Liar, Liar

by Nicholas Walsh, PA

Pop quiz: In 2001 Martha Stewart’s stock broker told her to dump her shares of ImClone Systems, a high flying stock. He said the Food and Drug Administration was about to release bad news about a new ImClone drug, and the company owners were dumping their shares. Stewart told her broker to sell her shares, the stock dived, and she saved what to you or me would be real money, even if it was chump change for Martha. But Stewart was convicted of a crime in connection with this bad business. What crime was it?

If you answered “insider stock trading,” you’re wrong. Stewart served five months in federal prison for making a false statement to the investigators, which she did when she claimed that her broker sold the shares because of a preexisting sell order, not because of the inside information.

It’s a surprisingly common story. A person has crossed the criminal line, or nearly so, is visited by an investigator, lies to cover his or her tracks, and gets convicted of just that, and not the underlying offense.

The federal law is found at 18 United States Code section 1001. Broadly, it makes it a crime for person to make any false statement to a federal investigator, whether verbally or in writing.

Doesn’t matter if the lie is verbal. Doesn’t matter if you got no monetary benefit from the lie. Doesn’t matter if you received no warning that lying to an investigator is a crime.

Section 1001 is a big favorite with the feds, because so many folks under investigation lay themselves open to the charge. In fact, according to my sources some United States Attorneys order early interviews of minor witnesses to white collar conspiracy crimes with the thought that a panicked witness will blurt out a lie. With the witness now exposed to criminal liability for making a false statement, the witness can be induced to become an informant or an enthusiastically cooperative witness, out to save his skin when the case gets to court.

Suppose you’ve done nothing wrong and you’re not afraid of the truth. You may think – as so many hapless criminal defendants have – that your best bet is to tell the investigator the whole story. And being a good Mainer, you want to be upfront with the agent. Even then it’s almost always a bad idea to agree to an interview with a federal agent.

First, chances are you don’t really know how serious the matter under investigation is. Even if you are a very minor player, the feds may seek your indictment as leverage in obtaining favorable testimony. You may not know if what you did, or what the feds think you did, is really a crime. In other words, you don’t know enough to keep yourself out of trouble.

So what do you do? If you are approached by a federal agent for an interview, any interview, do the following and nothing more: Ask the agent for his or her card, and tell him or her that you decline to be interviewed and that your lawyer will be in touch. Then shut up.

Ignore threats that you’ll be subpoenaed to testify to a grand jury. Ignore everything the agent says. Just take the card, say your lawyer will be in touch, and end the encounter by leaving or showing the agent to the door.

Remember, if an investigator contacts you don’t just clam up. Silence can be used against you – the agent can testify to a jury that he asked you “Did you harpoon the tuna?” and that you just said nothing. In the jury’s eyes that could be evidence of guilt. But telling the agent your lawyer will be in touch and you decline to be interviewed won’t come into evidence and cannot be used against you.

Maine doesn’t have the same crime, but it does have “Unsworn Falsification,” making it a Class D misdemeanor to give a false written statement “with the intent to deceive a public servant in the performance of his official duties.” So it’s not a crime in Maine to lie to a Maine cop, unless you do so in writing. (But it’s a bad idea all the same.) There’s an exception for falsely identifying yourself to an officer: that’s a crime whether or not you do it in writing.

Stay out of trouble.

Nicholas Walsh is an attorney practicing in Portland. He may be reached at (207) 772-2191, or at nwalsh@gwi.net.