Opposition Brief — Arthur Andersen LLP v. United States

() } Supreme Coun, US |

? FILED

“

DEC 8 ~ 2004

Jn the Supreme Court of the United States

ARTHUR ANDERSEN LLP, PETITIONER

Vv.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

PAUL D. CLEMENT

Acting Solicitor General

Counsel of Record

CHRISTOPHER A.WRAY

Assistant Attorney General

ELIZABETH D. COLLERY

Attorney

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTIONS PRESENTED

1. Whether the jury instructions correctly defined the

term “corruptly persuades” in 18 U.S.C. 1512(b)(2)(A) and

(B) to mean to persuade with an improper purpose to sub-

vert, undermine, or impede the fact-finding ability of an of-

ficial proceeding.

2. Whether petitioner's conviction for corruptly persuad-

ing another to destroy evidence in violation of Section

1512(b)(2)(A) and (B) required proof that petitioner knew its

conduct was wrongful.

3. Whether the district court plainly erred in failing to

instruct the jury that a conviction under Section 1512(b)(2)

(A) and (B) required proof that petitioner intended to ob-

struct a future government investigation it viewed as likely.

4. Whether the court of appeals erred in concluding that,

even if Section 1512(b)(2)(A) and (B) required proof that pe-

titioner intended to obstruct a particular official proceeding,

the failure to give such an instruction here was harmless.

5. Whether petitioner preserved its argument that an in-

formal SEC investigation is not an “official proceeding” un-

der 18 U.S.C. 1515(ay(1(C).

(I)

TABLE OF CONTENTS

Paye

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TABLE OF AUTHORITIES

Cases:

Bryan vy. United States, 524 US. 184 (1998) oe eeeeeees 22, 233

Cheek vy. United States, 498 U.S. 192 A991) occ 23

Lewy v. Remington Arms Co., lne., S365 F.2d

Ee 2x

Neder vy. United States, 527 U.S. 1 1999) cece ecceeeeeees 27

Pettibone v. United States, 148 U.S. 197 (1898) oo. ve

Ratzlaf vy. United States, 510 U.S. 135 (1994) oe 22, 23

Rice v. United States, 356 F.2d 709 (sth Cir.

ALATA 29

United States v. Aguilar, 515 U.S. 598 (1995) ........... 23, 2h, 26

United States vy. Applewhaite, 195 F.3d 679

EEE ce 20

United States vy. Brady, 168 F.3d 574 (st Cir.

SESS i

United States v. Browning, lne., 572 F.2d 720 0th

Cir.), cert. denied, 439 US, $22 (V9TS) ...cccccccceccceeenceeeeees 29

l'nited States v. Conneaut Indus., Inc., 852 F.

re 26

United States v. Davis, 183 F.3d 231 (3d Cir.

accra ecercrnsnnenenesenesnenenenenses 20

United States v. Farrell, 126 F.3d 484 (3d Cir.

SITTIE ceidentteeertentsderietetienmnnsitetessemesescnsoncessssssvecosccsescsecsccevecsazese 17, 19, 20

United States v. Frankhauser, 80 F.3d 641

Sr 24, 26, 27

(IIT)

IV

Cases—Continued:

United States v. Fruchtman, 421 F.2d 1019 (6th

Cir. 1970), cert. denied, 400 US. 849 (1970) ee eeeeees

United States v. Gravely, 340 F.2d 1156 (4th Cir.

1988)

United States v. Haas, 583 F.2d 216 (Sth Cir.

1978), cert. denied, 440 U.S. 981 (1979) oc. cccccccceeeeeeeeeee

United States v. Hernandez, 730 F.2d 895 (2d Cir.

TETTTIED ‘xchisninieninsicciRaitecsieseniiiineidiiaiiiadibitiaeadiiabinis

United States v. Howard, 569 F.2d 1331 (5th Cir.),

cert. denied, 439 U.S. 834 (1978) ......cccsssesesesesnensnenssneneees

United States v. Jackson, 607 F.2d 1219 (8th Cir.

1979), cért. denied, 444 U.S. 1080 (1980) .......0.........

United States v. Kelley, 36 F.3d 1118 (D.C. Cir.

_ == '

United States vy. Khatami, 230 F.3d 907 (9th Cir.),

cert. denied, 535 U.S. 10GR (2002) 0.0... cccecceeeecenseeeeeeees

United States v. Leo, 941 F.2d 181 (3d Cir. 1991) ..........

l'nited States v. Lovasco, 431 U.S. 783 (1977) ........ccc000-

United States v. Morrison, 98 F.3d 619 (D.C. Cir.

1996), cert. denied, 520 U.S. 1131 (1997) oc... cceeeeeeees

United States v. Mullins, 22 F 3d 1365 (6th Cir.

United States v. O'Kane, 86 Fed. Appx. 447 (2d Cir.),

cert. denied, 125 S. Ct. 38 (2004) oo... ccccccccecesceseceseeseeeseees

United States v. Partin, 552 F.2d 621 (5th Cir.),

cert. denied, 434 U.S. 903 (1977) .........sscessssssesssesesnsenes

United States v. Poindexter, 951 F.2d 369 (D.C.

Cir. 1991), cert. denied, 506 U.S. 1021 (1992) ...........

United States v. Shively, 927 F.2d 804 (5th Cir.),

cert. denied, 501 U.S. 1209 (1991)

11

United States v. Shotts, 145 F.3d 1289 (11th Cir.

1998), cert. denied, 525 U.S. 117 (1999)...

United States v. Tackett, 113 F.3d 603 (6th Cir.

1997), cert. denied, 522 U.S. 1089 (1998) ........cccccceeeeeeees

United States v. Thompson, 76 F.3d 442 (2d Cir.

GED ccsssssssssssemnasescsnenseememmsenmmnsennssanemmanenannnenscemannnneins

- 16.

- V

Cases—Continued: - Page

United States v. Wells, 519 U.S. 482 (1997) 19

United States vy. Williams, 504 U.S. 36 (1992) ............... 25, 29

Constitution, statutes and regulation:

U.S. Const. Amend. V -- 19,20

Anti-Drug Abuse Act of 1988, Pub. L. No. 100-690,

§ 702%a)-(c), 102 Stat. 4181 ......... 16

Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204,

§ 802(a), 116 Stat. 800 13

Victim Witness Protection Act of 1982, Pub. L.

No. 97-291, § 4(a), 96 Stat. 1248 (18 U.S.C. 1512) .0000...... 15, 18

_18 U.S.C. 1508 (1976) 14, 15, 16, 17, 18, 21, 23, 25

18 U.S.C. 1505 14, 18, 20, 21

Ie 9, 15, 16, 17, 22, 23, 26, 30

| ee ee passim

18 U.S.C, 1512(b)(2) (2000) ......... passim

18 U.S.C. 1512(b2)( A) (2000) once ecccceeeeeee 2, 9, 12, 21, 26, 27

18 U.S.C. 1512(b)( 2B) (2000) oo 2, 9, 10, 12, 21, 26, 27

as I ada etiataaiin acai 19

18 U.S.C. 1512(c) (Pub. L. No. 107-204, Tit. XI,

§ 1102, 116 Stat. 807) - 14,18

18 U.S.C. 1512(e)(1) (2000) oc ececeseeeeees 11, 26

18 U.S.C. 1512(f) (2000) 200... .ccccececececeees = 26

18 U.S.C. 1515 ..... , 18

TEI I NT ne aE IEEE 28, 30

18 U.S.C. 1515(b) _ cieehdadadadaaentabaiadaasaasintiiiiain 14

18 U.S.C. 1519 sniheeibaineeainasienaniiatataimmeiaia 13, 18

I Cities reetiniciaeeiataietceadeeteaaaiinidecemnem hited 13

18 U.S.C. 1520(a\(1) ....... satenneantnteeneneanamaninesmmmmasanss 13

fe ;, - -_ 13

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17 C.F.R.:

UU i 30

Section 201.202(aX9) . 7 - 30

SUT UTITTUTUNINI seietcinnstestesitaeubicneiinsiietieihintiaienatitetitne a 30

Vi

Miscellaneous:

Christopher v. Cotton, Document Retention Programs

for Electronic Records: Applying a Reasonableness

Standard to the Electronic Era, 243. Corp. L. 417

CRED cccencsscresmmsseesemnenenmnmnemme

134 Cong. Ree. 517,369 (daily ed. Nov. 10, 1988) ...............

142 Cong. Ree. (daily ed. Sept. 27, 1996):

Br. BD LE ecencesccscsczsersesssninsssesecsnsseenassnensnnesnssansnasnsnsssssnsqssssseusens

SB 8 BB oaccccceccesesscesssssszenssssnssssnesnsnssnssssnssasssenssnsnesnesessessensseans

Page

In the Supreme Court of the Gnited States

No. 04-368

ARTHUR ANDERSEN LLP, PETITIONER

v.

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the court of appeals (Pet. App. la-34a) is

reported at 374 F.3d 281.

JURISDICTION

The judgment of the court of appeals was entered on June

16, 2004. The petition for a writ of certiorari was filed on

September 14, 2004. The jurisdiction of this Court is invoked

under 28 U.S.C. 1254(1).

STATEMENT

Following a jury trial in the United States District Court

for the Southern District of Texas, petitioner was convicted

of corruptly persuading its employees to destroy documents

with an intent to impair their availability in a United States

(1)

Securities and Exchange Commission (SEC) investigation, in

violation of 18 U.S.C. 1512(b)(2)(A) and (B) (2000). Peti-

tioner was sentenced to five years of probation, fined

$500,000, and ordered to pay a special assessment of $400.

The court of appeals affirmed. Pet. App. la-34a.

1. The trial evidence detailed the involvement of peti-

tioner, an international auditing and consulting firm, and its

client, the Enron Corporation, in an accounting debacle that

left Enron in bankruptcy in a matter of weeks. The evidence

showed that, to prevent Enron’s and its own financial mis-

deeds and aggressive accounting from being uncovered by

the SEC, petitioner instructed its employees to undertake an

unprecedented campaign of document destruction.

At the time of Enron’s collapse, petitioner was already in

a precarious position with the SEC. In June 2001, the com-

pany settled an SEC action relating to its audit work for

Waste Management Corporation, paying a record $7 million

fine. The SEC “censure/d]” petitioner and entered a “cease

and desist” order enjoining any future securities law viola-

tions, effectively placing petitioner under a form of “proba-

tion.” Pet. App. 4a, lla-12a; Tr. 1764-1765. In addition, in

1998, the SEC had issued an informal request, followed by a

formal subpoena, for records relating to petitioner’s audit

work for Sunbeam Corporation. Tr. 448-455. In July 2001,

the SEC filed an amended complaint against five Sunbeam

officers and the lead Andersen partner who worked on the

Sunbeam audit, contending that Sunbeam’s financial state-

ments were materially false or misleading. Pet. App. 4a, 11a;

Tr. 458. Because of these two pre-existing matters, peti-

tioner was very familiar with SEC enforcement proceedings

and anxious to avoid any further sanction or censure. Gov't

C.A. Br. 27.

Andersen audited the publicly-filed financial statements of

Enron, a sophisticated trading and investment conglomerate

with a global energy trading business. Pet. App. 3a. Enron

employed accounting practices that were highly aggres-

sive, stretching Generally Accepted Accounting Principles

(GAAP) to their outermost limits. /bid.; Gov't C.A. Br. 6.

Although petitioner knew of Enron’s accounting practices

and classified it as a “high risk” client, the two companies

had an unusually close relationship. Pet. App. 3a; Tr. 1733-

1734. David Duncan, who led Andersen’s “Enron engage-

ment team,” was known as a strong “client advocate,” and

Andersen bent over backward to accommodate Enron, its

largest domestic client. Gov’t C.A. Br. 5. For example,

when Enron disagreed with the advice it received from a top

Andersen accountant, petitioner removed him, explaining

that he was “not sufficiently on board with Enron’s ac-

counting attitude.” Pet. App. 3a; Tr. 1173. Petitioner’s En-

ron engagement team had more than 100 accountants and

the firm billed Enron approximately $58 million in the year

2000. Pet. App. 3a.

In the late summer to early fall of 2001, petitioner’s man-

agement uncovered serious accounting problems at Enron

that caused it to anticipate imminent SEC action and civil

litigation. First, in September 2001, high level Andersen

personnel discovered that its Enron engagement team had

approved the use of an improper accounting technique for

four Raptors, a group of special purpose entities (SPEs) that

Enron used to engage in “off balance sheet” activities. Pet.

App. 3a-4a; Gov't C.A. Br. 6. To conceal the fact that some of

the Raptors had experienced sharp losses, petitioner allowed

Enron to aggregate the four entities even though peti-

tioner’s own accounting experts (the Professional Standards

Group) deemed that technique a “black and white” violation

of GAAP. Pet. App. 4a; Gov’t C.A. Br. 7; Tr. 2290-2291. Sec-

ond, while examining the Raptor issue, petitioner also deter-

mined that Enron and petitioner had made a separate $1.2

billion accounting error in Enron’s favor, which would re-

quire, at a minimum, that Enron reduce its outstanding

shareholder equity by $1.2 billion in its quarterly SEC filing,

due to be announced in mid-October 2001. Pet. App. 6a;

Gov't C.A. Br. 7-8.

While Andersen's senior management pondered these ac-

counting issues with rising concern, the public’s awareness of

Enron’s problems was also growing. On August 14, 2001,

Jeffrey Skilling, Enron’s Chief Executive Officer, resigned

unexpectedly, causing widespread speculation about finan-

cial problems at Enron and further depressing the already

diminished value of Enron’s stock. Pet. App. 4a; Gov’t C.A.

Br. 8. On August 28, 2001, after a Wall Street Journal article

suggested improprieties at Enron, the SEC opened an in-

formal investigation of the company. Tr. 656.

In late September, petitioner began to prepare for legal

action (including SEC document requests) relating to Enron.

By September 28, 2001, in-house attorney Nancy Temple

was participating in near-daily meetings or conference calls

with an Enron crisis-response group composed of high-level

Andersen partners. Pet. App. 4a; Gov’t C.A. Br. 9. On Oc-

tober 8, petitioner contacted a litigation partner at the law

firm of Davis, Polk & Wardwell to secure representation in

Enron-related litigation. Pet. App. 5a; Gov’t C.A. Br. 10.

The next day, Temple discussed the Enron situation with

senior Andersen in-house attorneys. Her meeting notes

document Temple’s understanding that “some SEC investi-

gation” was “highly probable”; that even if petitioner’s ac-

counting experts adopted an alternative methodology con-

cerning the Raptors, there was a “reasonable possibility

[that this] will foree a restatement”; and that, absent an

agreement by those experts, there would be a “restatement

and probability of charge of violating cease and desist [order]

in Waste Management.” Gov't C.A. Br. 10; see Pet. App. 5a.

Concerned about the record that the SEC and private liti-

gants would uncover, Temple and others decided to use the

firm’s widely ignored document policy to purge harmful ma-

terial from its files. In broad outline, petitioner’s document

policy required that only information necessary to support

the firm’s final audit opinion be maintained in the audit -

“workpapers.” All other information (including draft docu-

ments and handwritten notes) was to be permanently de-

stroyed upon conclusion of an audit. Gov’t C.A. Br. 11.

On October 10, as a result of conference call discussions

with the Enron crisis team, Michael Odom, a Houston part-

ner, urged Andersen personnel (including many members of

the Enron engagement team) to comply with the document

policy. Odom explained that “if it’s destroyed in the course

of the normal policy and litigation is filed the next day, that’s

great . . . we've followed our own policy, and whatever

there was that might have been of interest to somebody is

gone and irretrievable.” Pet. App. 5a; Gov't C.A. Br. 13.

Two days later, aware that the Enron engagement team

had not been following the Andersen document policy,

Temple urged that it be implemented immediately. Minutes

after designating the Enron matter as a “government

regulatory investigation” in the firm’s computer system,

Temple e-mailed Odom suggesting that he “remind| | the

engagement team of our documentation and retention

policy” and noting that compliance with the policy “will be

helpful.” Gov’t C.A. Br. 14. Temple urged that the Enron

engagement team comply with the policy even though it ac-

tually provided that “in cases of threatened litigation, no

related information will be destroyed” and identified “reg-

ulatory agency investigations (e.g., by the SEC)” as situa-

tions where “material in our files cannot be altered or de-

leted.” GX 160A. Odom forwarded Temple’s e-mail to

Duncan. Pet. App. 5a.

On October 16, 2001, Enron issued a press release an-

nouncing a $1.01 billion charge to earnings. During a confer-

ence call with analysts later the same day, Ken Lay, Enron's

Chief Executive Officer, mentioned that Enron was reducing

6

“shareholder equity” by approximately $1.2 billion.’ Pet.

App. 5a; Gov't C.A. Br. 16. Those announcements engen-

dered intense negative publicity. /bid. The SEC notified

Enron by letter of its existing investigation and requested

various accounting information and documents. Pet. App.

6a. Petitioner received a copy of the SEC letter from Enron

on October 19. [bid.; Gov’t C.A. Br. 17.

Faced with those ominous developments, Temple again

ordered compliance with the firm’s document policy. On Oc-

tober 19, Temple e-mailed a link to the policy to Professional

Standards Group accountant John Stewart, thereby causing

Professional Standards Group accountants to delete hun-

dreds of Enron-related e-mails. Likewise, during an urgent

conference call on October 20 to discuss the SEC inquiry,

Temple twice instructed members of petitioner’s Enron cri-

sis management team to “(mJake sure to follow the [docu-

ment] policy.” Pet. App. 6a; Gov’t C.A. Br. 17-18.

On October 23, Enron held another conference call with

securities analysts, during which Lay declined to answer

certain questions because of “potential lawsuits, as well as

the SEC inquiry.” Tr. 1876, 1878-1879. By that time,

Dunean had concluded that the $1.2 billion accounting error

would require a restatement. Tr. 1846-1850. After Lay’s

October 16 conference call with the analysts, Duncan and the

other Enron engagement partners decided that compliance

with the previously ignored document policy was imperative.

At an “urgent” and “mandatory” meeting, Duncan directed

the entire Enron engagement team to comply with the

| Lay’s press release characterized the charge to earnings as “non-re-

curring,” even though petitioner had informed Enron that that term was

misleading. When Enron refused to delete the word, Temple requested

that a draft Andersen internal memo regarding the matter be revised to

delete any reference to Andersen's conclusion that the press release was

“misleading.” Pet. App. 5a-Ga; Gov't C.A. Br. 14-15.

policy. Pet. App. 6a; Gov’t C.A. Br. 18. Dunean knew when

he issued the order that the SEC had already requested

documents from Enron, and he acted out of concern that

“extraneous material” in petitioner’s files could be used

against it in civil lawsuits and the SEC investigation. Tr.

1887-1888; Gov't C.A. Br. 18-19,

Petitioner’s Enron auditors were instructed to make com-

pliance with the document policy a priority despite the

mounting time pressure they faced in dealing with Enron’s

accounting problems. As a result, the Enron engagement

team made an unprecedented effort to destroy non-workpa-

per documents. Documents were shredded on-site and also

were shipped to petitioner’s main office for buik shredding.

A chart showing the quantity of materials shipped for shred-

ding during 2001 reveals the extraordinary spike in physical

document destruction that coincided with petitioner's

discovery of the SEC inquiry. Pet. App. 6a. In addition to

the destruction of hard copies of documents, tens of thou-

sands of e-mails and other electronic documents were de-

leted, representing at least a three-fold increase over usual

activity. Gov’t C.A. Br. 19-20.

Although petitioner and its legal department recognized

over the next two weeks that an SEC subpoena was inevita-

ble, the company continued to shred Enron documents. The

shredding continued notwithstanding an October 30 letter to

Enron signed by two top SEC Enforcement Division offi-

cials, a fact that signified the SEC’s “unusual” level of con-

cern; petitioner's discovery of two additional major account-

ing problems—one involving suspected fraud by Enron re-

lating to an entity named “Chewco” and the other a large ac-

counting error by petitioner itself; the decision by Enron’s

Board of Directors to form a special committee to investigate

Enron’s accounting; the efforts of Andersen partners to help

Enron’s Board formulate strategy for dealing with the SEC

and restating its finances; the filing of numerous shareholder

lawsuits; and petitioner's receipt of a subpoena for Enron

documents from a private plaintiff. Gov’t C.A. Br. 21-23; Tr.

1372, 5974-5975. Although Duncan and Temple were both

warned during this period about the dangers of destroying

documents, neither took any action to stop the shredding

campaign they had unleashed. Gov't C.A. Br. 23-24.”

Petitioner did not stop shredding until November 9, the

day after the SEC served petitioner’s general counsel in

Chicago with a subpoena for its Enron documents, and En-

ron announced its intent to file a restatement. Only then did

Duncan’s assistant send the engagement team an e-mail en-

titled “Stop the Shredding,” which explained that “[wJe have

been officially served for our documents.” Pet. App. 6a-7a;

Gov't C.A. Br. 24.

Enron filed for bankruptcy on December 2, 2001. In April

2002, Duncan pleaded guilty to obstructing the SEC investi-

gation. Gov't C.A. Br. 24.

2. On March 7, 2002, petitioner was indicted in the

United States District Court for the Southern District of

Texas on one count of corruptly persuading its personnel to

withhold, alter, destroy, or conceal documents with the in-

“ On October 26, 2001, Andersen partner John Riley heard the sound

of shredders operating in the Houston office and warned Duncan that “this

wouldn't be the best time in the world for you guys to be shredding a

bunch of stuff.” Tr. 5901. Duncan agreed that the “worst-case scenario” in

a “situation like this” would be “people * * * destroying a lot of docu-

ments,” but then took no action. Tr. 5900-5901. Six days later, David

Stulb, another Andersen partner, saw Duncan attempting to discard a

document Duncan described to him as “another smoking gun.” Tr. 3667.

Stulb warned Duncan of the need to retain “all of this information” be-

cause of the “strong likelihood” that, inter alia, the SEC and other bodies

would be interested. Tr. 3667. Stulb also informed Nancy Temple that

Duncan needed guidance on document retention. Temple promised to take

care of the matter and then did nothing. Tr. 3668-3674.

tent to impair their availability in an official proceeding, in

violation of 18 U.S.C. 1512(b)(2)(A) and (B)."

At the close of trial, the court instructed the jury about

the statutory term “corruptly persuades” in Section 1512(b),

stating: “The word ‘corruptly’ means having an improper

purpose. An improper purpose for this case is an intent to

subvert, undermine, or impede the fact-finding ability of an

official proceeding.” Pet. App. 48a-49a. The court also

informed the jury that

it is not necessary for the Government to prove that [pe-

titioner] knew its conduct violated the criminal law.

Thus, even if [petitioner] honestly and sincerely believed

that its conduct was lawful, you may find [petitioner]

guilty if you conclude that [petitioner] acted corruptly

and with the intent to make documents unavailable for

an official proceeding.

* 18 U.S.C. 1512(b)(2)(A) and (B) (2000) provide that

|w]hoever knowingly uses intimidation or physical force, threatens, or

corruptly persuades another person, or attempts to do so, or engages

in misleading conduct toward another person, with intent to

* + * * *

(2) cause or induce any person to —

(A) withhold testimony, or withhold a record, document, or

other object, from an official proceeding; [or]

(B) alter, destroy, mutilate, or conceal an object with intent

to impair the object’s integrity or availability for use in an official pro-

ceeding * * *

shall be fined under this title or imprisoned not more than ten years,

or both.

Section 1512 has been amended twice since petitioner's offense and convic-

tion, but the language of Section 1512(b) is unaltered. All references in

this brief to Section 1512 are to former Section 1512, unless otherwise

specified.

10

Id. at 49a. The court’s instructions defined the term “official

proceeding” as “a regulatory proceeding or investigation

whether or not that proceeding had begun or whether or not -

a subpoena had been served.” /bid.’ The jury returned a

guilty verdict.

3. The court of appeals affirmed. Pet. App. la-34a. The

court concluded, inter alia, that the jury instructions cor-

rectly defined the statutory term “corruptly” to mean acting

with an “improper purpose” “to subvert, undermine, or im-

pede the fact-finding ability of an official proceeding.” /d. at

17a-25a. The court noted that the jury instructions accorded

with the way in which the term “corruptly” had been rou-

tinely defined in related obstruction of justice statutes and

with how a majority of circuits interpreted the term in Sec-

tion 1512(b). Jd. at 18a. The court rejected the contention

that the instruction rendered the term “corruptly” superflu-

ous. While Section 1512(b)(2)(B) separately requires that

the defendant act with an “intent to impair the * * * integ-

rity or availability [of an object] for use in an official pro-

ceeding,” the court explained that an intent to “subvert,”

“undermine,” or “impede” an investigation, “implies a degree

of personal culpability beyond a mere intent to make docu-

ments unavailable.” Jd. at 22a. Likewise, the court noted

that the statute’s legislative history supported the district

court’s interpretation. As originally drafted, Section 1512(b)

applied only to coercive conduct (i.e., intimidation, physical

force or threats, or misleading conduct). In adding the term

“corruptly,” which had long been defined as used in Section

1503 to mean “motivated by an improper purpose,” Congress

indicated that it wanted to “include in section 1512 the same

4 Contrary to petitioner’s claim (Pet. 4), the court did not instruct the

jury that “the Government did not have to prove that the ‘corrupt per-

suader’ had any particular proceeding in mind or knew that a future sub-

poena was likely.”

1]

protection of witnesses from non-coercive influence that was

(and is) found in section 1503.” Jd. at 23a. Accordingly, the

Fifth Circuit concluded, since Ҥ 1503 proscribed conduct un-

dertaken ‘with an improper purpose,’ § 1512(b) should also

do so.” Ibid.

The court of appeals also concluded that an alternative in-

struction proposed by petitioner was not substantially cor-

rect. The court noted that petitioner’s proposed instruction,

which stated that a defendant acts “corruptly” only when he

uses an improper means of persuasion or causes another to

violate an independent legal duty, had no support in the

statute or existing law. Pet. App. 23a. And, the court con-

cluded, any error in failing to give petitioner’s instruction

was harmless, because the instruction actually given, like

petitioner’s proposed instruction, already required the jury

to find a level of culpability—an “intent to subvert, under-

mine, or impede”—over and above a mere intent to follow a

document retention policy that would result in making a

document unavailable in an official proceeding. Jd. at 24a-

25a. Likewise, the court rejected petitioner's claim that Sec-

tion 1512(b)(2) requires proof that the defendant knew his

conduct was unlawful, noting the “general rule * * * that

ignorance of the law is no defense.” /d. at 29a.

The court of appeals also concluded that the district court

correctly refused petitioner’s request to instruct the jury

that the official proceeding that petitioner intended to ob-

struct must have been “ongoing * * * or scheduled to be

commenced in the future.” Petitioner grounded that request

in language from United States v. Shively, 927 F.2d 804, 813

(5th Cir.), cert. denied, 501 U.S. 1209 (1991), but the court

found that language to be dicta that “defies the statutory

provision that an official proceeding ‘need not be pending or

about to be instituted at the time of the offense.’” Pet. App.

26a (quoting 18 U.S.C. 1512(e)(1)).

12

Similarly, the court of appeals found no reversible error in

the district court’s failure to instruct the jury that petitioner

could be found guilty only if it sought to obstruct a “particu-

lar proceeding.” Pet. App. 26a-27a. Once again the court

found that petitioner’s proposed instruction “ignores the

statutory language, which does not require a defendant to

know that the proceeding is pending or about to be initi-

ated.” Jd. at 27a. The court also rejected petitioner’s claim

that such an instruction was needed to prevent petitioner's

conviction for innocent maintenance of a records program.

The court found that no such risk existed here because

“(this case was tried on the theory that [petitioner] intended

to undermine, subvert, or impede a proceeding of the SEC,”

not under the theory that a mere “records retention program

violated the Act.” Jbid. Accordingly, the court concluded,

“(t}here was no risk of conviction for innocent maintenance

of a records program.” /d. at 28a.

ARGUMENT

Although petitioner identifies only one question pre-

sented, i.e., whether the jury instructions misinterpreted the

elements of the offense created by 18 U.S.C. 1512(b)(2)(A)

and (B) (Pet. I), the petition discusses five separate issues of

statutory interpretation under that provision. Two of those

issues were not raised or preserved below, and none of the

issues merits certiorari review.

1. a. Petitioner asks this Court to address the meaning

of “corruptly persuades” under Section 1512(b), warning that

the Fifth Circuit's “enormously influential” decision “pos|es]

serious risks of prosecution for virtually every company that

maintains a document retention policy.” Pet. 13.’ In fact,

5 Contrary to petitioner's claims (Pet. 11-12), this case does not in-

volve the validity of “a hundred years” of precedent on “obstruction of

justice.” It concerns the meaning of a particular criminal statute, 18

13

the decision below will have little future impact in prosecu-

tions for document destruction, because Congress recently

adopted a new criminal provision addressing such conduct.

18 U.S.C. 1519, enacted as part of the Sarbanes-Oxley Act of

2002, Pub. L. No. 107-204, Tit. VII, § 802(a), 116 Stat. 800,

prohibits, inter alia, the knowing destruction of documents

“in relation to or contemplation of” “any matter within the

jurisdiction of any department or agency of the United

States.” Section 1519 also contains a greater maximum term

of imprisonment (20 years) than Section 1512(b)(2) (ten

years). Most federal prosecutors will henceforth use Section

1519—which does not require proof that the defendant en-

gaged in “corrupt persua[sion]”—to prosecute document de-

struction cases, including cases in which the defendant per-

suaded or otherwise caused or aided and abetted subordi-

nates to destroy documents, as here. The question pre-

sented in this case—whether document destruction cases

like this one may also be prosecuted under Section

1512(b)(2)—is thus of little continuing practical importance."

b. Even absent the new statute, the meaning of “cor-

ruptly persuades” in Section 1512(b) would not warrant fur-

ther review. Despite petitioner’s frequent resort to due pro-

cess rhetoric (Pet. 12, 15, 18, 23, 26, 28), petitioner has never

claimed that Section 1512(b) denied it due process by failing

to provide fair warning that its conduct was unlawful. The

U.S.C. 1512(b), which was enacted in 1982 and amended in 1988 to add the

“corruptly persuades” element that petitioner challenges.

® With respect to the specific issue of accountants’ papers, the Sar-

banes-Oxley Act also added 18 U.S.C. 1520, which requires the mainte-

nance of “all audit or review workpapers” for five years, 18 U.S.C.

1520(a)(1), and the promulgation by the SEC of further requirements for

the “retention of relevant records,” 18 U.S.C. 1520(a)(2). Violation of the

statutory or SEC requirements is a criminal offense, 18 U.S.C. 1520(b),

and future cases involving destruction of accountants’ papers could also be

brought under that provision.

14

reason for that omission is clear. At the time of petitioner’s

document destruction campaign, federal law gave ample

notice that persuading others to destroy evidence to thwart

an impending federal investigation was a crime, United

States v. Shotts, 145 F.3d 1289, 1300-1301 (11th Cir. 1998),

cert. denied, 525 U.S. 117 (1999); United States v. Thompson,

76 F.3d 442, 452 (2d Cir. 1996), and that companies were not

free to destroy documents so long as a subpoena had not yet

arrived, United States v. Gravely, 840 F.2d 1156, 1160-1161

(4th Cir. 1988).

Accordingly, petitioner has preserved only a statutory

claim that the phrase “corruptly persuades,” as used in Sec-

tion 1512(b)(2), requires proof that it used improper means of

persuasion or that it persuaded its employees to commit un-

lawful acts. The lower courts correctly rejected that claim.

Congress borrowed the word “corruptly” in Section

1512(b)(2) from a related obstruction of justice statute, 18

U.S.C. 1503, where it has long been understood to mean con-

duct motivated by an improper purpose. Thompson, 76 F.3d

at 452 (citing cases); United States v. Haas, 583 F.2d 216, 220

(5th Cir. 1978), cert. denied, 440 U.S. 981 (1979). The ma-

jority of courts of appeals that have considered the meaning

of “corruptly” in Section 1512(b) have therefore accorded it

the same meaning. Shotts, 145 F.3d at 1300-1301 (holding

that “corruptly” means “motivated by an improper pur-

7 The use of “corruptly” in the new Section 1512(c), which was added

in 2002, see Pub. L. No. 107-204, § 1102, 116 Stat. 745, likewise mirrors the

use of that term in another obstruction of justice statute, 18 U.S.C. 1505

(prohibiting “corruptly * * * influencling], obstructing], or imped|ing|”

pending agency proceedings or congressional investigations). There is no

dispute that “corruptly” in Section 1505 encompasses acting with an im-

proper purpose. See 18 U.S.C. 1515(b) (“As used in section 1505, the term

‘corruptly’ means acting with an improper purpose, personally or by influ-

encing another, including making a false or misleading statement.”); see p.

21, infra.

15

pose”); United States v. Khatami, 280 F.3d 907, 911 (9th Cir.

2002) (“[O}ne who attempts to ‘corruptly persuade’ another

is, given the pejorative plain meaning of the root adjective

‘corrupt,’ motivated by an inappropriate or improper pur-

pose to convince another to engage in a course of behavior.”),

cert. denied, 535 U.S. 1068 (2002); see also United States v.

Brady, 168 F.3d 574, 578-579 & n.3 (Ist Cir. 1999)

(suggesting that “corruptly” in Section 1512 is satisfied by

proof of an improper motive of obstructing justice).

The prevailing view of the meaning of the term “cor-

ruptly” in obstruction statutes finds strong support in the

legislative history of Section 1512. Before 1982, Section 1503

prohibited corrupt or coercive efforts to influence witnesses,

jurors, and court officials in its first clause; its second so-

called “omnibus clause” in relevant part criminalized the

conduct of anyone who “corruptly * * * endeavors to influ-

ence, obstruct, or impede, the due administration of justice.”

18 U.S.C. 1503 (1976).

Because, as noted above, the term “corruptly” was inter-

preted to mean for an “improper motive or with bad or evil

or wicked purpose,” United States v. Partin, 552 F.2d 621,

642 (5th Cir.), cert. denied, 434 U.S. 903 (1977); see Thomp-

son, 76 F.3d at 452, Section 1503 encompassed non-coercive,

_non-deceptive acts of witness tampering, such as urging a

witness to testify falsely or to refrain from testifying or to

destroy evidence. See, e.g., United States v. Jackson, 607

F.2d 1219, 1223 (8th Cir. 1979), cert. denied, 444 U.S. 1080

(1980); United States v. Howard, 569 F.2d 1331, 1334, 1337 &

n.9 (5th Cir.), cert. denied, 439 U.S. 834 (1978). Section 1512

was enacted as part of the Victim Witness Protection Act of

1982 (VWPA), Pub. L. No. 97-291, § 4(a), 96 Stat. 1248, which

was intended to broaden protections for witnesses. The

VWPA deleted the protection for witnesses from the first

clause of Section 1503, left the omnibus clause of Section

1503 intact, and enacted Section 1512, but without the “cor-

16

rupt persuasion” element. Thus, as originally enacted, what

became Section 1512(b) was limited to coercive or deceptive

conduct; it prohibited only the knowing use of intimidation,

force, threats, or misleading conduct with the requisite in-

tent to, for example, influence the testimony of a person in

an official proceeding, and did not cover non-coercive, non-

deceptive witness tampering—conduct that was previously

covered by Section 1503. See United States v. Tackett, 113

F.3d 603, 608-609 (6th Cir. 1997), cert. denied, 522 U.S. 1089

(1998).

The statutory changes led to a circuit split. While a ma-

jority of the courts of appeals to address the issue continued

to uphold prosecutions of non-coercive witness tampering

under the omnibus clause of Section 1503, see Tackett, 113

F.3d at 607 (citing cases), the Second Circuit refused to allow

conviction under Section 1503 of a defendant who asked a

witness to lie to the grand jury, reasoning that Congress

meant Section 1512 to be the exclusive vehicle for prosecut-

ing witness tampering. United States v. Hernandez, 730

F.2d 895 (2d Cir. 1984).

In response, Congress amended Section 1512 to add “cor-

ruptly persuades” to the list of prohibited conduct. Anti-

Drug Abuse Act of 1988, Pub. L. No. 100-690, § 7029(a) and

(c), 102 Stat. 4181. The section-by-section analysis of the

legislation described “corrupt persuasion” broadly to include

conduct that requires neither illegal means of persuasion nor

persuasion to violate a legal duty. See 134 Cong. Rec.

$17,369 (daily ed. Nov. 10, 1988) (“‘Corrupt persuasion’ of a

witness is a non-coercive attempt to induce a witness to be-

come unavailable to testify.”).” Moreover, the section-by-

* Convincing a witness to destroy documents is no less culpable than

convincing him to become unavailable to testify. Indeed, the latter can be

less damaging, since a missing witness can be located while a destroyed

document is gone forever.

17

section analysis explained that the amendment was intended

“merely to include in section 1512 the same protection of

witnesses from non-coercive influence that was (and is)

found in section 1503.” Ibid. (emphasis added).” Because

the term “corruptly” in Section 1503 had long been defined

to mean “motivated by an improper purpose,” “{i}t is reason-

able to attribute to the ‘corruptly persuades’ language in

Section 1512(b), the same well-established meaning.” Shotts,

145 F.3d at 1301; see United States v. Farrell, 126 F.3d 484,

492 (3d Cir. 1997) (Campbell, J., dissenting).

ce. Contrary to petitioner’s claim (Pet. 22), the court of

appeals’ construction of Section 1512(b) does not render the

word “corruptly” superfluous. The instructions here re-

quired the jury to find both that petitioner acted “corruptly,”

i.e., With “an intent to subvert, undermine, or impede the

fact-finding ability of an official proceeding,” Pet. App. 18a,

and that it acted with an intent to withhold material from an

official proceeding, id. at 47a. Those two intents are not the

same. An Andersen employee could, for example, delete em-

barrassing personal e-mails from the company’s computer

system to prevent their disclosure in an SEC investigation

without being motivated by a desire to subvert, undermine,

or impede that investigation itself. Thus, as the Fifth Circuit

observed, the terms “subvert,” “undermine,” and “impede”

each “implies a degree of personal culpability beyond a mere

intent to make documents unavailable.” /d. at 22a.

Nor does the court of appeals’ reading of “corruptly per-

suades” render the scheme of corruption of justice statutes

* Petitioner argues (Pet. 23 n.23) that Senator Biden’s comments on

the VWPA referred only to cases in which the “corrupt persuasion” in-

volved “independently wrongful efforts to influence witnesses.” See also

Pet. 16-17. Senator Biden stated, however, that he was offering merely

“[e)xamples” of “corrupt persuasion,” not that he was purporting to give

an exhaustive list of conduct that would fall under the amended Section

1512. 134 Cong. Rec. 817,369 (daily ed. Nov. 10, 1988).

18

(as of 2001) “positively nonsensical.” Pet. 22. Petitioner

notes (Pet. 1-2, 15, 26) that, at the time of the charged con-

duct, it was illegal to persuade someone else to destroy

documents to thwart an anticipated federal proceeding but

not illegal to destroy documents one’s self. That apparent

statutory omission has little relevance here, because peti-

tioner’s own document destruction largely took place after it

knew of the SEC’s informal investigation—i.e., at a time

when it was unlawful under 18 U.S.C. 1505 for petitioner it-

self to destroy the documents. See p. 29, ‘nfra. Nor is the

distinction between acting alone and acting in concert with

others “nonsensical.”"” Indeed, it is petitioner’s own inter-

pretation of Section 1512(b) that would inject a large dose of

incongruity into the obstruction statutes by making the

word “corruptly” mean one thing in Section 1512(b) and

something entirely different in Sections 1503, 1512(c), and

1515. In any event, insofar as there was a statutory gap in

2001, Congress closed the claimed loophole in 2002 by en-

acting Section 1512(c), which prohibits individuals from “cor-

ruptly” destroying documents on their own “with the intent

to impair the object’s * * * availability for use in an official

proceeding,” and Section 1519, which prohibits the knowing

destruction of documents “in relation to or contemplation of”

“any matter within the jurisdiction of any department or

agency of the United States.” Further review is not war-

ranted to consider the correct interpretation of Section

It is, for example, illegal to conspire with another to con.mit a future

crime but not illegal to formulate an intent to commit a crime on one’s

own. Moreover, the facts of this case illustrate the dangers of concerted

action. On his own, David Duncan destroyed a few boxes of documents,

while collectively the Enron engagement team destroyed nearly two tons

of paper and tens of thousands of e-mails. Pet. App. 6a; Gov't C.A. Br. 4.

19

1512(b)(2) in light of a purported statutory gap that no

longer exists."

d. Petitioner errs in contending (Pet. 18-21) that the de-

cision below conflicts with decisions from the Third and D.C.

Circuits.

In Farrell, supra, the defendant was convicted under Sec-

tion 1512(b)(3) of “corrupt persuasion” after he urged a co-

conspirator not to reveal to federal agents self-incriminating

information about their joint criminal activities. 126 F.3d. at

486-487. The Third Circuit’s decision reversing the convic-

tion was a limited one. The court held that “the ‘culpable

conduct’ that violates § 1512‘b)(3)’s corruptly persuades

clause does not include a noncoercive attempt to persuade a

coconspirator who enjoys a Fifth Amendment right not to

disclose self- incriminating information about the conspiracy

to refrain, in accordance with that right, from volunteering

information to investigators.” Jd. at 488. Beyond that spe-

cific holding that “corruptly persuades” does not include per-

suading an individual to assert a valid constitutional privi-

lege, the court stated that it was “hesitant to define in more

abstract terms the boundaries of the conduct punishable un-

der the somewhat ambiguous ‘corruptly persuades’ clause. *

* * [Wle do not think it necessary to provide such a defi-

nition here.” Jbid. Moreover, although the court opined that

the term “corrupt” must mean something more than simply

an “improper purpose,” it specifically left open the question

whether persuading a person to withhold information from

'! Contrary to petitioner's claim (Pet. 12, 23), the court of appeals’ in-

terpretation of Section 1512(b)(2) does not violate the rule of lenity. The

rule of lenity “applies only if, after seizing everything from which aid can

be derived, . . . [the court] can make no more than a guess as to what

Congress intended.” United States v. Wells, 519 U.S. 482, 499 (1997) (cita-

tions and internal quotation marks omitted). As explained above, the lan-

guage, structure, and legislative history of Section 1512(b)(2) make Con-

gress’s intent clear.

20

federal investigators absent a valid Fifth Amendment privi-

lege to do so would be covered by Section 1512(b)’s “cor-

ruptly persuades” clause. /d. at 489 n.3. Thus, as the Fifth

Circuit correctly concluded (Pet. App. 21a, 23a), Farrell did

not address the issue presented here.”

Moreover, since Farrell, the Third Circuit has not clearly

resolved how the term “corruptly” applies under Section

1512(b) to cases that do not involve the assertion of a Fifth

Amendment privilege. In United States v. Davis, 183 F<

231 (3d Cir. 1999), the court appeared to rely (without any

further analysis) on Farrell’s dicta that “corrupt” conduct

requires more than an “improper purpose.” But a few

months later, in United States v. Applewhaite, 195 F.3d 679,

688 (1999), the Third Circuit affirmed a conviction under

Section 1512(b)(2) for “corrupt” behavior where the defen-

dants, without using any unlawful means, persuaded an un-

suspecting third party to destroy evidence of a crime.”

Read as a whole, therefore, Third Circuit law provides no

clear guidance on the question decided below.

Petitioner’s claim (Pet. 18-19) that the decision below con-

flicts with United States v. Poindexter, 951 F.2d 369 (D.C.

Cir. 1991), cert. denied, 506 U.S. 1021 (1992), and United

States v. Morrison, 98 F.3d 619 (D.C. Cir. 1996), cert. denied,

2 Notwithstanding a claimed conflict with Farrell, this Court denied

certiorari in United States v. Shotts, 145 F.3d 1289 (11th Cir. 1998), cert.

denied, 525 U.S. 1177 (1999) (No. 98-837), and United States v. O'Kane, 86

Fed. Appx. 447 (2d Cir.), cert. denied, 125 S. Ct. 38 (2004) (No. 03-10010),

two cases factually more similar to Farrell than this one.

18 Petitioner attempts to distinguish Applewhaite on the ground that

the defendants there knew that a crime had been committed. Pet. 25.

That fact is irrelevant. Section 1512(b)(2) is not limited to persons who act

to destroy evidence of their own crimes. Moreover, as noted above, during

the period when most of the documents were destroyed, petitioner knew

that the SEC was investigating Enron, and its decision to destroy docu-

ments was thus itself a crime under 15 U.S.C. 1505.

21

520 U.S. 1131 (1997), is likewise incorrect. In Poindexter,

the D.C. Circuit concluded that the phrase “corruptly influ-

ences” in Section 1505 was unconstitutionally vague as ap-

plied to the conduct of lying to Congress. The court also

suggested that narrowing the term “corruptly” to mean in-

fluencing another person to violate his legal duty might

eliminate that problem. 951 F.2d at 379. The statute at issue

in Poindexter was Section 1505, and the decision expressly

distinguished Section 1503, the statute on which Section

1512(b) was modeled, stating that “the language of § 1505 is

materially different from that of § 1503.” Id. at 385. Moreo-

ver, as noted above, petitioner has never suggested that Sec-

tion 1512(b)(2)(A) and (B) is unconstitutionally vague, either

on its face or as applied, and the Poindexter court’s per-

ceived need to interpret Section 1505 to avoid unconstitu-

tional vagueness accordingly does not apply here. In any

event, after Poindexter, Congress quickly rejected the D.C.

Circuit’s “nonsensical interpretation of section 1505,” 142

Cong. Rec. 511,605, $11,608 (daily ed. Sept. 27, 1996) (state-

ment of Sen. Nickles), by providing:

As used in section 1505, the term “corruptly” means

acting with an improper purpose, personally or by influ-

encing another, including making a false or misleading

statement, or withholding, concealing, altering, or de-

stroying a document or other information.

18 U.S.C. 1515(b) (emphasis added). Thus, to the extent it is

relevant at all, Poindexter and the ensuing events provide

further evidence of Congress’s intent that, in the context of

the obstruction of justice statutes, “corruptly” should mean

acting with an improper purpose.

Morrison likewise does not conflict with the decision be-

low. In Morrison, a defendant who exhorted a witness to

testify falsely in his favor was convicted of corrupt persua-

sion under Section 1512(b). On appeal, Morrison argued that

22

his conduct was not “corrupt” under Poindexter because he

did not use any improper means of persuasion. In affirming,

the D.C. Circuit suggested in passing that Poinderter’s rea-

soning might also be applied to Section 1512, but the court

did not decide that question because, even assuming that

Poindexter did apply, Morrison had acted “corruptly” by at-

tempting to convince a witness to “violate her legal duty to

testify truthfully in court.” 98 F.3d at 630. The holding of

Morrison, i.e., that the defendant’s conduct was “corrupt,”

does not conflict with the decision below.

2. a. Petitioner contends (Pet. 26) that the “corruptly

persuades” prong of Section 1512(b)(2) requires proof that

the defendant knew his actions were wrongful. As the Fifth

Circuit noted, Pet. App. 28a-29a, it is a “venerable principle

that ignorance of the law generally is no defense to a crimi-

nal charge.” Ratzlaf v. United States, 510 U.S. 135, 149

(1994). In Pettibone v. United States, 148 U.S. 197, 205

(1893), this Court applied that principle to a predecessor of

1503 that prohibited “corruptly * * * obstruct[ing] or im-

ped[ing], or endeavor[ing] to obstruct or impede, the due

administration of justice [in a United States Court].” /d. at

197. Since that time, no court has interpreted the word “cor-

ruptly” in an obstruction of justice statute to require proof

that the defendant knew his conduct was unlawful. See, e.g.,

United States v. Mullins, 22 F.3d 1365, 1369 (6th Cir. 1994);

Poindexter, 951 F.2d at 379.

b. Contrary to petitioner’s claim (Pet. 27) the Fifth Cir-

cuit’s application of that settled law does not conflict with

Ratzlaf, supra, or Bryan v. United States, 524 U.S. 184

(1998). In Ratzlaf, this Court concluded that, as used in a

provision that prohibited the structuring of cash transactions

to evade reporting requirements, the term “willfully” re-

quired proof that the defendant knew his conduct was un-

lawful. 510 U.S. at 136-137. Unlike “corruptly,” the term

“willfully” has long been understood in certain contexts to

23

require proof of a knowing violation of a legal duty. See, e.g.,

Cheek v. United States, 498 U.S. 192, 200-201 (1991). Moreo-

ver, the Ratzlaf Court adopted its interpretation to ensure

that the statute’s “willfulness” requirement would have a

consistent meaning in several related provisions in the same

subchapter. 510 U.S. at 142-143. Petitioner’s interpretation,

by contrast, would assign a different meaning to the term

“corruptly” in Section 1512(b) than it carries in the related

obstruction statues, an undesirable result at odds with the

rationale of Ratzlaf.

Bryan, supra, which also interprets the statutory term

“willfvily,” is likewise unhelpful to petitioner. In Bryan, the

Court held that a conviction for willfully violating the statute

prohibiting dealing in firearms without a license required

proof only that a defendant knew that his conduct was un-

lawful and not that he was aware of the licensing require-

ment. 524 U.S. at 194-195. Nothing in Bryan undermines

the consistent holding of the courts that there is no similar

requirement in the obstruction statutes, nor does Bryan

provide any support for imposing petitioner’s proposed al-

ternative requirement (Pet. 26) that the jury must find that

a Section 1512 defendant had a “basic consciousness of

wrongdoing.”"* In any event, the jury was required to find

such a “basic consciousness of wrongdoing” in this case when

it was instructed (Pet. App. 48a) that it had to find that the

4 Petitioner mischaracterizes United States v. Aguilar, 515 U.S. 593,

602 (1995), as holding that “an intent to obstruct justice is not in itself ob-

viously wrongful” (Pet. 27). In Aguilar, where the Court merely stated

that proof of an intent to obstruct justice, coupled with any act at all in

furtherance of that intent, is not alone sufficient to impose criminal liabil-

ity under 18 U.S.C. 1503. The court of appeals’ decision in this case, by

contrast, stands for the proposition that an intent to “subvert, undermine,

or impede” a proceeding, coupled with the conduct of knowingly persuad-

ing someone to destroy a document so that it will be unavailable for use in

that proceeding, violates Section 1512(b)(2).

24

defendant acted “corruptly,” with an “improper purpose” to

“subvert, undermine, or impede the fact-finding ability of an

official proceeding.” See Thompson, 76 F.3d at 451.”

c. Nor does the court of appeals’ decision conflict with

United States v. Frankhauser, 80 F.3d 641 (ist Cir. 1996).

See Pet. 27. In Frankhauser, the First Circuit noted that, as

a result of a prior conviction for obstructing justice, the de-

fendant knew that his advice to destroy some papers was

illegal, thereby “establishing that he acted with corrupt in-

tent to violate the law.” 80 F.3d at 652. The First Circuit

did not hold, however, that such proof was a prerequisite for

a Section 1512(b)(2) proceeding, cautioning that “[eJach case

must be evaluated on its own facts.” Ibid. Frankhauser

therefore stands only for the proposition that, where it ex-

ists, proof that the defendant knew his conduct was unlawful

will suffice to show a corrupt intent.

3. Petitioner suggests that the jury should have been in-

structed that petitioner could not be found guilty unless it

anticipated that an SEC proceeding was “likely” or “prob-

able.” Pet. 27-29. Petitioner did not request such an instruc-

tion in the district court (Pet. 29 n.28) and did not argue in

the court of appeals that the failure to give it was plain er-

ror.” Accordingly, petitioner’s claim is not properly pre-

! Petitioner's claim (Pet. 1, 4, 7, 12) that mo one at Andersen believed

that it was wrong to destroy Enron documents is inaccurate. Both Temple

and Duncan were on notice that such conduct was improper. See note 2,

supra. In addition, when Andersen auditors in Portland, Oregon, received

the urgent message from Houston to “clean up the files,” a senior super-

visor declined for the Portland team. Tr. 5158-5168. As that supervisor

later expressed: “[I}f you think there is going to be some requirement to

produce these documents, then don’t destroy anything. For God's sake,

just don’t do that.” Tr. 5210.

'6 Petitioner's capable trial counsel doubtless never requested such an

instruction because the evidence so clearly demonstrated petitioner's

awareness that an official proceeding was likely (or indeed had already

25

sented here. United States v. Williams, 504 U.S. 36, 41

(1992) (internal quotation marks and citation omitted) (not-

ing that this Court’s “traditional rule * * * precludes a

grant of certiorari * * * when the question presented was

not pressed or passed upon below”); see United States v. Lo-

vasco, 431 U.S. 783, 788 n.7 (1977).

Petitioner contends (Pet. 28) that a “likely or probable”

instruction was required by United States v. Aguilar, 515

U.S. 598 (1995). In Aguilar, this Court held that the defen-

dant could not be convicted of an offense under Section 1503,

which specifically requires proof of a “pending proceeding,”

absent proof that the “natural and probable” consequence of

his action was to interfere with a grand jury proceeding. Id.

begun) when its employees were instructed to destroy Enron documents.

See GX NT-1009 (Nancy Temple's Oct. 9 Notes describe an SEC investi-

gation as “highly probable”); Tr. 1887-1894 (Duncan instructs petitioner's

Enron engagement team to destroy all non-working paper Enron docu-

ments two business days after learning of the SEC's preliminary investi-

gation).

The record also belies petitioner's related claim (Pet. 7-9) that it did not

view an SEC request for its own documents as “likely” unti! it definitely

concluded that Enron would have to restate its earnings. In fact, Nancy

Temple knew from studying the Waste Management and Sunbeam mat-

ters that the SEC might request documents from petitioner before a re-

statement was even filed. See GX NT Undated, at A-004609 (Temple's

notes on Waste Management state “No restate until Feb. SEC all over us

in Jan.”), Tr. 6093-6096; Tr. 448-459 (SEC requests petitioner's Sunbeam

documents months before a restatement is filed). Moreover, Duncan knew

by October 23, 2002, that Enron's balance sheet would have to be restated

and expected the SEC to investigate any restatements. Tr. 1849-1850,

1904-1905. And while Andersen partner John Riley claimed to have be-

lieved that the SEC would subpoena petitioner's records only if Enron

restated its income, Tr. 6198, there is no evidence that Temple, Duncan, or

the SEC shared this view. Riley's claim was also substantially impeached

by his testimony during the Sunbeam matter, where he acknowledged

knowing from the first sign of adverse publicity that petitioner was going

to have a problem with an SEC investigation. Tr. 6120.

26

at 599. Although the petition for certiorari relies extensively

on Aguilar (Pet. 12, 14-15, 22, 25, 26, 27, 28), petitioner never

claimed in the district court that Aguilar applied to this

prosecution, barely mentioned the case in its pre-trial mo-

tions, and then failed to cite it once in its opening appellate

brief. Petitioner has therefore waived any claim that Agu/-

lar applies to prosecutions under Section 1512.

4. Petitioner did request an instruction requiring the

jury to find that it intended to obstruct a “particular” official

proceeding that was “ongoing or scheduled to be commenced

in the future.” But the district court’s decision not to give

such an instruction does not warrant further review. As the

Fifth Circuit observed, petitioner’s claim that the proceeding

must be “ongoing or scheduled” “defie|d] the statutory pro-

vision [18 U.S.C. 1512(e)(1)(2000)} that an official proceeding

‘need not be pending or about to be instituted at the time of

the offense.” Pet. App. 26a. Lower courts accordingly have

uniformly declined to impose such a requirement under Sec-

tion 1512(b)(2). See Frankhauser, 80 F.3d at 652 (“an official

proceeding need not be pending or about to be instituted at

the time of the corrupt persuasion”); United States v. Kelley,

36 F.3d 1118, 1128 (D.C. Cir. 1994); United States v. Con-

neaut Indus., Inc., 852 F. Supp. 116, 125 (D.R.1. 1994).

Nor does Section 1512(b)(2) require proof that petitioner

anticipated a “particular” federal proceeding. The statute's

language requires only that the defendant have acted with

intent to obstruct “an official proceeding.” See 18 U.S.C.

1512(b)(2)(A) and (B). Indeed, by specifying that an official

proceeding need not be pending, see 18 U.S.C. 1512(e)(1)

(2000), and that defendant need not know that the official

proceeding is a federal one, see 18 U.S.C. 1512(f) (2000),

Congress signaled that the defendant’s knowledge about the

proceeding need only be general, not particular. Further-

more, adoption of a “particular proceeding” limitation would

create an absurd loophole, permitting a company that de-

27

stroyed crucial documents after learning of an imminent

federal investigation to escape conviction by claiming that it

did not know the “particulars” of that investigation. Con-

gress did not intend such a result."”

Even if a “particular proceeding” requirement were im-

ported into Section 1512(b)(2)(A) and (B), petitioner’s re-

quested instruction would have been unnecessary because,

as the Fifth Circuit found, “(t}his case was tried on the the-

ory that petitioner intended to undermine, subvert, or im-

pede a proceeding of the SEC,” Pet. App. 27a, and it was

“clear at every step” “[t}hat the SEC was the feared oppo-

nent and initiator of a proceeding and not some other shad-

owy opponent,” id. at 28a. Because there was only one pro-

ceeding that the jury could have found petitioner intended to

obstruct, any instructional error in this regard was harmless.

Ibid.; see Neder v. United States, 527 U.S. 1, 7-15 (1999).

Although petitioner suggests (Pet. 28-29) that the jury

may have convicted it based solely on the adoption of a

document retention policy, the record belies that claim. The

indictment charged petitioner with a scheme to destroy En-

ron-related documents, and specified that the offense oc-

7 In Frankhauser, the First Circuit suggested that “the defendant

must act knowingly and with the intent to impair an object's availability

for use in a particular official proceeding.” 80 F.3d at 651. At the same

time, the court seemed to conclude that such proof was not required, af-

firming a conviction even though it was unclear which of two potential

proceedings the defendant anticipated. See id. at 652 (finding the defen-

dant “expected a grand jury investigation and/or a trial in the foreseeable

future.”).

'* Petitioner itself contended below that “the evidence in the case sug-

gests that the only proceeding that could have been affected is one in-

volving the SEC.” Tr. 6295; see R. 1125 (argument by petitioner that “the

government's case against [petitioner] rests entirely on the theory that

Andersen partners persuaded others to destroy documents with the inten-

tion of making them unavailable for use in an incipient SEC proceeding”).

28

curred at a time long after petitioner's document retention

policy was adopted. The government's trial evidence proved

the same scheme to destroy Enron-related documents that

was alleged in the indictment. And the government specifi-

cally informed the jury in closing argument that “there's

nothing criminal about having a document policy. What is a

crime is to take it out, blow it off, and implement it in the

middle of an SEC investigation because you want to be able

to control what documents the Government gets to see and

what documents it doesn't.” Tr. 6419. Thus, as the court of

appeals concluded, “[t}here was no risk of conviction for in-

nocent maintenance of a records program.” Pet. App. 28a."

5. Finally, petitioner contends that this Court should

grant certiorari to determine whether an informal SEC in-

vestigation constitutes an “official proceeding” as defined

under 18 U.S.C. 1515(a)1)(C). Although petitioner raised

that issue in the district court, it was mentioned only in a

footnote to petitioner's lengthy opening appellate brief. Pet.

C.A. Br. 70 n.24. The government therefore contended that

the claim had been waived. Gov't C.A. Br. 92 n.34. The

Fifth Circuit apparently agreed with the government, de-

clining to address th. issue in its opinion. Pet. App. 2a. Be-

' Without citing any authority, petitioner asserts (Pet. 17) that “virtu-

ally all companies of any size |have| adopted document retention policies

that permit or require the destruction of potentially harmful materials

prior to the initiation of actual proceedings or the receipt of a subpoena.”

See Pet. 12. In fact, document policies generally protect relevant materi-

als from destruction whenever litigation or government investigations are

anticipated. See, ¢e.g., Christopher V. Cotton, Document Retention Pro-

grams for Electronic Records: Applying a Reasonableness Standard to

the Electronic Eva, 24 J. Corp. L. 417, 422 (1999) (“In general, records re-

tention programs should * * * provide for the suspension of document

destruction when litigation is imminent.”); Lewy v. Remington Arms Co.,

836 F.2d 1104, 1112 (Sth Cir. 1988) (corporation cannot destroy documents

pursuant to policy if it “knew or should have know that [they] would be-

come material at some point in the future”).

29

cause this issue was not “pressed or passed upon below,”

Williams, 504 U.S. at 41, certiorari review is not available.

In any event, petitioner’s claim that a preliminary SEC

investigation is not an official proceeding is without merit.

Petitioner merely cites (Pet. 30 n.30) two cases in which the

courts held that agency investigations with certain charac-

teristics qualified as proceedings under the obstruction stat-

utes; petitioner cites no case, and we are aware of none,

holding that a preliminary SEC investigation is not an offi-

cial proceeding. Courts have long considered agency investi-

gations, even preliminary ones, to be proceedings under the

obstruction statutes. See United States v. Browning, Inc.,

572 F.2d 720, 724 (10th Cir.), cert. denied, 439 U.S. 822

(1978); United States v. Leo, 941 F.2d 181, 199 (3d Cir. 1991);

United States v. Fruchtman, 421 F.2d 1019, 1021 (6th Cir.),

cert. denied, 400 U.S. 849 (1970); Rice v. United States, 356

F.2d 709, 713 (8th Cir. 1966). Furthermore, contrary to peti-

tioner’s argument, the courts have also reasoned that the

term “proceeding” is not limited to those aspects of an

agency's investigation that are conducted under the author-

ity to issue subpoenas and administer oaths. See Browning,

Inc., 572 F.2d at 724 (“We do not see that the use of this ma-

chinery [i.e., the regulatory authority to administer oaths]

would have made the proceeding more like a ‘proceeding’

funder Section 1505] simply by virtue of the issuing of a

subpoena formally or the giving notice of a preliminary

investigation.”); see also, e.g., Leo, 941 F.2d at 187, 199

(standard post-award audit of defense contractor by Defense

Contract Audit Agency was a Section 1505 “proceeding”;

Fruchtman, 421 F.2d at 1021 (investigation conducted by

single FTC attorney who made request to see defendant’s

invoices was a Section 1505 “proceeding”).”

”” Contrary to petitioner's argument (Pet. 3 & n.4), it is irrelevant that

the SEC defines a “proceeding” as an agency process initiated by an order

30

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.

PAUL D. CLEMENT

Acting Solicitor General

CHRISTOPHER A. WRAY

Assistant Attorney General

ELIZABETH D. COLLERY

Attorney

DECEMBER 2004

of the Commission, see 17 C.F.R. 201.202(a\7) and (9). Congress nowhere

incorporated the SEC's definition of “proceeding” into Section 1512.

Rather, Congress defined “official proceeding” for purposes of Section

1512 as “a proceeding before a Federal Government agency which is

authorized by law.” 18 U.S.C. 1515(a)1C). A preliminary investigation

by the SEC is “authorized by law,” see 17 C.F.R. 202.5(a), and, as noted in

the text, the courts have found preliminary investigations to be pro-

ceedings.