HOUSTON — The company Arthur Andersen LLP employed to do most of its document shredding last year has shredded papers for the FBI, jurors hearing evidence in the firm's obstruction of justice trial almost learned.
Michael Patrick Chase, general manager of Shred It, testified Thursday that his company has a lot of clients in downtown Houston.
But a prosecutor cut him off with an objection when he tried to tell Andersen lawyer Rusty Hardin that the FBI was among the company's clients.
"We have done some shredding for the FB," Chase had said when Assistant U.S. Attorney Matt Friedrich objected. U.S. District Judge Melinda Harmon sustained the objection.
"Your honor, am I not allowed to show this man shreds for the FBI?" Hardin asked. Harmon told him to ask another question.
"Were the first two letters FB?" Hardin asked, soliciting another sustained objection.
Andersen is charged with destroying documents related to Enron audits in October and November as the Securities and Exchange Commission began investigating the energy company's finances.
Prosecutors contend that the firm implicitly encouraged compliance with its document retention policy so workers would shred documents to keep them from the SEC. The firm says it shredded to clean up fat files and get rid of extraneous material.
Prosecutors said Thursday they expected to rest their case Friday, the end of the third week of the trial. Hardin said he expects the defense case to last three to five days.
Among the last few witnesses Thursday was David Stulb, the head of the firm's internal investigative unit. Stulb said he wasn't told documents were being shredded when he went to the firm's Houston office in late October to look into accounting problems at then-client Enron Corp.
"It would have been nice to know," he said in his second day of testimony as a prosecution witness.
Also, Sharon Thibaut, who ran the office's "shred room" last year, said the Enron team sent more paper than usual to be shredded in October in 18 to 20 footlocker-like trunks. But she said she hadn't received much in the previous nine months.
Clashes between Hardin and the judge and prosecutors that have become common throughout the trial erupted again Thursday outside of the jury's presence.
Assistant U.S. Attorney Andrew Weissmann said prosecutors want Harmon to tell the jury before they begin deliberations to consider the refusal to testify by three Andersen employees who invoked their Fifth Amendment rights. None invoked that right in the jury's presence, though their names have come up in testimony.
Hardin said their attorneys should be able to explain that they invoked the Fifth only after federal prosecutors threatened to make them targets of the investigation.
Otherwise, Hardin said, the jury might think they were taking the Fifth because they had done something wrong.
"They are trying to draw the implication of guilt on the part of the partnership because of (the witness') individual decisions," Hardin said.
Weissmann countered, saying that "not a single one has made the allegation Mr. Hardin made here in court."
The three are Andersen lawyer Nancy Temple, who sent an e-mail encouraging that Enron auditors be reminded of the document retention policy; partner Thomas Bauer, a partner on the Enron audit; and manager Kate Agnew, a mid-level member of the Enron team. Harmon will decide later on instructing the jury on the issue.
Assistant U.S. Attorney Sam Buell complained in a whispered bench conference that Hardin was asking improper questions, forcing prosecutors to repeatedly stand up and object.
Hardin retorted that the prosecutors were "whiny little babies" who "have repeatedly in this case tried to keep the truth from the jury."
Harmon sided with prosecutors and warned, "I don't want to take draconian measures against you."