30 October 2005


That's: What would Socrates say? Would he say--I mean to ask--that anyone could ever get convicted under 18 U. S. C. §§1512(b)(2)(A) and (B)?

Let me explain, since here's a point of contact, not without interest, between accounting ethics and ancient philosophy.

Background: Enron's auditor, as you know, was Arthur Andersen. On Oct. 20, 2001, when it became clear that Enron was in trouble and was going to be investigated by the SEC, Andersen's management initiated a company-wide effort to destroy all working papers, memos, internal communications, etc. relating to Enron (except those needed for current audit work). This involved in some cases hiring dumptrucks to haul documents to shredding facilities. The management issued their order in the form: let's be sure to apply our firm's document retention policy to all Enron documents. But this was disingenuous, because the firm's policy was not to destroy documents related to a client if an investigation was judged likely. (See note 1 below.) The firm continued to destroy documents until Andersen was served with a subpoena for Enron related documents on Nov. 9-- twenty days later.

Because of this cover-up, Andersen was indicted and convicted of obstruction of justice. It lost its license to practice before the SEC and therefore went out of business (or effectively so: Andersen still exists as a very small firm).

However, on May 31, 2005, the US Supreme Court (see the decision here) threw out the conviction and ordered a retrial, on the grounds that the judge's instruction to the jury was faulty.

The statute under which Andersen was convicted (18 U. S. C. §§1512) declares as criminal:

(b) Whoever knowingly uses intimidation, threatens, or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person, with intent to—
(1) influence, delay, or prevent the testimony of any person in an official proceeding;
(2) cause or induce any person to—
(A) withhold testimony, or withhold a record, document, or other object, from an official proceeding;
(B) alter, destroy, mutilate, or conceal an object with intent to impair the object’s integrity or availability for use in an official proceeding [my emphasis]...
Everything hinged on whether "knowingly" qualifies "corruptly persuades" or, rather, only the words that immediately follow it, viz. "uses intimidation, threatens". The prosecutors argued for the latter, which the District Court accepted, and therefore the Court instructed the jury that, to find Andersen guilty, it was necessary only to determine that Andersen intended to "subvert, undermine, or impede" governmental factfinding; also that, "even if [petitioner] honestly and sincerely believed that its conduct was lawful, you may find [petitioner] guilty."

The Supreme Court, in a unanimous decision written by Justice Rhenquist, disagreed. In its view, "knowingly" qualifies "corruptly persuades", so that a consciousness of wrongdoing is required for a conviction under the statute. Here is the relevant paragraph:
The parties have not pointed us to another interpretation of "knowingly ... corruptly" to guide us here.In any event, the natural meaning of these terms provides a clear answer. See Bailey v. United States, 516 U. S. 137, 144-145 (1995). "[K]nowledge" and "knowingly" are normally associated with awareness, understanding, or consciousness. See Black's Law Dictionary 888 (8th ed. 2004) (hereinafter Black's); Webster's Third New International Dictionary 1252-1253 (1993) (hereinafter Webster's 3d); American Heritage Dictionary of the English Language 725 (1981) (hereinafter Am. Hert.). "Corrupt" and "corruptly" are normally associated with wrongful, immoral, depraved, or evil. See Black's 371; Webster's 3d 512; Am. Hert. 299-300. Joining these meanings together here makes sense both linguistically and in the statutory scheme. Only persons conscious of wrongdoing can be said to "knowingly ... corruptly persuad[e]." And limiting criminality to persuaders conscious of their wrongdoing sensibly allows §1512(b) to reach only those with the level of "culpability ... we usually require in order to impose criminal liability." United States v. Aguilar, 515 U. S., at 602; see also Liparota v. United States, supra, at 426.
This is of course what makes me wonder, WWSS? Has the Supreme Court erected a standard for criminality which could not possibly be satisfied, because no one willingly does what he regards as evil?

Note 1. Here is the U.S. Supreme Court's summary of Andersen's document rentention policy: "The firm's policy called for a single central engagement file, which "should contain only that information which is relevant to supporting our work." App. JA-45. The policy stated that, "in cases of threatened litigation, ... no related information will be destroyed." Id., at JA-44. It also separately provided that, if petitioner is "advised of litigation or subpoenas regarding a particular engagement, the related information should not be destroyed. See Policy Statement No. 780--Notification of Litigation." Id., at JA-65 (emphasis deleted). Policy Statement No. 780 set forth "notification" procedures for whenever "professional practice litigation against [petitioner] or any of its personnel has been commenced, has been threatened or is judged likely to occur, or when governmental or professional investigations that may involve [petitioner] or any of its personnel have been commenced or are judged likely." Id., at JA-29 to JA-30."


Anonymous said...

You've just promulgated the Socratic Defense, God help us all.

Anonymous said...

"Only persons conscious of wrongdoing can be said to "knowingly ... corruptly persuad[e]" -- which ought to mean conscious of legal  wrongdoing, not moral wrongdoing. Therefore the Socratic defense is not relevant here. If it is the case that "no one willingly does what he regards as evil" that may affect our moral evaluation of an apparent moral wrongdoer, but it need not affect our legal evaluation of a legal wrongdoer. The fact to be determined in the legal case, where 'state of mind' is to be considered, ought to be whether the accused believed their actions were against the law. Of course Rhenquist's decision appears to take seriously such terms as "corruptly", supposedly 'defined' as "immoral, depraved, or evil", thereby inserting these further undefined scare words into the law where what is needed is notice of what specific actions are forbidden. This law reminds me of the crime of "corrupting the youth of Athens." The proper decision would have voided this provision of the law as unconstitutionally vague. 

Posted by Ralph Blanchette

Michael Pakaluk said...

Ralph, this is interesting. If we put aside the problem of vagueness--Do you think that the wrongdoing of which (say) a CPA needs to conscious, in order to violate the statute, under this decision, is merely that an action is a violation of the law, or perhaps also that an action is a violation of the code of professional conduct of an accountant--presumably a stricter standard than the law?

If, as Rhenquist says in the decision, what counts as 'corruptly persuade' can vary with role (he gives the example of a husband persuading his wife not to give testimony that would reveal intimate details--this would not be 'corruptly to persuade'), then can someone's role tighten, rather than relax, the standard for compliance with the statute?

Ralph Blanchette said...

Michael, CPA wrongdoing that violates an intelligible law ought to be prosecuted under that law. CPA wrongdoing that violates the standards of a professional association ought to be subject to the sanctions of that association. It is antidemocratic folly to incorporate professional standards into the law by mere reference, since that grants the 'guild' involved the power to change the law by changing the standards. Criminal liability should be spelled out in advance in the published law. Torts are a different matter. Tighter professional standards are highly relevant and appropriate there. That's how I see it. Does this answer your question?

Michael Pakaluk said...

Ralph, yes, that answers my question, and I believe your view is correct.

But do you have a view, on the merits, of whether 'knowingly' is correctly taken to qualify 'corruptly persuade' (again, putting aside your concern about vagueness)?

Ralph Blanchette said...

I have a view on that in two ways, Michael. (1) Within the scope of normal English grammar and (2) within the scope of the presumption of innocence.

The opening clause: "Whoever knowingly uses intimidation, threatens, or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person, with intent to—" is framed by the phrases "Whoever knowingly" and "with intent to". How could all of the specified actions in between be done with an "intent to" without also being done "knowingly"? Further, how can ones "misleading conduct" be criminal without also being misleading knowingly? Surely a staffer at Anderson could be shredding 2-year-old supporting documents from an XYZ Corp. audit and state that it is company policy to shred all such documents after two years and this could "mislead" another staffer regarding Enron documents, all without knowingly misleading with intent to obstruct an investigation. As for 'knowingly corruptly persuades', it's sheer trash as a definition of a forbidden act but the alternative, that one can be culpable for unknowingly corruptly persuading someone to do something, that is even trashier. All this trash originates in the word "corruptly" which has a status that reminds me of laws that forbid "unnatural" acts.

From a broader perspective, if a law is ambiguous, the judge has an obligation to void it or at the very least, to interpret it in favor of the defendant who is entitled to the presumption of innocence, which includes the presumption of innocent intentions. The prosecution is still free to prove knowing intent to do a forbidden act, if it has the evidence for it. This does not reach such a high altitude as Socrates' theory, in which all intentions are innocent because all actions aim at some good.

I'm glad I did not choose a career in the law, because this is the kind of law bad lawyers write and all lawyers must spend their time reading. That this takes a toll on ones mental acuity can be seen in the 'reason' Rhenquist gave for the court's (proper) decision.

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