Andersen Pleads Not Guilty to Federal Charge

Gene Frauenheim, the managing partner of Andersen’s Houston office, entered the plea in the Houston courthouse, denying the federal charge it destroyed documents relating to the collapse of Enron.

The Justice Department announced the count against Andersen last Thursday, marking the first criminal indictment stemming from Enron’s bankruptcy. Enron was one of Andersen’s biggest clients.

At a separate pretrial hearing in U.S. District Court for the Southern District of Texas, the Andersen’s defense team won a request to set an early trial date, a move the accounting firm has said is crucial for its survival.

“An indictment is the same as a conviction for this company,” said Rusty Hardin, Andersen’s lead lawyer in Houston. Several hundred Andersen employees rallied outside of the federal courthouse, chanting “We are Arthur Andersen!” and demanding a speedy trial.

Andersen currently employs 25,000 in the U.S. and a total 85,000 people worldwide.

If Andersen is convicted, it could face a fine up to $500,000 and five years probation. The Houston federal judge could also impose additional fines equal to twice the gross gain or loss caused by its illegal accounting methods of Enron.

A trial date for Andersen is set for May 6 in Houston.