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Gone are the days when antitrust was viewed by prosecutors as a gentleman’s crime, when only Sherman Act violations were charged in indictments. Like Eliot Ness, who prosecuted Al Capone for income tax evasion, today’s lawyers with the Department of Justice’s Antitrust Division prosecute whatever crimes they uncover even if there is no antitrust violation�most recently, corporate obstruction of justice. Gone, too, are the days when corporate defendants pleaded guilty and were given community service sentences, and individuals rarely went to jail. Congress has pushed the costs of antitrust crimes higher by raising fines (with an even higher penalty just signed into law) and by enacting the Sarbanes-Oxley Act of 2002, addressing corporate misconduct through individual accountability by creating new penalties for document destruction and tampering. Counsel advising corporations and their executives must be fully aware of the consequences for the widening range of criminal prosecutions. Statistics tell part of this story. In 1994, the Antitrust Division brought 57 criminal cases, of which 8.7% were brought under federal statutes other than � 1 of the Sherman Act. By 2003, almost half-43.9%-of all criminal cases charged were brought under other criminal statutes. See www.usdoj.gov/atr/public/12848.htm. In its manual, the division identifies two categories of non-Sherman Act criminal offenses it investigates and prosecutes. See www.usdoj.gov/atr/foia/divisionmanual/ch3.htm. One category includes violations related to the conduct under investigation, such as conspiracy to defraud the United States, false statements to a government agency, mail and wire fraud, tax offenses and even racketeering. In recent years, additional crimes have been charged in this category: conspiracy to commit money laundering, theft of honest services and embezzlement. The second category involves violations that affect the integrity of the investigative process, such as the making of a false declaration before the grand jury and obstruction of justice. An increase in mail and wire fraud charges Twenty years ago, the division confined itself to bringing antitrust cases, with the exception of charges like perjury that are related to the integrity of the process. In the late 1980s, it began to charge wire and mail fraud when failed attempts were made to rig bids or fix prices. See Constance K. Robinson, “Criminal Antitrust Enforcement Developments,” American Bar Association Section of Antitrust Law Annual Meeting, Atlanta (Aug. 14, 1991). For example, in United States v. Sintering, 927 F.2d 232 (6th Cir. 1990), the division charged the defendants with mail fraud in connection with a bid to General Motors for a contract to supply pressure plates used in power-steering systems. The court held that attempted bid-rigging was actionable fraud under the federal wire fraud statute. In United States v. Critical Industries, No. 90-00318 (D.N.J. filed July 24, 1990), the charge was wire fraud in connection with attempted price-fixing. The defendants argued that attempted price-fixing was not a crime. The court held that even though an attempt to fix prices was not a Sherman Act violation, the conduct violated the wire fraud statute. The trend to broaden the range of crimes charged is illustrated by several recent cases. In one, Maryland utility officials and contractors pleaded guilty to wire fraud in connection with a kickback scheme. See www.usdoj.gov/atr/public/press_releases/2004/202990.htm. In another, an attorney was charged with money laundering, fraud and obstruction. See www.usdoj.gov/atr/public/press_releases/2004/202790.htm.Five individuals were indicted in a scheme to defraud the federal E-rate program and charged with conspiracy, mail fraud and money laundering. See www.usdoj.gov/atr/public/press_releases/2004/203124.htm. Today there is also a new emphasis on the category of violations affecting the integrity of the process. Assistant Attorney General R. Hewitt Pate explained: “With increased frequency, the Division is uncovering evidence of obstruction of justice, and we will aggressively investigate such conduct.” See www.usdoj.gov/atr/public/speeches/200736.htm. What kind of corporate conduct is being prosecuted? In the typical obstruction case, an official of a company destroys or alters documents to hide criminal behavior. For example, an executive of Micron Technology Inc. altered notes and removed some pages to cover up knowledge of competitors’ future prices. United States v. Moser, No. 03-80660 (E.D. Mich. filed March 11, 2004). But two recent cases show a different profile: systemic corporate efforts to obstruct justice. In the first, employees of Toho Carbon Fiber and its parent, Toho Tenax Co., removed to Tokyo documents subpoenaed by a U.S. grand jury. When the Tokyo District Prosecutor’s Office, assisting the Antitrust Division, raided the Toho Tenax headquarters, the documents were discovered. United States v. Toho Carbon Fibers Inc., No. 02-281 (C.D. Calif. 2001). In the second matter, the British firm Morgan Crucible Co. PLC was charged with witness tampering and document destruction. It pleaded guilty and paid a $1 million fine. At the same time, its U.S. subsidiary, Morganite Inc. of Dunn, N.C., was charged for its decade-long involvement in a price-fixing conspiracy. Four Morgan Crucible executives were also charged with obstruction of the Antitrust Division’s investigation. Three of these executives�a U.S., a U.K. and a Netherlands citizen�are currently incarcerated in the United States; the fourth executive, a U.K. citizen, remains a fugitive. See www.usdoj.gov/atr/public/speeches/203626.htm. Is the cost of committing obstruction sufficiently low that a corporation is willing to pay that cost to avoid an antitrust violation? The maximum fine for a corporation convicted of obstruction is much lower than for a Sherman Act conviction�$500,000 compared with $10 million. But that’s a short-sighted comparison as there are provisions under the Federal Sentencing Guidelines that can result in a much larger total penalty for obstruction, and other consequences, assuming the government can meet the Sixth Amendment requirements of Blakely v. Washington, 124 S. Ct. 2531 (2004), or obtain a waiver whereby the defendant agrees to waive such rights. First, even without a formal obstruction charge, an upward adjustment in the company’s culpability score will raise its fine. Depending on the volume of commerce affected by the conspiracy, a higher culpability score could add millions of dollars to the total penalty. Second, under the guidelines, a fine range is determined. A court can consider the obstruction conduct and decide to sentence the company at the upper end of that range (often twice as much as the lower), resulting in millions more in penalties. Antitrust Division has been seeking longer jail terms Higher fines for obstruction are not the only consequence. Corporate executives face significant jail terms. The statute commonly used�18 U.S.C. 1503�has a maximum term for individuals of 10 years. But the Antitrust Division has signaled its intention to use Sarbanes-Oxley, under which individuals convicted of document destruction and tampering may be sentenced to as many as 20 years in prison. See remarks by Lisa Phelan, Chief, National Criminal Enforcement Section, ABA, Antitrust Section, Criminal Practice and Procedure Committee Newsletter (September 2003) at 5. The legal maximum fine for an antitrust violation is $10 million per violation, but using the alternative-fine provision of twice the gain from the illegal conduct or twice the loss to the victim, it can be much larger. In the United States, “fines of $10 million or more have become almost commonplace with more than 40 imposed in the last seven years,” stated Makan Delrahim, deputy assistant attorney general in the Antitrust Division. In contrast, “[j]ust ten years ago the highest antitrust fine ever obtained in the United States was less than $3 million.” See www.usdoj.gov/atr/public/speeches/203626.htm. The record now is a $500 million fine against Hoffman La Roche Inc.�the largest criminal fine obtained by the Department of Justice. The division has been aggressively obtaining jail terms even for noncitizens, with an average sentence of more than 18 months. “More individuals have been sentenced in division cases to one year or longer in the last four years, than in the previous decade combined,” commented Scott Hammond, the division’s director of criminal enforcement. See www.usdoj.gov/atr/public/speeches/200686.htm. Today, the Antitrust Division has widened the scope of its criminal prosecutions. It is not enough to say that a company has not committed an antitrust crime if, in the context of its response to the investigation, it participates in an effort to undermine the integrity of the investigative process. Nor will the division turn its head should an investigation uncover evidence of other crimes in the course of an antitrust investigation. The stakes are higher and will continue to rise, as the division will use the statutory tools that exist to ensure that criminal behavior�whatever it is�is punished. Savvy counsel must have full knowledge of the facts of an investigation and all potential criminal violations to bargain successfully for amnesty, to obtain a global settlement that covers all possible violations or to defend successfully. Stan Gorinson and Connie Robinson are partners in the Washington office of Atlanta’s Kilpatrick Stockton, concentrating on domestic and international antitrust matters, including criminal and civil litigation.

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