’s characterization of the draft release as

misleading be deleted from the email exchanges.

An SEC letter to Enron quickly followed the releases of October

16. In the letter the SEC advised that it had opened an informal

investigation in August and an additional accounting letter would

follow. Andersen received a copy of the letter on Friday, October

19. A Saturday morning conference of Andersen’s Enron crisis group

followed. While the meeting traversed a range of issues, Temple

again reminded all “to make sure to follow the policy.” The

following Tuesday, October 23, Enron had a telephone conference with

security analysts. At the same time, Duncan scheduled an “urgent”

and “mandatory” meeting in Houston at which, following lengthy

discussion of technical accounting issues, he directed the

engagement team to comply with Andersen’s records retention policy.

On October 26, a senior partner at Andersen circulated an

article from the New York Times discussing the SEC’s response to

Enron. In an email, he commented that “the problems are just

beginning and we will be in the cross-hairs. The marketplace is

going to keep the pressure on this and it’s going to force the SEC

to be tough.” Evidence that this prediction of SEC toughness was

sound came quickly. On October 30, the SEC sent Enron a second

letter requesting accounting documents - a letter signed by the two

7
top enforcement division officials.

Throughout this period Andersen’s Houston office shredded

documents. Government witnesses detailed the steady shredding and

deletion of documents and the quantity of paper trucked away from

the Houston office. Almost two tons of paper were shipped to

Andersen’s main office in Houston for shredding. The government

produced an exhibit at trial charting the time and quantity of the

carted waste paper from January 2001 through December of that year.

The pounds carted remained fairly steady at a rate under 500 pounds,

but spiked on October 25 to just under 2500 pounds. The shredding

continued until the SEC served its subpoena for records on November

8. Temple advised Duncan that the subpoenae had been served. The

next day Duncan’s assistant advised the Houston team: “Per DAVE –

No more shredding. . . . We have been officially served for our

documents.”

Enron filed for bankruptcy on December 2, 2001. The following

April, David Duncan pleaded guilty to obstructing the SEC.

II

We turn first to Andersen’s claims of error in certain

evidentiary rulings at trial.

1

The first such contention urges error in the district court’s

exclusion of Andersen’s evidence of the volume of documents retained

by the engagement team that were either not deleted or recaptured

and produced to the SEC. This evidence was relevant, Andersen

8
argues, because it is inconsistent with the charge that its

personnel were “corruptly persuaded” to destroy documents and delete

emails to keep them from the SEC. Andersen’s explanation for the

shredding and deleting, at least for the upward spike on October 23,

was that personnel in its Houston office were attempting to clean

up their files in anticipation of their examination by Chicago

supervising personnel, and that the presence of multiple copies of

significant documents was evidence that there was “no systematic

attempt to root out embarrassing materials.” The argument continues

that the district court misunderstood the issue. Pointing to an in

limine order, Andersen argues that Judge Harmon believed the

proffered evidence inadmissible as an attempt to offer evidence that

“on other occasions the defendant acted innocently,” when the true

thrust of the evidence was to negate the evidence that any person

acting for Andersen acted corruptly and with the intent necessary

to commit the charged crime.

The government replies that refusing to admit the documents

into evidence was simply the court’s enforcement of its pretrial

ruling on discovery – that the defendant could not offer documents

in trial that it had not produced for examination by the prosecution

before trial; that Andersen never authenticated the documents nor

by a proper predicate demonstrated that the documents not destroyed,

to which it wanted to point, were relevant Enron documents.

Relatedly, the government notes that other evidence was before the

jury demonstrating that not all of the documents were destroyed.

9
Finally, it argues that the evidence supporting Andersen’s

conviction is so powerful, that any error was not reversible error.

The government relied on the volume of documents destroyed as

evidence of Andersen’s intent. It follows that competent evidence

countering the government’s proof of the volume of shredding, as

well as its timing, undeniably had some relevance. To put the issue

in perspective, Andersen did not attempt to deny that it shredded

large numbers of documents and for sustained periods, leaving the

government’s assertion to this extent largely unchallenged. Nor

does Andersen’s principal argument claim error in the exclusion of

specific documents alleged to have been destroyed. In sum, that all

documents were not destroyed and that large numbers of documents

were produced to the SEC by Andersen was not challenged.2 Some 21

boxes of Duncan’s preserved desk files were introduced by Andersen

and displayed to the jury. Andersen’s explanation for the

undeniable surge in shredding and the persistent and uncustomary

reminders to employees to abide Andersen’s retention policy was that

it wanted to leave only the work papers of auditing efforts, and

that Duncan did not want his superiors in Chicago to face his

unkempt files. That explanation pointed to the upsurge in papers

trucked away shortly after he learned of his superior’s planned

visit to Houston. The jury was free to evaluate this testimony.

2
There was a misstatement by a prosecutor regarding an email he
represented to the jury was deleted and not produced by Andersen. That was
corrected on the objection of the defense. We describe this event later in Part
IV while addressing Andersen’s claim of prosecutorial misconduct.

10
 Andersen maintained at trial that it was not offering the

specific documents into evidence and hence its proffer of documents

not identified to the prosecution as trial exhibits before trial did

not violate the pretrial order entered by the trial judge; that it

wanted to place into perspective the government’s evidence of the

amount of paper carted away by proof of the large amount of

documents produced for the SEC. The government responded at trial

that the evidence would not be relevant without the predicate proof

of what the documents were and that proof, if forthcoming, would put

the proffer in the teeth of the pretrial preclusion order. Fine

point it is, but we cannot conclude that the trial judge abused her

discretion in this ruling.

Regardless, even if there was a sufficient showing that these

documents were relevant to the SEC proceeding, it is clear that

Andersen was denied only this particular method of demonstrating

that it produced a large number of documents; that it otherwise made

this showing at trial is not seriously challenged. The district

court observed that there was “ample evidence already in the record

that all the documents were not destroyed” and that “Andersen does

not need to introduce evidence of 1660 boxes of remaining desk files

to make this point.” Any error was not reversible error.

In sum, we are not persuaded that the district court committed

reversible error in its rulings regarding the evidence of the volume

of documents destroyed or retained.

2

11
 We turn next to Andersen’s contention that the district court

erred in allowing the government to offer evidence of two SEC

proceedings filed against it arising out of Andersen’s work with

Sunbeam Corp and Waste Management, Inc. Andersen argues that the

evidence of these charges of its misconduct and their settlement was

not relevant in that there was no evidence that they were connected

to any “corrupt persuader,” or that any partner at Andersen involved

in work at Sunbeam or Waste Management was also involved with its

Enron account. It concedes that while the fact of these two

difficulties with the SEC offers at least “a small kernel” of

relevant evidence that “could have been thought relevant,” far too

much detail of the unproved accusations and settlements were

admitted. This excess was such that the jury could not be expected

to cabin its consideration to Andersen’s motive in shredding

documents. Rather, the argument goes, the government was allowed

to prove that Andersen was “a bad corporate actor and should be

found guilty for that reason alone.”

Rule 404(b) is a rule of inclusion allowing proof of prior bad

acts of a defendant when the acts are relevant to an issue other

than the defendant’s character, such as “motive, opportunity,

intent, preparation, plan, knowledge, identity, or absence of

mistake or accident.”3 When the relevance of an issue is shown, the

inquiry turns to Rule 403, which requires the exclusion of the

3
FED. R. EVID. 404(b).

12
evidence if its relevance is substantially outweighed by the danger

of unfair prejudice.4 There must be a “genuine risk that the

emotions of the jury will be excited to irrational behavior,” and

the risk must be “disproportionate to the probative value of the

offered evidence.”5 We will reverse only on a clear showing of a

prejudicial abuse of discretion.6

The government opened its case with the testimony of Thomas

Newkirk, one of four associate directors in the Division of

Enforcement of the SEC. He explained (1) the structure of the

Agency; (2) the difference between a matter under investigation or

MUI and a formal inquiry; (3) that a 102(e) proceeding is directed

at professionals engaged in misconduct in their practice before the

commission, such as lawyers or accountants; and (4) that this

proceeding could result in both a prohibition of practice before the

SEC and censure for unprofessional conduct. He also explained that

“almost without fail” a restatement of earnings by a Fortune 500

company will prompt a formal investigation and that documents for

the investigation are obtained by subpoena.

Newkirk’s attention was then drawn to prior proceedings by the

SEC against Andersen. He explained to the jury that Sunbeam was a

4
FED R. EVID. 403.
5
United States v. Beechum, 582 F.2d 898, 915 n.20 (5th Cir. 1978)
(quoting Trautman, Logical or Legal Relevancy A Conflict in Theory, 5 VAND. L.
REV. 385, 410 (1952)).
6
United States. v. Davis, 546 F.2d 583, 592 (5th Cir. 1977).

13
public company whose stock was traded on the New York Stock Exchange

in the 1990's. Andersen was its auditor when in November 1998

Sunbeam filed a restatement of its earnings, reducing its earnings

for two previous quarters by $60 million, nearly 30 percent of its

earnings for that period. Under his supervision, the SEC on May 12,

1998, launched an investigation into Sunbeam’s financial statements.

He explained the course of the investigation, including Andersen’s

production of documents under an SEC subpoena and the filing of a

complaint in the United States District Court in Florida. The

complaint, also admitted into evidence, charged five officers from

Sunbeam and the Andersen engagement partner with fraud. An amended

complaint was filed on July 11, 2001.7

Newkirk then outlined the SEC action taken against Andersen and

Waste Management. As he explained it, Waste Management, a Fortune

500 Company whose stock was traded on the New York Stock Exchange,

filed a restatement of earnings for the years 1992 through the first

three quarters of 1997 of more than $1.7 billion, the largest

restatement in history, prompting a formal investigation. There had

been an informal investigation, but on the filing of the formal

investigation, the SEC promptly issued a subpoena for Andersen

documents. Then on June 19, 2001, the SEC filed a complaint in the

Federal District Court in Washington, D.C. Andersen consented to

a decree enjoining it from future violations of the Securities Laws.

7
At this juncture Judge Harmon instructed the jury that these documents
were only evidence of the SEC’s statements, not the truth of the statements.

14
The Federal Court also imposed a fine of $7 million against Andersen

and fines of from 30 to 50 thousand dollars against three Andersen

partners sued in that case. This was the largest fine against a Big

Five firm sought and obtained by the SEC. Finally, the government

offered through Newkirk the censure of Andersen for issuing false

and misleading statements that its audit of Waste Management had

been conducted in accordance with generally accepted accounting

principles.

Andersen’s contention that the evidence of its difficulties

with the SEC in the Sunbeam and Waste Management cases was not

relevant is not persuasive. The district court carefully examined

this question in a written ruling before trial to which she adhered

in trial.

The defense of Andersen faced three large realities. First,

David Duncan, its partner in charge of the Enron account, pleaded

guilty to a criminal charge of obstruction, confessing intent to

impede the SEC investigation by shredding documents. Second, it

could hardly deny that Andersen engaged in massive shredding and

deletion of files as a part of senior management’s investigation of

its handling of Enron, including difficulties with the accuracy of

Enron’s financial statement. Third, it must have known that a

restatement of earnings of any appreciable size by a Fortunate 500

company would prompt a formal SEC investigation and subpoena for its

documents. A contrary contention was a hard sell, at best.

15
 As for Duncan, Andersen’s able trial counsel suggested in his

cross examination that Duncan was innocent, despite his plea of

guilty. The large shredding was said to be an effort to catch up

with the cleaning of files that had been put aside, contrary to

Andersen’s records retention policy and to get the files in order

for review by Andersen’s Chicago-based supervisors. It was not to

frustrate an SEC investigation.

Under the court’s charge, the government had the burden of

proving that the shredding was done with the intent to subvert,

undermine, or impede an official proceeding, including proceedings

before the SEC. In confronting that burden, the government urged

that Andersen’s difficulty with the SEC in other matters was the

backdrop to Andersen’s destruction of documents in its internal

investigation of its work for Enron. Specifically, the government

noted that the trouble at Enron came within months of Andersen being

hit in the Waste Management case with the largest fine ever imposed

by the SEC upon a Big Five accounting firm, accompanied by censure

and a consent to an injunction not to mislead in violation of the

securities laws, and that this blow was quickly followed by the

filing of an amended complaint in the SEC’s Sunbeam suit which

leveled charges of fraud against Sunbeam officials and the Andersen

partner in charge of that account. This backdrop, with its

attendant press, includes the quickly following sudden resignation

of Skilling, Enron’s CEO, in August 2001. That is, trouble with

Enron, Andersen’s largest account, came into view less than 90 days

16
from these large developments in Andersen’s difficulties with the

SEC regarding its work with both Sunbeam and Waste Management.

These “prior” acts were indisputably relevant to the question

of Andersen’s intent in its destruction of Enron-related documents.

This was evidence of Andersen’s actual experience with restating

earnings and the inevitability of an SEC subpoena. It was evidence

that Andersen knew its audit work would be at issue. Moreover, it

was a powerful rebuttal of the testimony of Andersen’s SEC expert,

John Riley, that no SEC subpoena was expected until the end of the

first week in November.

Andersen urges that evidence about Sunbeam and Waste Management

could not be relevant, absent proof that the facts offered were

known by a single person, a corrupt persuader. It urges that it

cannot be charged with the collective knowledge of all its agents.

The government replies that the law is to the contrary, pointing to

decisions of courts of appeals.8 We need not resolve that debate.

The notes of Nancy Temple, an in-house lawyer, make clear that she

was keenly aware of the cease and desist order and the 102(e)

censure proceedings in Waste Management, and that she viewed Waste

Management and Sunbeam as a “model” for the Enron difficulties.

There is much more. On November 6, Lawrence Rieger, a senior

partner, sent an email to Temple with press accounts of the press

releases by Sunbeam and Waste Management. He included an Andersen

8
United States v. Bank of New England, 821 F.2d 844, 856 (1st Cir. 1987);
Steere Tank Lines, Inc. v. United States, 330 F.2d 719, 724 (5th Cir. 1963).

17
memorandum entitled “Action Steps in Response to Indications of

Possible Restatement of Financial Statement.” That document had

been distributed to all U.S. partners. Goolsby, an Andersen

partner, and John Riley had extensive knowledge of the proceedings

in both Waste Management and Sunbeam and participated in conference

calls with Andersen personnel addressing the Enron “crisis.”

Goolsby had signed the court papers in Waste Management. David

Duncan, who had never worked on either Waste Management or Sunbeam

matters, knew about those cases. It defies common sense to assert

that partners in Andersen would not be informed about both of these

cases. At the least, a jury could reasonably so conclude.

Andersen retreats to the contention that in any event there was

too much detail about unproved charges, detail that was unnecessary

and prejudicial. It points out that its offer to stipulate to the

fact of the prior occurrences was not accepted. We are unpersuaded.

The government was not required to accept a sterile recitation of

the prior events. Rather, it was entitled to leave the clothes on

these events, so recent. The district court carefully instructed

the jury regarding the limits upon the evidence. Many of the

documents were redacted before being sent into the jury room, and

counsel had full opportunity to place the events in perspective

through cross examination and closing argument. We find no abuse

of discretion in the trial judge’s weighing of the probative value

of the evidence and the risk of collateral prejudice.

3

18
 Andersen next contends that the district court erred in

excluding evidence of statements made by Kathy Agnew during an

interview with the FBI. According to Andersen, these statements

would have enabled Andersen to impeach one of the government’s key

pieces of evidence suggesting a link between Andersen’s decision to

destroy documents and its concern over an SEC investigation of

Enron.

During the testimony of Agent Sullivan, the agent supervising

the FBI’s investigation of Andersen, the government introduced notes

taken by Agnew of an October 23, 2001, meeting with Andersen partner

Thomas Bauer. In these notes, Agnew wrote: “Clean up documentation.

SEC voluntary request. Two suits, more on the way.” Andersen did

not challenge the admission of Agnew’s notes, attack Agnew’s

credibility, or attempt to introduce evidence of other statements

made by Agnew while Agent Sullivan was on the stand. Several weeks

later, however, the day before closing arguments, Andersen attempted

to introduce an FBI report written by Agent Sullivan summarizing

statements Agnew made about the October meeting. The report

indicates that Agnew did not specifically remember the October 23

meeting, but she recalled that their goal was to ensure that the

work papers were complete.

Andersen claims that the statements recorded in Sullivan’s

report were admissible under Federal Rule of Evidence 806 to impeach

the out-of-court statements in her notes. We disagree. Rule 806

allows a party to attack the credibility of a declarant when a

19
hearsay statement or a statement defined in Rule 801(d)(2)(C), (D),

or (E) has been admitted.9 Rule 806 does not apply in this case,

however, because the Agnew notes were not hearsay: the government

did not admit them to prove the truth of the statements contained

in them. The statements were instead admitted only to show that

they were made and that Andersen knew that it was subject to SEC

investigation. Because the statements were not hearsay, Rule 806

does not apply.

Indeed, Andersen effectively concedes this point in its reply

brief, insisting that the notes were admitted for the truth of the

proposition they “implicitly” advanced -- that Andersen personnel

were instructed to destroy documents because the SEC was conducting

an inquiry. That the notes may have suggested a link between

Andersen’s document destruction and the SEC, however, does not alter

the fact that the statements in the notes were not admitted for

their truth.

Nonetheless, Andersen urges that Agnew’s notes were admitted

into evidence only under Rule 801(d)(2)(D) and that Rule 806 should,

by its terms, allow for the admission of the FBI report. Andersen’s

argument is unpersuasive for several reasons. First, despite

Andersen’s claim, it is not apparent from the record that the

9
FED. R. EVID. 806. Rule 806 provides in pertinent part: “When a hearsay
statement, or a statement defined in Rule 801(d)(2)(C), (D), or (E), has been
admitted in evidence, the credibility of the declarant may be attacked, and if
attacked may be supported, by any evidence which would be admissible for those
purposes if declarant had testified as a witness.”

20
district court relied on Rule 801(d)(2)(D) in admitting the notes

because Andersen made no objection to their admission and the court

did not address the matter directly. Since the notes were readily

admissible as non-hearsay statements without regard to Rule

801(d)(2)(D), we will not presume that Rule 801(d)(2)(D) was the

sole basis for their admission. Moreover, Andersen appears to

assume that Rule 806 applies whenever a statement might have been

admitted under Rule 801(d)(2)(D), even if it was in fact admitted

on other grounds. We do not read Rule 806 so broadly. As the

Advisory Committee notes make clear, the purpose of Rule 806 was to

allow for the impeachment of a hearsay declarant.10 Because the

statements in Agnew’s notes were not hearsay at all, Rule 806 simply

does not apply.

We conclude that the district court did not commit reversible

error by refusing to admit the FBI reports of an interview with

Agnew.

III

Andersen contends that the jury instructions were flawed in

three ways: first in explaining the meaning of “corruptly

persuades,” then in misstating the element of “official proceeding,”

and finally in not instructing the jury that the government had to

prove that Andersen knew that its destruction of records was

unlawful.

10
See FED. R. EVID. 806 advisory committee’s notes.

21
 “We review the rejection of a requested jury instruction for

abuse of discretion, ‘affording the trial judge substantial latitude

in tailoring [the] instructions.’”11 Reversal is required only if

the requested instruction "1) is substantively correct; 2) was not

substantively covered in the charge actually delivered to the jury;

and 3) concerns an important point in the trial so that the failure

to give it seriously impaired the defendant’s ability to effectively

present a defense."12 No error results from a court’s refusal to

give an instruction that is not substantially correct in its

statement of the law.13

1

Andersen was convicted of obstructing justice under what has

come to be known as the “corrupt persuasion” prong of 18 U.S.C.

§ 1512(b)(2)(A)&(B). It provides:

Whoever knowingly uses intimidation, threatens, or
corruptly persuades another person, or attempts to do so,
or engages in misleading conduct toward another person,
with intent to . . . cause or induce any person to (A)
. . . withhold a record, document, or other object, from
an official proceeding; [or] (B) alter, destroy,
mutilate, or conceal an object with intent to impair the
object's integrity or availability for use in an official
proceeding . . . shall be fined under this title or
imprisoned not more than ten years, or both.

In this case, the charge read in relevant part:

11
United States v. Morales, 272 F.3d 284, 289 (5th Cir. 2001).
12
Id.
13
Id.; United States v. Dixon, 185 F.3d 393, 402-03 (5th Cir. 1999).

22
 To “persuade” is to engage in any non-coercive attempt to
induce another person to engage in certain conduct. The
word “corruptly” means having an improper purpose. An
improper purpose, for this case, is an intent to subvert,
undermine, or impede the fact-finding ability of an
official proceeding.

Andersen’s principal argument is that the district court’s

definition of the term “corruptly” in § 1512(b)(2) renders the term

superfluous. Andersen argues that, since § 1512(b)(2) explicitly

requires that the accused act with the intent to withhold materials

from an official proceeding, the term “corruptly” has no meaning

under the district court’s definition. Andersen urges that

“corruptly persuades” requires more than an intent to withhold

documents. Andersen contends that the term should be read to

require either proof that the person persuaded violated an

independent duty or that the person engaged in inherently culpable

conduct, such as bribery.

The government challenges Andersen’s basic contention that the

term “corruptly” would have no independent meaning if defined as “an

improper purpose.” The government relies on the term’s plain

meaning, its definition in closely related statutes, the statute’s

structure, and legislative history. Specifically, the government

notes that courts have routinely defined the term “corruptly” in

companion statutes like §§ 1503 and 150514 to require “an improper

14
18 U.S.C. § 1505 criminalizes, in relevant part, anyone who “corruptly
. . . influences, obstructs, or impedes or endeavors to influence, obstruct, or
impede the due and proper administration of the law under which any pending
proceeding is being had before any department or agency of the United States, or
. . . being had by either House, or any committee of either House or any joint
committee of the Congress.”

23
purpose.”15 In United States v. Reeves, for example, we defined the

term to be an intent to “secur[e] improper benefits or advantages

for one’s self or for others.”16 The majority of circuits

interpreting the term as used in § 1512(b) have reached a similar

result, defining “corruptly” in terms of improper purpose despite

the dim light it casts upon its meaning, its circularity aside.17

We find Andersen’s surplusage argument unpersuasive.

Andersen’s argument relies heavily on the Third Circuit’s decision

in United States v. Farrell.18 In Farrell, a divided panel

15
See United States v. Haas, 583 F.2d 216, 220 (5th Cir. 1978) (defining
“corruptly” as “for an improper purpose” or “an evil or wicked purpose”); United
States v. Partin, 552 F.2d 621, 641-42 (5th Cir. 1977).
16
752 F.2d 995, 1002 (5th Cir. 1985) (interpreting “corruptly endeavor”
as related to obstructing the due administration of the tax laws).
17
United States v. Shotts, 145 F.3d 1289, 1300-01 (11th Cir. 1998) (“It
is reasonable to attribute to the ‘corruptly persuade’ language in Section
1512(b), the same well-established meaning already attributed by the courts to
the comparable language in Section 1503(a), i.e., motivated by an improper
purpose. We are unwilling to follow the Third Circuit’s lead in imposing a
requirement for an additional level of culpability on Section 1512(b) in the
absence of any indication that Congress so intended and in the face of persuasive
evidence that it did not.”); United States v. Thompson, 76 F.3d 442, 452 (2d Cir.
1996) (finding § 1512(b) not to be unconstitutionally overbroad or vague because
“Section 1512(b) does not prohibit all persuasion but only that which is
‘corrupt[ ],’” and “[t]he inclusion of the qualifying term ‘corrupt[ ]’ means
that the government must prove that the defendant’s attempts to persuade were
motivated by an improper purpose”); see also United States v. Khatami, 280 F.3d
907, 911-12 (9th Cir. 2002) (“Synthesizing these various definitions of ‘corrupt’
and ‘persuade,’ we note the statute strongly suggests that one who attempts to
‘corruptly persuade’ another is, given the pejorative plain meaning of the root
adjective ‘corrupt,’ motivated by an inappropriate or improper purpose to
convince another to engage in a course of behavior--such as impeding an ongoing
criminal investigation.”). But see United States v. Farrell, 126 F.3d 484, 490
(3d Cir. 1997) (“[B]ecause the ‘improper purposes’ that justify the application
of § 1512(b) are already expressly described in the statute, construing
‘corruptly’ to mean merely ‘for an improper purpose’ (including those described
in the statute) renders the term surplusage, a result that we have been
admonished to avoid.”).
18
126 F.3d 484 (3d Cir. 1997).

24
concluded that the term “corruptly persuades” in § 1512(b) did not

proscribe “a noncoercive attempt to persuade a coconspirator who

enjoys a Fifth Amendment right not to disclose self-incriminating

information . . . from volunteering information to investigators.”19

In reaching its decision, the court specifically rejected the notion

that the term could mean “persuades with the intent to hinder

communication to law enforcement,” concluding that such a definition

“would render the word ‘corruptly’ meaningless.”20 The panel also

dismissed the relevance of court decisions interpreting the term

“corruptly” in companion statutes like § 1503.21 Although these

decisions had routinely defined the term to mean “with an improper

purpose,” the court found these decisions unpersuasive because of

the differences between § 1512 and § 1503.22 Unlike § 1512(b), §

1503 does not include any mens rea element except the term

“corruptly.” Section 1512(b), by contrast, expressly requires a

specific intent to withhold documents from investigators. With this

in mind, Andersen asserts that a definition which makes sense in §

1503 becomes surplusage when applied to § 1512(b).23

19
Id. at 488.
20
Id. at 487.
21
18 U.S.C. § 1503(a) provides, in relevant part, that “[w]hoever . . .
corruptly . . . influences, obstructs, or impedes, or endeavors to influence,
obstruct, or impede, the due administration of justice, shall be punished as
provided in subsection (b).”
22
Farrell, 126 F.3d at 489-90.
23
Id. at 490.

25
 The Third Circuit, however, did not define the term “corruptly”

to require the violation of an independent legal duty, as Andersen

claims.24 Rather, it held the converse, that encouraging another to

exercise a constitutional right is not corrupt.25 The Farrell court

specifically declined to define the term in any detail or to give

substantive content to the term. Rather, the decision can fairly

be read more narrowly: that a person who persuades someone to invoke

his Fifth Amendment right does not violate the statute.

Andersen is incorrect, moreover, in its contention that the

court’s definition of “corruptly” rendered the term superfluous.

The court defined “corruptly” to mean “an intent to subvert,

undermine or impede the fact-finding ability of an official

proceeding.” Andersen contends that “corruptly” has no independent

meaning under this definition because § 1512(b) already separately

requires an intent to impede the fact-finding ability of an official

proceeding. Section 1512(b), however, requires an “intent to impair

the . . . integrity or availability [of an object] for use in an

official proceeding”; it does not focus on undermining an agency’s

24
Id. at 488 (“[W]e are hesitant to define in more abstract terms the
boundaries of the conduct punishable under the somewhat ambiguous ‘corruptly
persuades’ clause. However, we do not think it necessary to provide such a
definition here because we are similarly confident that the ‘culpable conduct’
that violates § 1512(b)(3)’s ‘corruptly persuades’ clause does not include a
noncoercive attempt to persuade a coconspirator who enjoys a Fifth Amendment
right not to disclose self-incriminating information about the conspiracy to
refrain, in accordance with that right, from volunteering information to
investigators.”).
25
Id. at 488-89.

26
fact-finding ability. In short, as defined by the court, “corruptly”

was not a mirror of § 1512(b)’s intent requirement.

This point becomes more apparent when the charge is read in

full. The district court instructed that “[a]n improper purpose,

for this case, is an intent to subvert, undermine, or impede the

fact-finding ability of an official proceeding,” including “subvert”

and “undermine” as urged by Andersen.26 Acting with an intent to

“subvert, undermine, or impede” an investigation narrowed the reach

of the statute, insisting upon a degree of culpability beyond an

intent to prevent a document from being available at a later

proceeding. A routine document retention policy, for example,

evidences an intent to prevent a document from being available in

any proceeding. But it does not alone evidence an intent to

“subvert, undermine, or impede” an official proceeding. In

narrowing the statute’s potential reach, the district judge rejected

the government’s argument that the jury should be charged on the

bare bones of the statute and shaped the charge to the facts of the

case. It also gave meaning to “corruptly persuades.” “Subvert”

means “to overturn or overthrow from the foundation, ruin” or “to

pervert or corrupt by an undermining of morals, allegiance, or

faith.” The most relevant definition of “undermine” is “to subvert

or weaken insidiously or secretly.” Impede means “to interfere with

26
The limiting words “for this case” were included at Andersen’s urging.
The word “impede” was requested by the government and included over the objection
of Andersen.

27
or get in the way of,” to “hold up.” Each of these terms implies

a degree of personal culpability beyond a mere intent to make

documents unavailable.

The legislative history of § 1512(b), explored by the dissent

in Farrell, further persuades us that the district court’s charge

was correct.27 Section 1512(b) was enacted to replace and expand

the witness protection provisions incorporated in § 1503. As

initially drafted, § 1512(b) did not bar noncoercive conduct

performed with an intent to hide information from investigators; one

could violate the statute only through intimidation, use of physical

force, threats, or misleading conduct. Congress added the term

“corruptly persuades” in 1988 to “include in section 1512 the same

protection of witnesses from non-coercive influence that was (and

is) found in section 1503.” Congress knew that courts had uniformly

defined “corruptly” in § 1503 as “motivated by an improper purpose,”

and it is logical to give the word “corruptly” in § 1512 the same

meaning that it has in § 1503. At the very least, this legislative

history – and its clear intent to criminalize non-coercive conduct

– deflates Andersen’s “structural” argument that § 1512 targets

certain means used to obstruct justice and not just motive.28

27
Farrell, 126 F.3d at 491-93 (Campbell, J., dissenting).
28
Andersen argued that the structure of the statute required the
definition of “corruptly persuades” to be based on the means of persuasion used
rather than the persuader’s motive or intent. It points out that, before the
statute was amended to include “corrupt persuasion,” the statute criminalized
only certain behaviors – namely, the use of intimidation or physical force,
threats, and misleading conduct. Andersen argued that it would be anomalous to
construe the term “corruptly persuades” differently; it must also be interpreted

28
 We are persuaded that defining “corruptly” as “motivated by an

improper purpose” comports easily with the legislative history.

Congress intended that § 1512(b) have the same substantive scope as

former § 1503. Since § 1503 proscribed conduct undertaken “with an

improper purpose,” § 1512(b) should also do so.

Andersen requested that the jury be instructed that the only

way corrupt persuasion may be found is by an improper method or a

violation of an independent legal duty. We find no court that has

come to this conclusion. Andersen bases its argument on Farrell,

but Andersen’s description of the holding is an incomplete statement

of the Third Circuit’s viewpoint. Farrell made clear that a

violation of an independent legal duty is sufficient to prove

corrupt persuasion, and it refused to define “corruptly persuade”

as acting with an improper purpose, but it did not hold that

violating an independent legal duty or persuading by an improper

method was the only way to establish a § 1512(b) violation.29 The

statute itself has no such requirement.

Andersen, moreover, gives no explanation why “improper purpose”

should require unlawful conduct. Under the caselaw, “corruptly”

to require similarly culpable actions.
29
Farrell, 126 F.3d at 488-90 (explaining that it was “hesitant to define
in more abstract terms the boundaries of the conduct punishable under the
somewhat ambiguous ‘corruptly persuades’ clause,” and finding it unnecessary to
do so because the conduct at issue - “a noncoercive attempt to persuade a
coconspirator who enjoys a Fifth Amendment right not to disclose
self-incriminating information about the conspiracy to refrain, in accordance
with that right, from volunteering information to investigators” - could not
satisfy the statute).

29
requires an improper purpose, not improper means,30 and Andersen

offers no explanation why “improper purpose” should require

“improper means.” Indeed, the means used would seem to be relevant

only to the extent that they shed light on whether the purpose was

improper. Moreover, the only examples of “unlawful conduct” that

Andersen gives are bribery and counseling a witness to lie. The

statute would have little independent reach, however, if it could

be violated only through bribery or suborning perjury because such

conduct is to a large extent criminalized in other provisions of the

criminal code.31 Yet Andersen offers no other examples of

“culpable” or “unlawful” conduct sufficient, under its test, to

trigger the statute. We cannot lightly conclude that Congress

intended for the statute to do only work already done by the

criminal code.

Finally, even ignoring Andersen’s failure to request a

substantially correct instruction, the submitted instruction

survives harmless error review. Trial error is harmless unless it

had a “substantial and injurious effect or influence in determining

the jury’s verdict,” or leaves us in “grave doubt” as to whether it

such an effect. On the facts of this case, that the jury was not

required to find a violation of an independent legal duty did not

30
See, e.g., U.S. v. Khatami, 280 F.3d 907, 911-12 (9th Cir. 2002); U.S.
v. Shotts, 145 F.3d 1289, 1301 (11th Cir. 1998); United States v. Thompson, 76
F.3d 442, 452-53 (2d Cir. 1996).
31
18 U.S.C. § 1622, for example, criminalizes subornation of perjury.

30
have a substantial and injurious effect on the verdict. The jury

was instructed that to corruptly persuade another, Andersen must

have acted with an intent to subvert, undermine, or impede the fact-

finding ability of an official proceeding. Contrary to Andersen’s

assertions, this instruction does not read “corruptly persuade” out

of the statute. Acting with an intent to withhold a record from an

official proceeding casts a wider net than acting with an intent to

subvert, undermine, or impede the entire fact-finding ability of the

proceeding. There is nothing improper about following a document

retention policy when there is no threat of an official

investigation, even though one purpose of such a policy may be to

withhold documents from unknown, future litigation. A company’s

sudden instruction to institute or energize a lazy document

retention policy when it sees the investigators around the corner,

on the other hand, is more easily viewed as improper. The

instruction’s requirement of an improper purpose in withholding the

documents ensures that the jury found a level of culpability over

and above the mere intent to withhold a document from an official

proceeding. We cannot say that the error had a substantial and

injurious effect on the jury’s verdict.

The court narrowed the reach of the statute at the urging of

Andersen. Any error that occurred did not have a substantial and

injurious effect on the jury’s verdict.

31
 2

Andersen argues that the jury instructions were also flawed in

their explanation of an “official proceeding.”32 The contention is

that while § 1512(b)(2) provides that the proceeding “need not be

pending or about to be instituted at the time of the offense,”33 it

does not offer guidance as to the concreteness of the defendant’s

expectation of a proceeding.

Andersen first contends that it was entitled to have the jury

instructed that an “official proceeding” had to be “ongoing or

. . . scheduled to be commenced in the future.” Resting on this

court’s decision in United States v. Shively,34 the argument is that

there must be proof of “intent to affect . . . some particular

federal proceeding that is ongoing or is scheduled to be commenced

32
The jury charge instructed:
An “official proceeding” is a proceeding before a
federal court, judge, or agency. In this regard, you
are instructed that the Securities and Exchange
Commission, otherwise known as the “SEC,” is a federal
agency, and that an “official proceeding,” for this
case, is a proceeding before a federal agency, such as
the SEC. A proceeding before a federal agency includes
all of the steps and stages in the agency’s performance
of its governmental functions, and it extends to
administrative as well as investigative functions, both
formal and informal. For purposes of this case a civil
law suit brought by private litigants is not an official
proceeding.
The charge goes on to explain that “[t]he government need prove only that
Andersen acted corruptly and with the intent to withhold an object or impair an
object’s availability for use in an official proceeding, that is, a regulatory
proceeding or investigation whether or not that proceeding had begun or whether
or not a subpoena had been served.”
33
18 U.S.C. § 1512(e)(1).
34
927 F.2d 804, 812-13 (5th Cir. 1991).

32
in the future.”35 The government argues, and we agree, that this

statement was dicta, it having already concluded that the government

failed to prove that the defendant intended to affect an official

proceeding. This reconciles Shively with the plain language of the

statute, an accommodation that we should prefer over a reading that

defies the statutory provision that an official proceeding “need not

be pending or about to be instituted at the time of the offense.”

Andersen next maintains that it was entitled to an instruction

to the jury that it could not be found guilty unless at the time of

the obstructing act it “had in mind a particular proceeding that it

sought to obstruct.” In addition to its reliance upon Shively,

Andersen argues that Congress could not have intended to criminalize

the widespread use of records retention programs, all of which have

a general purpose of not retaining documents that might be helpful

to some later appearing adversary - that this court should read the

statute to insist upon proof that a defendant intended to impede a

particular proceeding. The argument anticipates a government

argument that this is fanciful, pointing out that the prosecution

argued just that in ascribing criminal intent to Michael Odom’s

statement in a videotaped meeting with employees that the records

retention policy should be followed because it would make records

unavailable in possible future litigation — even though it asserts

his remarks were unrelated to Enron. Indeed, it argues, the jury

35
Id.

33
asked to see the video during its deliberations. This, it urges,

makes clear that the jury was allowed to convict for acts that do

not violate the statute.

This contention is not without force, but it fails here.

Andersen’s requested instruction is in tension with the

congressionally detailed reach of the statute. It ignores the

statutory language, which does not require a defendant to know that

the proceeding is pending or about to be initiated.36 Its stronger

argument is that without insisting that a defendant’s intent to

impede a proceeding have some limiting sights, companies could be

convicted for maintaining records retention programs which were

adopted with no proceeding in mind. The answer here may lie with

the sound application of the elements of corrupt purpose and intent.

That case is not before us.

Ultimately, we find no reversible error. Wherever the

permissible reach of this statute may be finally drawn, it is beyond

this case. This case was tried on the theory that Andersen intended

to undermine, subvert, or impede a proceeding of the SEC. The

government did not suggest that a records retention program violated

the Act. Rather, it argued that Andersen used that policy as a code

to shred - to subvert, undermine, or impede a government proceeding

it knew was imminent. There was no risk of conviction for innocent

maintenance of a records program. That the SEC was the feared

36
See 18 U.S.C. § 1512(b), (f).

34
opponent and initiator of a proceeding and not some other shadowy

opponent was clear at every step. That is how the case was tried

and the jury charged. Prosecutor Matthew Freidrich in the first

opening statement of the government told the jury:

They knew that the SEC was coming . . . they knew what
that could mean to the firm . . . and the reason that
they knew that was because Andersen – at the time these
events that are set out in the indictment happened,
Andersen was already under a form of probation with the
SEC . . . if Andersen was found to, again, have violated
securities laws, they could have their ticket pulled,
meaning they could be debarred. They could be stopped
from practicing accounting in front of the SEC, and that
would have meant the end of the practice. . . . [T]his
case is all about a group of partners at Andersen who
knew that the law was coming and did what they could
. . . to hinder the law. And at the end of the trial, we
will ask you to find them guilty of that.

This case, as charged37 and tried, was well within the statute.

We cannot find reversible error in the trial court’s rejection of

Andersen’s request to add to the definition of an official

proceeding that it be a particular proceeding.

3

Finally, Andersen argues that the district court erroneously

charged the jury by not instructing that “a conviction under section

1512(b)(2) is permissible only if the defendant is shown to have

known that its conduct was wrongful.” It asserts that because

persuading another to withhold documents from an official proceeding

37
The indictment alleged, “In the summer and fall of 2001, a series of
significant developments led to ANDERSEN’s foreseeing imminent civil litigation
against, and government investigation of, Enron and ANDERSEN.” The jury was
instructed in the court’s final charge that “for purposes of this case a civil
law suit brought by private litigants is not an official proceeding.”

35
is not necessarily culpable conduct, Congress must have intended

“corruptly” to shield those who act without knowledge of their

unlawful conduct from culpability.

The government responds, and we agree, that the jury was

properly instructed because knowledge of one’s violation is not an

element of § 1512(b)(2). The general rule, of course, is that

ignorance of the law is no defense.38 When Congress wishes to avoid

the general rule, it usually does so by requiring that a defendant

act willfully or with specific intent to violate the law.39 Section

1512(b)(2) does not require that the defendant act willfully, and

does not provide that a defendant may be convicted only if the

defendant knows his conduct is unlawful. Andersen’s argument misses

the import of the jury’s finding that it acted with an improper

purpose; one could act with an improper purpose even if one did not

know that the actions were unlawful. The instructions required the

jury to find the appropriate mental states for a § 1512(b)(2)

violation: the jury could convict Andersen only if it found that

Andersen intended to subvert, undermine, or impede the fact-finding

ability of an official proceeding. The district court did not err

by refusing to give an “ignorance of the law” instruction.

38
Ratzlaf v. United States, 510 U.S. 135, 149 (1994).
39
Id. at 143-46; Cheek v. United States, 498 U.S. 192, 199-200 (1991).

36
 IV

Andersen challenges two additional rulings of the district

court involving the cross-examination of David Duncan and remarks

made by the prosecutor in his closing argument. We find no

reversible error.

1

Inappropriate and harmful comments made during closing argument

may constitute reversible error.40 When reviewing alleged improper

comments, we first determine whether the comments were improper and

then decide whether they caused harm.41 “Improper argument harms

the defendant if it affects his substantial rights.”42 Finally, “it

is necessary to look at [the challenged remarks] in context.”43

The comments at issue here involve an email written by Rodney

Faldyn demonstrating Andersen’s adoption of a previously rejected

accounting practice that allowed Enron to avoid a restatement of

earnings. At least one copy of the email was deleted during the

document destruction, but copies of the email survived. During its

opening statement, the prosecution said, “you won’t find another

copy of this [email] anywhere in evidence. Do you think the SEC

would have wanted to see this document?” At a bench conference,

40
United States v. Simpson, 901 F.2d 1223, 1227 (5th Cir. 1990).

41
United States v. Gallardo-Trapero, 185 F.3d 307, 320 (5th Cir. 1999).
42
Simpson, 901 F.2d at 1227.
43
Gallardo-Trapero, 185 F.3d at 320.

37
Andersen informed the court that a copy of the email was in fact

produced to the SEC. The prosecution told the court that it would

not have made the statement if it knew that a copy was produced, and

the court found that the prosecution acted in good faith. To cure

any confusion, the district court instructed the jury that despite

the government’s good faith belief, “an undeleted copy of the

document exists and [] it was produced to the SEC pursuant to the

subpoena. . . . [Y]ou are not to consider any arguments regarding

whether or not another copy of that document was preserved.”

During rebuttal summation, the government again referred to the

Faldyn email as evidence of Andersen’s change of accounting practice

in relation to Enron. In response to Andersen’s argument that it

destroyed only unimportant documents, the government noted that the

Faldyn email was deleted and said, “ask yourselves, the SEC, would

you want this?” Andersen objected, asserting that the prosecutor’s

argument ignored the court’s previous instruction to the jury that

the SEC received a copy of the email. The court overruled the

objection, and the prosecutor went on to explain to the jury that

even if copies of the email survived and were produced, one deletion

alone was significant. That some Andersen employees “didn’t get the

message” to destroy documents, the argument goes, does not indicate

that Andersen was not attempting to destroy important documents.

The government argued further that the destruction of a copy of an

important document is significant because a copy could indicate who

38
had the document, when the person received it, and whether the

person destroyed it.

Andersen moved for a mistrial after closing arguments, and the

court denied the motion. The court disagreed with Andersen’s

contention that the prosecution simply repeated its confusing

remarks from opening statements, noting that the prosecutor

indicated that there were other copies of the email and “never said

this was the only document”; rather, the prosecutor asked, “wouldn’t

the SEC have liked to have seen that.”

Andersen asserts that the rebuttal comments “created the

incorrect impression that Andersen had deleted all copies of the

email.” Andersen views the rebuttal comments as misleading and

misstating the evidence, and contends that because the discussion

of the Faldyn email was a significant portion of the government’s

rebuttal, a new trial is warranted.

We find no prosecutorial misconduct here. The comments made

during rebuttal were different from the remarks made during opening

statement. The opening statement remark that no copy of the email

would be found in evidence could have confused the jury by implying

that all copies of the email were destroyed. In contrast, the

rebuttal comments highlighted the email’s importance, asserted that

the SEC would want to see it, and noted that at least one copy of

it was deleted. The prosecutor did not claim that all copies of the

email were destroyed or that no copy of the email was received by

the SEC; rather, the prosecutor argued that destruction of one copy

39
alone demonstrates the document’s incriminating nature and

Andersen’s intent to keep it from the SEC, even if other copies

eventually were produced. The court did not err in finding that

these comments were not improper and denying Andersen’s request for

a mistrial.

2

Andersen asserts that the district court “prejudicially

handicapped [its case] by undermining the cross-examination of David

Duncan.” It claims that the basis of its cross-examination of

Duncan was four summaries of interview sessions (“FD-302 forms”)

between Duncan and the FBI drafted by FBI agents after the

interviews. During his cross-examination, Duncan said that the four

FD-302s forms contained various inaccuracies and misstatements. The

court sustained the government’s objection to Andersen’s attempt to

cross-examine Duncan regarding the discrepancies between his

recollection and the summaries. Andersen requested an evidentiary

hearing to determine the nature of the inaccuracies, and the

government explained that Duncan marked his own copies of the

summaries, highlighting portions he felt were inaccurate. The court

conducted an in camera review of three of Duncan’s copies of the

summaries, finding that none of the inconsistencies were material.

Rather, the court found that Duncan’s notations referred to specific

words or phrases, making it “more likely that Duncan, a precise

accountant, meant by his highlighting that the agent failed to

40
capture in his prose the precise flavor of what Duncan recalled as

his actual statement.” The court accordingly denied Andersen’s

motion for an evidentiary hearing.

Based on these events, Andersen presents two claims of error:

(1) the district court exerted insufficient effort to determine the

materiality of misstatements in the FD-302 forms, and (2) the

court’s failure to provide the marked FD-302 forms crippled

Andersen’s ability to effectively cross-examine David Duncan.

Andersen provides no authority to justify reversal of the

jury’s verdict, and we find none. To the contrary, Andersen’s

various assertions are belied by the underlying events. First, the

facts demonstrate that Andersen had everything it needed to

effectively cross examine Duncan. Duncan’s cross-examination lasted

three days and covered a wide range of topics. Andersen could have

questioned Duncan about his statements to the FBI and then compared

his statements to the summaries drafted by the FBI agent. Andersen

then could have highlighted to the jury any inconsistencies between

his testimony and the summaries, and could have called the FBI agent

who drafted the summary to explore the discrepancies. Andersen did

not take these opportunities below, perhaps because impeaching

Duncan’s credibility would undermine its admitted strategy of using

Duncan’s testimony to support its own defense.

Second, Andersen did not present to the court below one of its

primary complaints - that the court could not adequately determine

the materiality of the inconsistencies because the court reviewed

41
only three of the four summaries marked by Duncan. Andersen did not

complain to the district court that the court’s review was

insufficient by failing to review the fourth summary. Furthermore,

it was Duncan’s attorney, not the government, who possessed and

provided the marked summaries, but Andersen did not inquire as to

why the fourth summary was not provided.

Given that Andersen provides no authority explaining why the

court’s actions and findings require reversal, and that the facts

undermine its assertion that it could not effectively cross-examine

Duncan, we find no reversible error.

V

For these reasons, we AFFIRM the judgment of conviction.

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