White Collar Alert
A Grand Jury in the Southern District of Texas recently handed down an indictment charging an individual with obstruction of justice for allegedly lying to outside counsel conducting an internal investigation.
The indictment, No. H-04-514-SS in United States v. Singleton, charges, inter alia, that Greg Singleton, a natural gas trader for El Paso Corporation, engaged in a conspiracy to falsely report natural gas transactions to two leading industry reports and subsequently lied to outside counsel conducting an internal investigation into those allegations. The indictment alleges that, in July 2002, the United States Attorney’s Office in the Southern District of Texas began investigating El Paso’s natural gas trading practices. El Paso received subpoenas from a Grand Jury and Commodities Futures Trading Commission, and a “data request” from the Federal Energy Regulatory Commission. Upon receiving the Grand Jury subpoena, El Paso issued a press release in which it agreed to “cooperate fully with the request.”
El Paso then undertook an internal effort to collect the requested documents, including making inquiries to Mr. Singleton.
On November 13, 2002, the company hired outside counsel to conduct an internal investigation into “the accuracy of the information that [the company] reported to trade publications.” On November 14, 2002, the outside counsel conducting the investigation sought to interview Mr. Singleton and informed him that the company “may choose” to disclose the contents of the interview to the government. At this point, Mr. Singleton stated that he had retained individual counsel and wanted to reschedule the interview when his individual counsel could be present. On November 19, 2002, prior to interviewing Mr. Singleton, El Paso allegedly reported to the United States Attorney’s Office that it had “uncovered an incident in which an El Paso natural gas trader had reported inaccurate information to a trade publication” and the U.S. Attorney’s office “immediately began a criminal investigation of the matter.” The indictment does not state whether Mr. Singleton was aware of this report by El Paso or the subsequent launch of the U.S. Attorney’s Office investigation.
Subsequently, on November 22, 2002, Mr. Singleton was interviewed by outside counsel at his attorney’s office. The indictment alleges that during this interview Mr. Singleton “did not disclose, falsely denied and otherwise concealed that he had provided false information to trade publications.” The indictment further alleges, but does not substantiate, that Mr. Singleton “believed that El Paso’s Outside Lawyers would inform government agencies of his statements during the interview.” As a result, the indictment charges that Mr. Singleton did “knowingly, intentionally and corruptly obstruct, influence and impede official proceedings, to wit, the government investigations of El Paso’s natural gas price reporting to trade publications” and thus violated 18 U.S.C. § 1512(c)(2).
The indictment of Mr. Singleton follows the guilty pleas and indictments of several executives of Computer Associates in the Eastern District of New York for allegedly obstructing justice by lying to private law firms hired by the company to conduct internal investigations. The theory of prosecution used in Computer Associates and now in the Singleton case raises anew issues about how attorneys advise interviewees during an investigation.
The government clearly believes that § 1512(c) extends obstruction of justice to statements made to private attorneys conducting internal investigations, at least where the defendant has reason to believe his statements may ultimately be produced to the government. This trend of “deputizing” private outside counsel conducting internal investigations as de facto agents of the government for purposes of obstruction of justice and false statements charges is increasingly common. This theory raises not only a host of legal and ethical issues, but also practical implications about conducting future internal investigations. Miller & Chevalier Chartered, will continue to monitor developments in this area and issue alerts as appropriate.
For more information, please contact any of the following lawyers:
Mark Rochon, firstname.lastname@example.org, 202-626-5819
John Davis, email@example.com, 202-626-5913
Matthew Reinhard, firstname.lastname@example.org, 202-626-5894