Obstruction of (Contemplated) Justice

The more familiar obstruction statutes ' in particular 18 U.S.C. ”1503, 1505 and 1512 ' would seem ill-suited to the facts set out above. In addition to requiring that the defendant act either “corruptly” or “by threat or force,” these statutes require that the obstructive conduct have some reasonable connection to a judicial proceeding. Section 1505 proscribes obstruction of “the due and proper administration of the law under which any pending proceeding is being had,” and Section 1512(c) proscribes corruptly obstructing an “official proceeding.”

Even the general “Omnibus Clause” of '1503, described variously as a “catchall” obstruction statute that “embraces the widest variety of conduct that impedes the judicial process,” requires that the defendant's conduct somehow impede the “due administration of justice.” See, United States v. Kumar, 617 F.3d 612, 620 (2nd Cir. 2010). In fact, courts have interpreted '1503 to impose a “nexus” requirement: some relationship in time, causation or logic between the obstructive act and the judicial proceeding. United States v. Aguilar, 515 U.S. 593, 599 (1995). This nexus requirement, in turn, has been articulated as an endeavor having “the natural and probable effect” of interfering with the due administration of justice. Id. While it is true that a conviction for conspiracy to obstruct justice under these statutes would not require a judicial proceeding to exist at the time of the offense, a defendant must have “directly intended to prevent or otherwise obstruct the processes of a specific judicial proceeding in a way that is more than merely speculative.” United States v. Vaghela, 169 F.3d 729, 734-35 (11th Cir. 1999); see also, United States v. Yielding , 657 F.3d 688, 712 (8th Cir. 2011) (noting the nexus requirement's application to cases under Section 1512).

Elimination of the Nexus Requirement

Returning to the Kernell fact pattern, prosecutors can ' and in several recent cases have ' leveled so-called “anticipatory” obstruction of justice charges under 18 U.S.C. '1519, in a trend that has potentially stark implications for companies and their counsel in addressing compliance matters, internal and external investigations, and day-to-day operational activities that fall within the ambit of federal regulation or oversight.

Known also as the “anti-shredding provision” of the Sarbanes-Oxley Act of 2002, '1519 was enacted in response to the Enron collapse and substantially broadened the more familiar obstruction statutes by excluding any requirement that the allegedly obstructive conduct be done in relation to any pending proceeding. The statute ' which over the last two years has been validated against vagueness claims and clarified by several appellate courts ' provides:

Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case , shall be fined under this title, imprisoned not more than 20 years, or both. (Emphasis added.)

As courts have recognized, the elements for an offense under '1519 include: 1) knowingly, 2) destroying or concealing a record or document, 3) with the intent to impede or obstruct any matter (including those contemplated but not yet initiated) within the jurisdiction of the United States. United States v. Powell, 680 F.3d 350, 355-56 (4th Cir. 2012).

The breadth of this statute in contrast to the other obstruction statutes, and its potential application in the business setting, are striking, if for no other reason than the relative obscurity of '1519. Notable aspects of '1519 that relieve the government of several burdens include the following:

• The defendant need not know a matter was pending or within federal jurisdiction. Instead, the “knowingly” element refers only to the obstructive conduct. United States v. Moyer, 674 F.3d 192, 208 (3rd Cir. 2012). The federal nature of the statute's prohibition is a jurisdictional requirement, but not a substantive element. United States v. McRae, 702 F.3d 806, 834 (5th Cir. 2012).
• There is no nexus requirement. Given that an investigation or matter within federal jurisdiction need not be initiated or even pending at the time of the obstructive conduct, the government need not prove any connection between the alleged obstructive conduct and the federal matter. Moyer, at 209; United States v. Gray, 692 F.3d 514, 519-20 (6th Cir. 2012).
• Materiality is not an element. As an example, falsification through omission from a log or report can support a conviction, without proof of the materiality of the omission. Powell, at 356; Moyer, at 207-08.
• Importantly, the reduction in prosecutorial hurdles and broadening of the statute was not accompanied by a lighter maximum sentence. Section 1519, like '1512, carries a penalty of up to 20 years' imprisonment, compared with the 10-year maximum under '1503 and the five-year maximum under '1505.

Recent Charges

In the wake of the guidance provided by the federal appellate decisions affirming the distinctions between '1519 and the other obstruction statutes in recent years, prosecutors across the country have been increasingly relying on this anti-shredding provision to file charges based on a variety of fact patterns well outside the typical norm for obstruction cases. While some recurring uses have emerged (e.g., prosecutions for falsification of records in connection with environmental and healthcare criminal investigations), the diversity of fact patterns in charged cases underscores the breadth of chargeable conduct under the statute.

A sampling of '1519 cases filed within the last year includes:

• The removal by two men of a laptop computer and a backpack containing fireworks from the room of suspected Boston Marathon bomber Dzhokhar Tsarnaev.
• A pest control company's alteration of company service reports regarding the application of an EPA-registered pesticide.
• A healthcare center CFO's submission of a falsified document in an attempt to justify her siphoning of company funds to a personal bank account.
• The creation of false records by operators of a biofuel company involved in a federal renewable fuel program.
• A civilian Navy employee's presentation of a falsified lease to support his claim for housing benefits to which he was not entitled.
• Concealment of customer files by a pain therapy center employee in connection with an investigation into the distribution of scheduled narcotics.
• The covering up of a GPS device located on a truck for a waste transportation and disposal business.

One notable development ' and one open question in interpreting the scope of '1519 ' involves just how far courts will extend the term “tangible object.” For example, in a pending case in Utah, a man stands charged with the excavation, removal and subsequent destruction of a three-toed dinosaur track from the Hell's Revenge area. It is far from clear that the anti-shredding provision of the Sarbanes-Oxley Act was drafted with fossils on U.S. Bureau of Land Management property in mind. Accordingly, the defendant in that case will no doubt be closely watching the recently granted cert petition in the case of John Yates, a commercial fisherman who was cited by the Florida Fish & Wildlife Commission for having 72 undersized red grouper on his boat. But when he returned to shore, there were only 69 on board. He was accused of throwing three of the fish back in the ocean ' “shredding the evidence” under '1519. Yates' conviction was affirmed last year, with the court noting that the statutory term “tangible objects” “unambiguously applies to fish.” United States v. Yates, 733 F.3d 1059, 1064 (11th Cir. 2013).

Conclusion

Whether you are in-house or external counsel, the arrival of '1519 on the scene is a matter that must clearly be factored into the calculus when advising clients at the earliest stages of an internal investigation, external investigation or other compliance matter. While counsel may not recommend (and clients may resist) the issuance of a legal hold notice unless and until a government investigation or civil litigation has been initiated, application of '1519 in a variety of settings is actively expanding the reach of obstruction statutes to criminalize conduct that at first blush may appear to fall well outside the reach of criminal law.

Any action undertaken to interfere with any matter within federal jurisdiction, whether pending or contemplated, could potentially run afoul of '1519's prohibitions. Therefore, corporations and the lawyers who advise them should understand and clearly communicate at as early a stage as possible that if an employee alters or destroys evidence, or withholds information from an investigation for fear that full disclosure may implicate a rule or regulation within federal jurisdiction, liability for the individual and the organization may attach.

Jeffrey M. Hanna is an Associate at McGuireWoods LLP, resident in its Richmond, VA, office. He can be reached at [email protected].

Imagine you are a federal prosecutor and the following fact pattern lands on your desk: A college student gains unauthorized access to the e-mail account of a candidate for federal office. The student changes the e-mail account password and then shares the new password on an Internet message board. Within one day, fearing a possible (but not-yet initiated) investigation, he takes steps to delete information from his computer related to his unauthorized access. Based on these facts, what charges would you consider? Identity theft in violation of 18 U.S.C. '1028? Wire fraud in violation of 18 U.S.C. '1343? A charge under the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. '1030?

Each of those charges seems like a logical choice, in no small part because they were in fact charged in the case from which the fact-pattern was taken. See, United States v. Kernell , 667 F.3d 746 (6th Cir. 2012). But what about obstruction of justice, given that the alleged deletion of the information occurred before any government investigation or judicial proceeding had been initiated? Just such a charge was brought under 18 U.S.C. '1519, a relatively obscure but potentially powerful statute that has considerably expanded the scope of obstruction of justice. It is seeing increased use, and could prove to be a powerful tool in the federal prosecutor's toolbox. Reflective of its growing attention, as discussed further below, it is the subject of a pending U.S. Supreme Court case that will examine just how broadly this statute may reach.

Predecessor Obstruction Statutes

The more familiar obstruction statutes ' in particular 18 U.S.C. ”1503, 1505 and 1512 ' would seem ill-suited to the facts set out above. In addition to requiring that the defendant act either “corruptly” or “by threat or force,” these statutes require that the obstructive conduct have some reasonable connection to a judicial proceeding. Section 1505 proscribes obstruction of “the due and proper administration of the law under which any pending proceeding is being had,” and Section 1512(c) proscribes corruptly obstructing an “official proceeding.”

Even the general “Omnibus Clause” of '1503, described variously as a “catchall” obstruction statute that “embraces the widest variety of conduct that impedes the judicial process,” requires that the defendant's conduct somehow impede the “due administration of justice.” See, United States v. Kumar , 617 F.3d 612, 620 (2nd Cir. 2010). In fact, courts have interpreted '1503 to impose a “nexus” requirement: some relationship in time, causation or logic between the obstructive act and the judicial proceeding. United States v. Aguilar , 515 U.S. 593, 599 (1995). This nexus requirement, in turn, has been articulated as an endeavor having “the natural and probable effect” of interfering with the due administration of justice. Id. While it is true that a conviction for conspiracy to obstruct justice under these statutes would not require a judicial proceeding to exist at the time of the offense, a defendant must have “directly intended to prevent or otherwise obstruct the processes of a specific judicial proceeding in a way that is more than merely speculative.” United States v. Vaghela , 169 F.3d 729, 734-35 (11th Cir. 1999); see also, United States v. Yielding , 657 F.3d 688, 712 (8th Cir. 2011) (noting the nexus requirement's application to cases under Section 1512).

Elimination of the Nexus Requirement

Returning to the Kernell fact pattern, prosecutors can ' and in several recent cases have ' leveled so-called “anticipatory” obstruction of justice charges under 18 U.S.C. '1519, in a trend that has potentially stark implications for companies and their counsel in addressing compliance matters, internal and external investigations, and day-to-day operational activities that fall within the ambit of federal regulation or oversight.

Known also as the “anti-shredding provision” of the Sarbanes-Oxley Act of 2002, '1519 was enacted in response to the Enron collapse and substantially broadened the more familiar obstruction statutes by excluding any requirement that the allegedly obstructive conduct be done in relation to any pending proceeding. The statute ' which over the last two years has been validated against vagueness claims and clarified by several appellate courts ' provides:

Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case , shall be fined under this title, imprisoned not more than 20 years, or both. (Emphasis added.)

As courts have recognized, the elements for an offense under '1519 include: 1) knowingly, 2) destroying or concealing a record or document, 3) with the intent to impede or obstruct any matter (including those contemplated but not yet initiated) within the jurisdiction of the United States. United States v. Powell , 680 F.3d 350, 355-56 (4th Cir. 2012).

The breadth of this statute in contrast to the other obstruction statutes, and its potential application in the business setting, are striking, if for no other reason than the relative obscurity of '1519. Notable aspects of '1519 that relieve the government of several burdens include the following:

• The defendant need not know a matter was pending or within federal jurisdiction. Instead, the “knowingly” element refers only to the obstructive conduct. United States v. Moyer , 674 F.3d 192, 208 (3rd Cir. 2012). The federal nature of the statute's prohibition is a jurisdictional requirement, but not a substantive element. United States v. McRae , 702 F.3d 806, 834 (5th Cir. 2012).
• There is no nexus requirement. Given that an investigation or matter within federal jurisdiction need not be initiated or even pending at the time of the obstructive conduct, the government need not prove any connection between the alleged obstructive conduct and the federal matter. Moyer, at 209; United States v. Gray , 692 F.3d 514, 519-20 (6th Cir. 2012).
• Materiality is not an element. As an example, falsification through omission from a log or report can support a conviction, without proof of the materiality of the omission. Powell, at 356; Moyer, at 207-08.
• Importantly, the reduction in prosecutorial hurdles and broadening of the statute was not accompanied by a lighter maximum sentence. Section 1519, like '1512, carries a penalty of up to 20 years' imprisonment, compared with the 10-year maximum under '1503 and the five-year maximum under '1505.

Recent Charges

In the wake of the guidance provided by the federal appellate decisions affirming the distinctions between '1519 and the other obstruction statutes in recent years, prosecutors across the country have been increasingly relying on this anti-shredding provision to file charges based on a variety of fact patterns well outside the typical norm for obstruction cases. While some recurring uses have emerged (e.g., prosecutions for falsification of records in connection with environmental and healthcare criminal investigations), the diversity of fact patterns in charged cases underscores the breadth of chargeable conduct under the statute.

A sampling of '1519 cases filed within the last year includes:

• The removal by two men of a laptop computer and a backpack containing fireworks from the room of suspected Boston Marathon bomber Dzhokhar Tsarnaev.
• A pest control company's alteration of company service reports regarding the application of an EPA-registered pesticide.
• A healthcare center CFO's submission of a falsified document in an attempt to justify her siphoning of company funds to a personal bank account.
• The creation of false records by operators of a biofuel company involved in a federal renewable fuel program.
• A civilian Navy employee's presentation of a falsified lease to support his claim for housing benefits to which he was not entitled.
• Concealment of customer files by a pain therapy center employee in connection with an investigation into the distribution of scheduled narcotics.
• The covering up of a GPS device located on a truck for a waste transportation and disposal business.

One notable development ' and one open question in interpreting the scope of '1519 ' involves just how far courts will extend the term “tangible object.” For example, in a pending case in Utah, a man stands charged with the excavation, removal and subsequent destruction of a three-toed dinosaur track from the Hell's Revenge area. It is far from clear that the anti-shredding provision of the Sarbanes-Oxley Act was drafted with fossils on U.S. Bureau of Land Management property in mind. Accordingly, the defendant in that case will no doubt be closely watching the recently granted cert petition in the case of John Yates, a commercial fisherman who was cited by the Florida Fish & Wildlife Commission for having 72 undersized red grouper on his boat. But when he returned to shore, there were only 69 on board. He was accused of throwing three of the fish back in the ocean ' “shredding the evidence” under '1519. Yates' conviction was affirmed last year, with the court noting that the statutory term “tangible objects” “unambiguously applies to fish.” United States v. Yates , 733 F.3d 1059, 1064 (11th Cir. 2013).

Conclusion

Whether you are in-house or external counsel, the arrival of '1519 on the scene is a matter that must clearly be factored into the calculus when advising clients at the earliest stages of an internal investigation, external investigation or other compliance matter. While counsel may not recommend (and clients may resist) the issuance of a legal hold notice unless and until a government investigation or civil litigation has been initiated, application of '1519 in a variety of settings is actively expanding the reach of obstruction statutes to criminalize conduct that at first blush may appear to fall well outside the reach of criminal law.

Any action undertaken to interfere with any matter within federal jurisdiction, whether pending or contemplated, could potentially run afoul of '1519's prohibitions. Therefore, corporations and the lawyers who advise them should understand and clearly communicate at as early a stage as possible that if an employee alters or destroys evidence, or withholds information from an investigation for fear that full disclosure may implicate a rule or regulation within federal jurisdiction, liability for the individual and the organization may attach.

Jeffrey M. Hanna is an Associate at McGuireWoods LLP, resident in its Richmond, VA, office. He can be reached at [email protected].