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Grand Theft Auto Meets The Sarbanes-Oxley Act

Arthur Andersen was one of the many casualties of the collapse of Enron Corporation.  In 2002, a jury found the once well respected firm guilty of violating 18 U.S.C. §§ 1512(b)(2)(A) and (B).  These sections make it a crime to "knowingly use intimidation or physical force, threaten, or corruptly persuade another person . . . with intent to . . . cause" that person to "withhold" documents from, or "alter" documents for use in, an "official proceeding."  Three years later, a unanimous Supreme Court overturned the conviction.  Arthur Andersen LLP v. United States, 544 U.S. 696 (2005).  Writing for the Court, Chief Justice Rhenquist found that the jury instructions had "diluted the meaning of 'corruptly' so that it covered innocent conduct".

In the meantime, Congress enacted the Sarbanes-Oxley Act of 2002 which amended 18 U.S.C. § 1512 to add a new paragraph (c) which provides:

Whoever corruptly—

(1) alters, destroys, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the object's integrity or availability for use in an official proceeding; or

(2) otherwise obstructs, influences, or impedes any official proceeding, or attempts to do so,

shall be fined under this title or imprisoned not more than 20 years, or both.

This new provision was the subject of an opinion issued yesterday by the Ninth Circuit Court of Appeals.  United States v. Watters, Case No. 11-10362 (9th Cir. June 5, 2013).  The case involved the appeal of an individual who had been convicted of obstruction of justice after being indicted on 19 counts of conspiracy, transportation of stolen vehicles, and sale or receipt of stolen vehicles.  At issue was whether the trial judge had properly charged the jury as to the meaning of "corruptly".

In an opinion by Judge J. Clifford Wallace, the Court of Appeals found that the Supreme Court's decision in Arthur Andersen was not directly applicable because it concerned paragraph (b) rather than paragraph (c) of Section 1512.   Moreover, paragraph (b) of the statute includes the word "knowingly" while paragraph (c) does not.  Judge Wallace then concluded that it was sufficient for the trial court to have instructed the jury that "corruptly" meant acting with "consciousness of wrongdoing".  The trial court was not required to use the words "evil" or "wicked".  Judge Wallace, however, declined to provide a comprehensive definition of "corruptly" in Section 1512(c), finding that the parties had not raised that question.

The case is a good reminder of the breadth of Section 1512(c) and the old saying "it's not the crime, it's the cover-up".

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30172DBAB0084D3A8F39D7AF0A8E79BC.ashx Keith Paul Bishop
Partner at Allen Matkins
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