Friday, July 31, 2009

Shredder Programs and Obstruction of Justice

This is a follow-up to a post I did a couple of years ago, that dealt with using a forthwith grand jury subpoena to obtain computer hardware and other digital evidence. I used a federal case from Connecticut to illustrate how forthwith subpoenas work in this context.

This post is about what happened to the man whose (alleged) conduct was the impetus for the forthwith subpoena: Charles Spadoni. On January 9, 2001, a federal grand jury indicted him on charges of racketeering, conspiracy, bribery, wire fraud and obstruction of justice. U.S. v. Triumph Capital Group, Inc., 544 F.3d 149 (U.S. Court of Appeals for the Second Circuit 2008). He was convicted and appealed, claiming the evidence was Insufficient to prove certain elements of the crimes and the government “suppressed material exculpatory and impeaching evidence.” U.S. v. Triumph Capital, supra.

The Court of Appeals agreed that the government improperly suppressed exculpatory and impeaching evidence relevant to the first four charges, so it reversed his conviction and remanded for a new trial on those counts of the indictment. We, though, are only concerned with the obstruction of justice conviction.

I won’t go into all the facts that led to the non-obstruction of justice charges. I’ll just note that at the time, Spadoni was General Counsel for Triumph Capital, a “Boston-based private equity firm”. U.S. v. Triumph Capital, supra. The original indictment accused Spadoni and others of bribing people in state government, including Paul Silvester, who was for a while the Deputy Treasurer of the state of Connecticut. U.S. v. Triumph Capital, supra. All of this was allegedly going on in 1998 and 1999.

The relationship between Triumph Capital and state employees apparently came to the attention of federal investigators, because on May 25, 1999 a non-forthwith federal grand jury subpoena was served on the Connecticut office of Triumph Capital. It called for the production of evidence related to an investment contract that would later become the basic of certain of the charges in the original indictment. U.S. v. Triumph Capital, supra. Here is where things began to get interesting, as far as we’re concerned:

Shortly after the subpoena was served, Spadoni told Silvester about it. He said Triumph did not believe its consulting contracts with Stack and Thiesfield were covered by the subpoena, but Triumph's lawyers anticipated more subpoenas in the future. Spadoni . . . told [Silvester] that an attorney had advised him to destroy documents not called for by subpoena in anticipation of further subpoenas, and recommended specialized deletion software to remove them from his computer. . . .

On July 13, 1999, the grand jury issued another subpoena, which led Triumph to produce the Stack and Thiesfield consulting contracts. On December 29, 1999, the grand jury issued an additional subpoena, which led to the production of backup tapes from Triumph's computer networks.

On April 11, 2000, the grand jury subpoenaed a Triumph laptop computer assigned to Spadoni. An FBI forensic computer examiner testified at trial that his inspection of the laptop revealed that a copy of the commercial document deletion software `Destroy-It!’ was installed on the computer on June 21, 1999, and used to delete files in a directory named `Triumph’ on June 23, 1999. On December 28, 1999, the software was used to delete two files in a directory named `LAT, LLC,’ which was the name of Thiesfield's wholly-owned company.

Among the documents deleted from the laptop were files named `Stack Contract’ and `LAT Contract.’ These files were accessed on November 16, 1998, and at the time they had last been modified on November 10, 1998. . . . The document deletion software was also used to remove files called `Park Strategies Agreement,’ `Engagement Letter,’ and others apparently unrelated to this case.

At one point after the investigation began, Triumph's comptroller, Robert Trevisani, discussed with Spadoni how to destroy computer files securely, and remarked, `if we were trying to hide something, we could use a program like CleanSweep. . . . Spadoni informed Trevisani that the program he needed `would be Destroy-It!.’

U.S. v. Triumph Capital, supra. The April 11, 2000 subpoena was the forthwith subpoena I talked about in my last post. As I explained in that post, this subpoena issued because the government had heard Spadoni was going to delete evidence on the laptop.

The indictment charged Spadoni with obstructing justice in violation of 18 U.S. Code § 1503(a), which makes it a crime to “influence, obstruct, or impede, the due administration of justice”. Spadoni claimed he should have been acquitted of the charge “because there was insufficient evidence to support the jury's finding that he knew his actions were likely to affect the grand jury proceedings.” U.S. v. Triumph Capital, supra.

In making this argument, Spadoni relied on the U.S. Supreme Court’s decision in U.S. v. Aguilar, 515 U.S. 593 (1995). In Aguilar, the Court held that for someone to be guilty under § 1503(a), they had to know that their actions were “likely to affect the judicial proceeding” which was obstructed. The Aguilar Court reversed a federal judge’s conviction for obstructing justice because it found the evidence did not prove beyond a reasonable doubt that he knew, when he lied to FBI agents, that the false statements would be given to a grand jury.

The Court said it wasn’t enough that Aguilar knew a grand jury was investigating matters related to the false statements he gave; to convict him, the government had to prove he knew the agents were working for the grand jury and his statements would be given to the grand jury. The Court said that absent such knowledge, Aguilar simply lied to federal agents, which does not constitute obstruction of justice. It explained that obstruction of justice under § 1503 requires a nexus between false statements or other acts and a “judicial proceeding;” a grand jury investigation is a judicial proceeding, but talking to federal agents is not. U.S. v. Aguilar, supra.

Spadoni argues that his conduct was directly analogous to Aguilar's. Destroying a document does not in fact affect a grand jury proceeding if the grand jury never requests the document. While Spadoni deleted several documents from his company laptop, at no time did he delete a document for which there was an outstanding subpoena. Just as there was insufficient evidence to prove that Aguilar knew his false statements would later be communicated to the grand . . . , so, goes the argument, there is insufficient evidence to prove that Spadoni knew the documents he deleted would later be, or were likely later to be, requested by the grand jury.

U.S. v. Triumph Capital, supra. The Court of Appeals did not agree. It found, first, that his

argument ignores a key difference between . . . a grand jury subpoena duces tecum seeking the production of documents and the questioning of a subject by an investigating agent. Grand jury subpoenas duces tecum are customarily employed to gather information and make it available to the investigative team of agents and prosecutors so that it can be digested and sifted for pertinent matter. Before the subpoenas are issued, the government often does not have at its disposal enough information to determine precisely what information will be relevant. . . .

Accordingly, subpoenas duces tecum are often drawn broadly, sweeping up both documents that may prove decisive and documents that turn out not to be. This practice is designed to make it unlikely that a relevant document will escape the grand jury's notice, and it is generally effective. Destruction of a relevant document is therefore likely to impact the grand jury's deliberations. . . .

By contrast, an investigating agent collecting statements from witnesses (or even . . . a suspect) does not always act as `an arm of the grand jury,’ and `what use will be made of false testimony given to an investigating agent who has not been subpoenaed or otherwise directed to appear before the grand jury is ... speculative.’ [Aguilar, supra.])

U.S. v. Triumph Capital, supra. The Court of Appeals therefore found that the context provided

a crucial distinction between Aguilar's conduct and Spadoni's. The inference that Aguilar's statements to the agent would be presented to the grand jury was not strong. The statements were not obtained by grand jury subpoena, and statements made to investigating agents are not communicated to grand juries as a matter of course. By contrast, the inference that the grand jury would issue a subpoena for the Thiesfield and Stack contracts was quite strong, perhaps inescapable. The government produced evidence suggesting Spadoni's awareness of the comprehensive nature of the subpoenas duces tecum typically issued in federal grand jury investigations. The jury heard evidence that Triumph's attorneys anticipated further subpoenas; that Spadoni had received advice from a former prosecutor indicating that the grand jury would be likely to inspect the data contained on his laptop; that Spadoni stated his belief that federal investigations are `very comprehensive and thorough,’ and that Spadoni asked Silvester to destroy copies of a different contract. . . .

The Stack and Thiesfield contracts . . . were at the very core of the transaction the government was investigating. The jury could have concluded that Spadoni was aware that further subpoenas covering a broad range of documents would issue, and knew it was likely that the Stack and Thiesfield contracts would be requested. Accordingly, Spadoni's conviction for obstruction of justice, based on his destruction of those documents in his computer files, was supported by sufficient evidence.

U.S. v. Triumph Capital, supra.

The Court of Appeals affirmed the obstruction of justice conviction but remanded that count to the district court for resentencing. The district court had sentenced Spadoni to “concurrent 36-month terms of imprisonment on all counts”. U.S. v. Triumph Capital, supra. The Court of Appeals remanded for resentencing because it could not “be certain that the 36-month concurrent sentence” on the obstruction of justice count “was not affected by the convictions that we have reversed”. U.S. v. Triumph Capital, supra.

1 comment:

JoelKatz said...

18 USC 1503(a) only "influence, obstruct, or impede" clause is about threatening letters. I'd love to see the law that makes it a crime to destroy your own documents before they have been requested by a grand jury.