From the New York Observer:
Meet Leslie Caldwell. President Obama has installed Ms. Caldwell, known as a “terror of a prosecutor,” as head of the Criminal Division of the Department of Justice. It has been over a decade since Ms. Caldwell destroyed Arthur Anderson, and with it, 85,000 jobs—only to be reversed by the Supreme Court nine to nothing (well after she went into private practice). Now the president has brought her back—with a big promotion—and the vengeance of DOJ already aimed at Credit Suisse, BNP Paribas and others.
Ms. Caldwell and her then right hand man, Andrew Weissmann, viewed businessmen and bankers as “wise guys on Wall Street,” deserving of brutal prosecutorial tactics. Their prosecutions proceeded on the theory that the “end justifies the means.” Winning was the sole goal. They forgot that the job of a federal prosecutor is to seek justice—not convictions.
Arthur Andersen LLP was Ms. Caldwell’s first target in the wake of the collapse of Enron amid allegations of financial and accounting irregularities and secret-off balance sheet deals and partnerships. Andersen accountants were actually embedded at Enron, and the energy company paid the consulting firm millions in fees every year. Enron changed to mark-to-market accounting, lawful at the time, and was pushing the envelope.
Ms. Caldwell’s task force terrorized Arthur Andersen partner David Duncan with life in prison. Ms. Caldwell would walk into the room, take command and bark at a potential witness: “You’re going to tell us this, this and this (specifying the statements she wanted) or you’re going to be indicted.”
Ms. Caldwell and Mr. Weissmann persuaded Duncan it didn’t matter that he believed his conduct was lawful; it didn’t matter that he was following the policies of corporate counsel, that the accounting rules could be interpreted different ways, or, that Andersen had retained hundreds of thousands of documents—including anything it was supposed to keep. Ms. Caldwell and Mr. Weissmann virtually bludgeoned him into a guilty plea that required his testimony against his firm. Mr. Duncan acquiesced, but all the while maintained that he believed his conduct was lawful.
Ms. Caldwell knew the carnage she would cause. Andersen represented 2,300 publicly traded companies and employed 85,000 people worldwide. So Ms. Caldwell and Mr. Weissmann obtained the indictment, then sealed it for a week while the government worked behind the scenes with the SEC and Andersen’s clients to avoid “upheaval” in the markets from the announcement of the indictment. After all, no publicly traded company could continue doing business with an accounting firm under a criminal indictment.
