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December 2012

Spoliation by In-House Counsel May Result in Criminal Prosecution

Discovery sanctions are never ideal, but criminal prosecution is worse.  Recent trends indicate that federal prosecutors may use 18 U.S.C. § 1519 to prosecute in-house counsel who participate in the destruction or concealment of evidence during (or even before) a government investigation.  Section 1519 provides as follows:

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.

To obtain a conviction under this Section, federal prosecutors must prove: 1) the defendant knowingly altered, destroyed, mutilated, concealed, covered up, falsified, or made a false entry as to any record, document, or tangible object; 2) in doing so, the defendant intended to impede, obstruct, or influence a government investigation or administration of a matter; and 3) the investigation or administration of a matter falls within the jurisdiction of a federal agency or department.  See United States v. Yielding, 657 F.3d 688 (8th Cir. 2011).

For example, this statutory provision was applied in a criminal case against the former vice president and associate general counsel of a pharmaceutical company in United States v. Stevens, 771 F. Supp. 2d 556 (D. Md. 2011).  In Stevens, the prosecution alleged that the defendant obstructed an FDA investigation by withholding and concealing documents.  In her defense, the defendant asserted that she relied in good faith on the advice of counsel when responding to the FDA’s inquiry.  The court found that the advice of counsel defense negated the specific intent required by 18 U.S.C. § 1519.

Awareness of 18 U.S.C. § 1519 and its requirement of specific intent can help in-house counsel avoid prosecutorial cross-hairs.  A recent article discussing the implications of 18 U.S.C. § 1519 for corporate counsel and executives explains that routine document destruction policies, in the absence of any intent to impede an ongoing or impending government investigation, are permissible.  Further, implementation of formal policies allowing for the monitoring of routine document destruction by counsel or compliance officers, as well as a policy requiring approval by counsel or compliance officers before routine document destruction, is advisable.  Finally, although reliance on the advice of outside counsel can provide a defense to allegations of improper document handling related to a governmental investigation, companies must still employ good faith and good judgment in choosing outside counsel and in following outside counsel’s advice.

For more on this topic, visit the ABA’s Corporate Counsel page, which links to the above-mentioned article.