By: Christopher D. Carusone
Franklin Brown, Steven Woghin, Lauren Stevens. All three attorneys rose to the top of the in-house counsel ranks at their companies. All three faced unprecedented challenges when their companies came under federal investigation. Most importantly, all three were accused of obstruction of justice in how they handled their companies’ responses to government investigations. As executive vice president and chief legal counsel for Rite-Aid Corp., Brown was accused of attempting to deceive government investigators and the law firm hired to perform an internal investigation into the manipulation of the company’s financial statements by coaching witnesses to lie and backdating contracts. Ditto for Woghin, senior vice president and general counsel of Computer Associates International Inc. As vice president and associate general counsel of GlaxoSmithKline, Stevens was accused (but later exonerated at trial) of concealing evidence and making false statements to the Food and Drug Administration (FDA) investigating the company’s off-label promotion of Wellbutrin.
In light of these cases and others, corporate counsel must understand the difference between advocacy and obstruction when facing government investigations.
Obstruction Under Federal Law
Laws prohibiting obstruction of justice can be found throughout the U.S. Code, depending on the subject matter and regulatory scheme involved. However, many more commonly used statutes prohibiting obstruction generally reside in the Crimes Code, Chapter 73, 18 U.S.C. Section 1501 et seq. These laws apply to federal proceedings before the judiciary, executive departments/agencies, and Congress and are not limited to criminal investigations. Putting aside the more obvious forms of criminality (such as the use of threats/violence, witness intimidation, and jury tampering), the laws most relevant to corporate counsel guiding the company through a federal investigation are those prohibiting tampering with witnesses and physical evidence.
The line between preparing an employee to present the truth to government agents in the best possible light and coaching that employee to lie or conceal the truth can be thin and dangerous. Federal obstruction statutes broadly criminalize any “endeavor” intended to “influence, obstruct, or impede” a federal investigation or proceeding. Exempted from criminal liability, phrased as an affirmative defense, is conduct in which the “defendant’s sole intention was to encourage, induce, or cause another person to testify truthfully.” See Section 1512(e). Examples of those who crossed the line include one corporate counsel who coached a witness to misrepresent a particular transaction he was involved with as an “investment” rather than the “repayment” of a debt. See United States v. Lonich, 23 F.4th 881 (9th Cir. 2022).
A somewhat clearer picture of the actus reus of obstruction emerges when the government demands records, data and other physical evidence. In this context, anyone who “alters, destroys, mutilates, conceals, covers up, falsifies, or makes false entries in any record, document, or tangible object intending to impede, obstruct, or influence” a federal investigation is guilty of obstruction. See Section 1519. Federal courts have held that this section is not limited to preexisting records but also to the creation of new records or correspondence containing false information.
Obstruction Under Pennsylvania Law
Laws prohibiting obstruction under Pennsylvania law are located in the Crimes Code, Chapter 51, 18 Pa.C.S. Section 5101 et seq, while laws prohibiting tampering are located in Chapter 49, 18 Pa.C.S. Section 4910. Like their federal counterparts, these laws prohibit obstruction and tampering in all the obvious ways (such as through violence, intimidation, and bribery).
However, there are some key differences. First, in the absence of force, violence, physical interference or obstacle, acts of obstructing the administration of law or other governmental function are limited to “breach of official duty” (by government officials) and “any other unlawful act” (meaning acts that are specifically defined as unlawful). Section 5101. Second, tampering with a witness under Pennsylvania law is limited to acts of intimidation, which does not include merely inducing a witness to lie to investigators. Finally, the Superior Court has held that statutes prohibiting obstruction and tampering with physical evidence (Section 4910) were unconstitutionally overbroad as applied to attorneys who failed to timely deliver physical evidence to the government that came into their possession. See Commonwealth v. Stenhach, 514 A.2d 114 (Pa.Super. 1986).
Safe Harbor for Lawyers?
Legal advice is protected by the First Amendment. Indeed, federal statutes prohibiting obstruction do not “punish the providing of lawful, bona fide, legal representation services in connection with or anticipation of an official proceeding.” This safe harbor includes counseling one’s client to withhold documents the lawyer believes in good faith are privileged. However, as one court put it, “a criminal lawyer has no license to act as a lawyer-criminal.” See United States v. Cintolo, 818 F.2d 980, 990 (1st Cir. 1987). After all, lawyers are officers of the court and not per se exempt from prosecution for obstruction simply because of their profession.
Although seemingly sticky, courts seem to have little trouble identifying true obstruction disguised as legal advice. Perhaps this is because true obstruction—such as coaching witnesses to lie or falsify records—is so clearly outside the boundaries of permissible advocacy. The fact that legal advice is generally privileged from disclosure offers little protection, particularly in a corporate context where the privilege can so easily be waived by existing or subsequent leadership looking to pin the blame on the corporate counsel who should have known better.
Recommendations
Litigation Hold
The first order of business when confronted with a grand jury subpoena or civil investigative demand is to issue a litigation hold to prevent the destruction of evidence, particularly evidence in digital form. Much of this can be accomplished through the company’s IT department. However, attention must also be paid to records in paper form, as well as individual records and data kept by employees (in-office filing cabinets and hard drives) who were/are involved in the matter now under investigation.
Employ Outside Counsel
Given the potential for personal peril, the best option for corporate counsel when faced with a government investigation is to outsource the headache to experienced white-collar defense counsel to represent the company. This is not to say that outside counsel needs to handle every encounter with regulators. Indeed, in many instances, corporate counsel (particularly those working in highly regulated industries) is the best choice to efficiently handle government regulators in routine matters. However, when faced with a full-blown government investigation, relying on the advice of outside counsel is not only best for the company, but it is also best for in-house counsel who may later need an advice-of-counsel defense.
Employ Separate Counsel for Employees
Corporate counsel should think twice before personally preparing employees for interviews with investigators. The biggest problem with taking on such a task is the risk that employees and investigators may perceive corporate counsel’s preparation (even if performed perfectly) as an attempt to obstruct the investigation. The better course is for corporate counsel to limit their communications to the company’s outside counsel, who can then communicate with counsel for employees through a joint defense agreement. Cycling corporate counsel’s input into witness preparation through multiple layers of attorney-client privilege does not guarantee that it will remain confidential, but it certainly increases the odds.
Christopher D. Carusone is a partner in the Pittsburgh and Harrisburg offices of Cohen Seglias Pallas Greenhall & Furman. As a former Pennsylvania chief deputy attorney general, Carusone is a member of the firm’s white-collar defense and internal investigations group. He can be reached at ccarusone@cohenseglias.com and 412-227-5951.