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You are a corporate executive staring down the barrel of a prosecutor’s gun. How do you know what kind of charge will be fired — criminal, civil, or if you are really lucky, perhaps even a blank? Former prosecutors say much depends on how you respond to the government’s investigation in the first place. The charges will also be influenced by a variety of other factors, they say, including how good the proof is, how complicated the case is, and what message the charge will send to the industry and the public at large. But one way to virtually guarantee yourself trouble in the form of a criminal charge is to actively obstruct the prosecution’s investigation. “Obstruction can often convert a decision not to prosecute into a decision to prosecute,” said Mary Jo White, the former U.S. Attorney for the Southern District of New York who now heads the litigation practice at Debevoise & Plimpton. “There is probably nothing that a prosecutor regards more seriously than obstruction,” she said, “because it undermines the ability to fairly and efficiently prosecute wrongdoing.” “It is a blatant offense in the face of the government,” added White. “They are not ever going to respond warmly.” A number of former corporate executives are now facing obstruction charges for alleged interference with a government probe. The indictments of Martha Stewart, former chief executive of Martha Stewart Living Omnimedia, and Frank P. Quattrone, a former investment banker with Credit Suisse First Boston, are perhaps the two most high-profile examples. Enron Corp.’s former chief financial officer, Andrew S. Fastow, has also been indicted for obstruction of justice, among other charges. Last year, ImClone Systems Inc. founder Samuel D. Waksal pleaded guilty to obstruction and insider trading charges, and the year before that, David Duncan, an accountant with Arthur Andersen who worked on the Enron account, pleaded guilty to obstruction. Arthur Andersen itself was convicted of obstruction last year, resulting in the demise of the former Big Five accounting firm. Obstruction of justice generally involves lying to a grand jury or destroying documents, or instructing others to do the same, former prosecutors said. White said it is typically one of the most obvious offenses. That it is obvious, however, does not necessarily translate into a slam dunk for the prosecution. James B. Comey, the U.S. Attorney for the Southern District of New York, learned this in late October when his prosecution of Quattrone ended in a hung jury. Quattrone has been charged with attempting to hinder a government probe into allegations that during the late 1990s high-tech boom, Credit Suisse and other investment banks required investors looking to get in on initial public offerings to pay unreasonably high commissions and purchase shares in the aftermarket to keep stock prices artificially high. In a settlement with the Securities and Exchange Commission last year, Credit Suisse agreed to pay a $100 million fine without admitting or denying liability. The prosecution’s case against Quattrone focused largely on an e-mail message he sent to his Credit Suisse colleagues during the course of the investigation, telling them to “clean up those files.” Southern District Judge Richard Owen declared a mistrial after jurors failed to reach a decision. The case is scheduled to be retried March 22. Former prosecutors said the case might have been hindered by the lack of an underlying substantive charge. “It’s much harder to bring an obstruction case without coupling it with a substantive crime,” White said. “You risk jury nullification,” she said, explaining that jurors may think that “there wasn’t a crime here so what’s the big deal?” White said that stand-alone obstruction cases present another concern in the arena of white-collar crime. “You risk garbling the message you are trying to send,” she said. “It can send a message that you are not going after the most serious instances of white-collar crime, but instead are going after obstruction cases in which the underlying offense is smaller.” MARTHA STEWART CASE The case against Martha Stewart may be perceived as one such example of an obstruction case with a relatively minor underlying offense, former prosecutors said. Comey has charged Stewart with lying to investigators about her sale of shares in the biotech company ImClone Systems, allegedly based on insider information about its anti-cancer drug Erbitux, thus avoiding about $50,000 in losses. But Stewart was not charged with insider trading, although she faces what experts say is a “novel” charge of making false statements to bolster the price of her own company’s shares. The case against Stewart was probably brought “because of a combination of her name and the extent of the alleged obstruction,” said Alan Vinegrad, the former Eastern District U.S. Attorney who is now a partner in the New York office of Covington & Burling. Prosecutors are accusing Stewart of altering documents, making false statements to government regulators and collaborating with her broker to cover up what she had done. “It’s pretty wide-ranging activity,” Vinegrad said. Still, he said, “if you strip away the obstruction case, what you’ve got is a $51,000 loss. You won’t get me to say that that was a serious offense. “The case probably had more to do with who she was than what she did,” Vinegrad said. “The government was in a tough spot. If they hadn’t brought a case, people would have said, ‘It must be because she is a celebrity.’” Prosecutors will also bring stand-alone obstruction cases where the underlying offense is difficult to explain to a jury, such as an arcane tax case or insider trading, said Stanley Twardy, a former U.S. Attorney for the District of Connecticut who is now a partner at Day, Berry & Howard in Stamford. In such circumstances, prosecutors may decide to pursue the relatively simpler charge of obstruction, he said. The prosecutor may also lack the evidence needed to prove the underlying crime beyond a reasonable doubt, Twardy said. And stand-alone obstruction cases get brought, he said, “because you do get convictions.” Former prosecutors said they did not expect the mistrial in the Quattrone matter to affect future prosecutions, including that of Stewart. White said she was faced with a similar question after her office lost an obstruction case against a Texaco executive in a race discrimination matter. Her response, she said, was that it would not deter her from bringing the next obstruction case “on the appropriate facts.” “You’re not going to win every case,” she said. “If you win 100 percent of the time, it means you’re not bringing any hard cases.” Eric R. Havian, a former Assistant U.S. Attorney who is now a partner at Phillips & Cohen in San Francisco, said the Quattrone mistrial could actually have a much bigger impact on the defendants and defense attorneys in other white-collar crime cases. “Martha Stewart may look at that trial and say, ‘Hey, he got off and he did a terrible job on the stand. I’m a much more credible witness,’” he said. What she may not realize, Havian said, and what prosecutors know, is that every case is different. “It is highly unlikely that the jurors who sit on the Stewart case will know what happened in the Quattrone case,” he said. “It can make a criminal defense lawyer’s job more difficult.” Comey, whose office is prosecuting both Quattrone and Stewart, has been tapped as deputy attorney general and is already spending most of his time in Washington, D.C. But his departure will have “very little impact” on pending obstruction cases in the Southern District, Havian said. “Once the case is in the office, it is worked on by the career people,” he said. “U.S. Attorneys really have an impact at the broader level, allocating resources and making other decisions.” The Southern District U.S. Attorney’s Office did not return calls seeking comments for this article. PROSECUTING COMPANIES In much rarer circumstances, prosecutors will also bring criminal charges against a company. Among all the corporate scandals that have followed in the wake of the accounting debacle at Enron Corp., Arthur Andersen is the only company to be indicted thus far. White described criminally charging an entire company as “a very awesome decision.” “It can affect many innocent employees and shareholders and may negatively impact the marketplace as well,” she said. “You need to consider the overall public interest.” As such, the relative dearth of corporate criminal charges is not surprising, former prosecutors said. Prosecutors are much more interested in bringing cases against individuals, Havian said. “As the old saying goes, ‘A corporation has no soul to damn, no body to kick,’” he said. There are certain times, however, when a prosecutor will contemplate going after a company criminally. “Typically you would look at criminal charges against a company to send a message,” he said, “but also in large part to exercise control of the company in the future.” That is, of course, if the company survives the charge. New York Attorney General Eliot Spitzer has described a criminal conviction as the “death penalty” for companies, and in many cases it is. Spitzer’s office did not return calls for comment for this article. If it means the company will lose a license to do business, such as is typically the case in the defense, health care and securities industries, it will have a hard time staying alive, Havian said. A criminal conviction can also kill a company where “reputation is everything,” as was the case with Arthur Andersen, said Vinegrad of Covington & Burling. He said the decision to charge the company anyway probably reflected a combination of several factors. First, they were repeat offenders, he said. The company had been sanctioned before for its role in an accounting scandal and had entered into a consent decree promising that it would not repeat its past offenses. There was also a reported unwillingness to accept responsibility for what it did, Vinegrad said, adding that Arthur Andersen reportedly refused an offer of deferred prosecution that might have enabled the company to survive. Finally, he said, it appeared that it was difficult to place the blame on any one person at the company. “There was a lot of fingerpointing,” he said.

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