obstructing justice

Victor Rita was convicted after a jury trial of perjury, making false statements, and obstructing justice in connection with an investigation into InterOrdnance, a gun company. Prosecutors had been examining whether buyers of InterOrdnance's PPSH 41 machinegun parts kits could assemble machineguns without proper registrations. Rita had purchased one such kit, allowed an ATF agent to inspect it after initially sending it back to the company, and provided a different kit that did not amount to a machinegun. When brought before the grand jury, Rita denied under oath that the agent had asked for the PPSH kit and that he had spoken to InterOrdnance about it shortly thereafter. A probation officer prepared a presentence report that grouped the five counts of conviction as stemming from a single incident and calculated a Guidelines sentencing range. The report determined a base offense level of 20 by treating the perjury as accessory after the fact to the underlying gun registration violation. It placed Rita in criminal history category I due to no countable prior offenses more than 10 years before the present offense. The report recommended a sentence of 33 to 41 months' imprisonment. The report noted no circumstances warranting a departure. At the sentencing hearing, Rita presented evidence and argument seeking a sentence below the Guidelines range based on his poor physical condition, fear of retaliation in prison due to his prior work in government criminal justice, and his lengthy military service of over 25 years with 35 commendations, awards, or medals. The Government did not seek a sentence above the range but noted that Rita's perjury had interfered with its case against InterOrdnance and that Rita should have known better as a former employee. The district judge listened to the arguments, found the Guidelines range appropriate, and imposed a sentence of 33 months' imprisonment. Rita appealed to the Fourth Circuit, arguing that his sentence was unreasonable because it did not adequately account for his history and characteristics and was greater than necessary under 18 U.S.C. § 3553(a). The Fourth Circuit affirmed, applying a presumption that a sentence within the properly calculated Guidelines range is reasonable. Rita then petitioned for certiorari, noting a circuit split on the use of such a presumption, and the Supreme Court granted review.

Enron Corporation switched its business from operation of natural gas pipelines to an energy conglomerate during the 1990s. This move was accompanied by aggressive accounting practices and rapid growth. Beginning in 2000, Enron’s financial performance began to suffer, and as 2001 wore on it worsened. On August 14, 2001, Jeffrey Skilling, Enron’s Chief Executive Officer, unexpectedly resigned. Within days, Sherron Watkins, a senior accountant at Enron, warned Kenneth Lay, Enron’s newly reappointed CEO, that Enron could implode in a wave of accounting scandals. She likewise informed David Duncan and Michael Odom of the looming problems. On August 28, an article in the Wall Street Journal suggested improprieties at Enron, and the SEC opened an informal investigation. By early September, petitioner had formed an Enron crisis-response team, which included Nancy Temple, an in-house counsel. On October 8, petitioner retained outside counsel to represent it in any litigation that might arise from the Enron matter. On October 10, Odom spoke at a general training meeting attended by 89 employees, including 10 from the Enron engagement team. Odom urged everyone to comply with the firm’s document retention policy. He added that if it is destroyed in the course of the normal policy and litigation is filed the next day, that is great because the firm has followed its own policy. Temple entered the Enron matter into her computer on October 12, designating the Type of Potential Claim as Professional Practice Government Regulatory Investigation. Temple also emailed Odom, suggesting that he remind the engagement team of the documentation and retention policy. On October 16, Enron announced its third quarter results disclosing a $1.01 billion charge to earnings. The following day, the SEC notified Enron by letter that it had opened an investigation in August and requested information and documents. On October 19, Enron forwarded a copy of that letter to petitioner. On the same day, Temple sent an e-mail to a member of petitioner’s internal team of accounting experts and attached a copy of the document policy. On October 20, the Enron crisis-response team held a conference call, during which Temple instructed everyone to make sure to follow the document policy. On October 23, Enron CEO Lay declined to answer questions during a call with analysts because of potential lawsuits as well as the SEC inquiry. After the call, Duncan met with other Andersen partners on the Enron engagement team and told them that they should ensure team members were complying with the document policy. Another meeting for all team members followed, during which Duncan distributed the policy and told everyone to comply. These and other smaller meetings were followed by substantial destruction of paper and electronic documents. On October 30, the SEC opened a formal investigation and sent Enron a letter that requested accounting documents. Throughout this time period, the document destruction continued despite reservations by some of petitioner’s managers. On November 8, Enron announced that it would issue a comprehensive restatement of its earnings and assets. Also on November 8, the SEC served Enron and petitioner with subpoenas for records. On November 9, Duncan’s secretary sent an e-mail that stated Per Dave No more shredding. We have been officially served for our documents. In March 2002, petitioner was indicted in the Southern District of Texas on one count of violating sections 1512(b)(2)(A) and (B). The indictment alleged that between October 10 and November 9, 2001, petitioner did knowingly, intentionally and corruptly persuade other persons, to wit petitioner’s employees, with intent to cause them to withhold documents from, and alter documents for use in, official proceedings, namely regulatory and criminal proceedings and investigations. A jury trial followed. When the case went to the jury, that body deliberated for seven days and then declared that it was deadlocked. The District Court delivered an Allen charge, and after three more days of deliberation, the jury returned a guilty verdict. The District Court denied petitioner’s motion for a judgment of acquittal. The Court of Appeals for the Fifth Circuit affirmed. Because of a split of authority regarding the meaning of section 1512(b), the Supreme Court granted certiorari.

In March 1981, R. Foster Winans began working as a reporter for the Wall Street Journal and one of the writers of the "Heard on the Street" column. From December 1981 through May 1983, David Carpenter worked as a news clerk at the Journal. Kenneth P. Felis was a stockbroker at Kidder Peabody who had been brought to the firm by Peter Brant, another Kidder Peabody broker and Felis' longtime friend. Since February 1981, Dow Jones distributed to all new employees "The Insider Story," a forty-page manual with seven pages devoted to the company's conflicts of interest policy. The district court found that both Winans and Carpenter knew company policy deemed all news material gleaned by an employee during the course of employment to be company property and required employees to treat nonpublic information learned on the job as confidential. Winans participated in a scheme with Brant, Felis, and Carpenter in which Winans provided the two stockbrokers with securities-related information scheduled to appear in "Heard" columns. Based on this advance information the brokers would buy or sell the subject securities. Carpenter, who was involved in a private personal relationship with Winans, served primarily as a messenger between the conspirators. Trading accounts were established in the names of Felis, Carpenter, Winans, Brant, David Clark, Western Hemisphere, and Stephen Spratt. During 1983 and early 1984, defendants made pre-publication trades on the basis of their advance knowledge of approximately twenty-seven Wall Street Journal "Heard" columns, generating net profits approaching $690,000. In November 1983, when Kidder Peabody's Compliance Department noticed a correlation between "Heard" articles and trading in the Felis and Clark accounts, Felis denied any impropriety. Felis and Brant moved funds among accounts to conceal the scheme, and Felis advised Stephen Spratt to change account names. When the SEC began inquiring, Clark and Brant made misstatements to agency officials, and Carpenter produced false invoices. On March 29, 1984, Winans and Carpenter voluntarily testified fully to the SEC. After a twenty-day non-jury trial in the United States District Court for the Southern District of New York before Judge Charles E. Stewart, Jr., Winans and Felis were convicted of securities fraud, mail and wire fraud, and conspiracy, while Carpenter was convicted of aiding and abetting. The defendants appealed to the Second Circuit.

In 1979, petitioner Sedima, a Belgian corporation, entered into a joint venture with respondent Imrex Co. to provide electronic components to a Belgian firm. The buyer was to order parts through Sedima. Imrex was to obtain the parts in this country and ship them to Europe. The agreement called for Sedima and Imrex to split the net proceeds. Imrex filled roughly $8 million in orders placed with it through Sedima. Sedima became convinced that Imrex was presenting inflated bills, cheating Sedima out of a portion of its proceeds by collecting for nonexistent expenses. In 1982, Sedima filed this action in the Federal District Court for the Eastern District of New York. The complaint set out common-law claims of unjust enrichment, conversion, and breach of contract, fiduciary duty, and a constructive trust. In addition, it asserted RICO claims under § 1964(c) against Imrex and two of its officers. Two counts alleged violations of § 1962(c), based on predicate acts of mail and wire fraud. A third count alleged a conspiracy to violate § 1962(c). Claiming injury of at least $175,000, the amount of the alleged overbilling, Sedima sought treble damages and attorney's fees. The District Court held that for an injury to be "by reason of a violation of section 1962," as required by § 1964(c), it must be somehow different in kind from the direct injury resulting from the predicate acts of racketeering activity. It found no allegation here of any injury apart from that which would result directly from the alleged predicate acts of mail fraud and wire fraud. Accordingly, it dismissed the RICO counts for failure to state a claim. A divided panel of the Court of Appeals for the Second Circuit affirmed. After a lengthy review of the legislative history, the Court of Appeals held that Sedima's complaint was defective in two ways. It failed to allege an injury "by reason of a violation of section 1962." It also failed to allege that the defendants had already been criminally convicted of the predicate acts of mail and wire fraud, or of a RICO violation. In light of the variety of approaches taken by the lower courts and the importance of the issues, the Supreme Court granted certiorari.