Former Enron Prosecutor Speaks Out: Criminal Charges Shouldn't
Be So Easy
By Amir Efrati
The Wall Street Journal
Friday, November 21, 2008
As one of the lead Justice Department prosecutors investigating
the collapse of Enron Corp., Andrew Weissmann in 2002 helped
bring criminal charges against Enron's accounting firm, Arthur
Andersen, for allegedly destroying evidence. The case was
instrumental in the downfall of the large firm, and Mr.
Weissmann and his colleagues were roundly criticized by the
The tables have turned. Mr. Weissmann, now a defense
lawyer at Jenner & Block LLP, is trying to make it harder for
federal prosecutors to charge companies with crimes, even as he
defends the government's decision to charge Arthur Andersen.
On Friday, Mr. Weissmann will argue before a federal appeals
court that for nearly a century, judges, prosecutors and defense
lawyers have wrongly believed that, under a 1909 Supreme Court
decision, New York Central and Hudson River Railroad v. United
States, a company can be held criminally liable any time an
employee commits a crime intended to help the company.
If the Manhattan-based court agrees with Mr. Weissmann, it could
herald a major shift in how the Justice Department prosecutes
corporations, while empowering many companies under
Mr. Weissmann's arguments are in support of a Greek shipping
company, which he says was wrongly convicted of a crime last
year. He doesn't represent the company, but he declined to
comment on whether he is being compensated for his
"When employees commit crimes, companies are at the complete
mercy of the government, because technically they're criminally
liable, they have no defense and can only appeal to the
discretion of the prosecutor to not bring charges," says Mr.
Weissmann, whose brief was brought on behalf of the Chamber of
Commerce and other groups.
Mr. Weissmann isn't trying to alter the standard for prosecuting
"irresponsible" companies with systemic flaws that allowed
employees to commit crimes. Those don't deserve a free
pass. In the case of Arthur Anderson, he says the
government believed company policy relating to document
retention encouraged the alleged criminal act. The Supreme
Court eventually overturned the company's lower-court
conviction. Rather, Mr. Weissmann is arguing that
companies with robust compliance programs that try to prevent
and root out wrongdoing by employees shouldn't be charged
criminally for rogue actors who don't heed the company's
If Mr. Weissmann prevails, prosecutors would find it harder to
threaten some corporations with criminal charges for not giving
in to government demands for information. Prosecutors
would also have difficulty forcing companies into so-called
deferred-prosecution agreements in which they plead guilty to a
crime but pay a sometimes-hefty fine and agree to good behavior
to avoid charges. Such agreements, which have become
increasingly popular in recent years, can do lasting damage to
businesses, some defense lawyers say.
It "would do a lot to influence the balance of power between a
prosecutor and a defense lawyer representing a company," says
Jonathan Polkes, a defense lawyer at Weil, Gotshal & Manges.
Mr. Weissmann, 50 years old, says he noticed the "glitch" in the
law four years ago as a prosecutor when he helped put together
deferred-prosecution agreements of Merrill Lynch & Co. and
Canadian Imperial Bank of Commerce for their conduct in
connection with the Enron collapse. It struck him that the
standard for criminal liability might be too low for "companies
that work hard to create compliance programs" and yet are still
on the hook, he says.
In 2006, after he left the government, Mr. Weissmann wrote a
law-review article on the topic before he began his private
practice, and gave testimony about it before the Senate
Judiciary Committee. The National Association of Criminal
Defense Lawyers took notice and waited for the right case to try
to change the law through the courts. It came in the case
of Ionia Management SA, which was convicted last year in federal
district court in Connecticut for
violations in connection with dumping waste on the high seas.
Mr. Weissmann argued in a brief to the appeals court that the
lower-court judge wrongly instructed the jury that a corporate
defendant could be criminally responsible for acts committed by
a single employee, even if those acts were committed against the
The government argues that Ionia
didn't challenge the jury instruction during the trial.
Moreover, the court correctly told the jury that the company
could be liable for its employees' conduct.
The government also argues that the court hearing the appeal
today has previously affirmed the prevailing interpretation of
the 1909 Supreme Court decision.
Mr. Weissmann argues that interpretation comes from a faulty
reading of the case, in which the Supreme Court ruled that a law
passed by Congress, the Elkins Act, was constitutional.
The law said that a company could be criminally liable for
violations of the Elkins Act by individuals. But Mr.
Weissmann argues the courts and others took the Supreme Court's
ruling to mean corporations can be criminally liable when
individuals violate any statute, not just the Elkins Act.
He says if Congress wanted that to be the standard, it should
pass a law saying so.
Write to Amir Efrati at