Calling DOJ’s Bluff: Why a Stand-Alone False Statement Charge Is the Sign of the Weak Prosecution

hand raises for two winning cards on a green poker tableOn September 4, 2019, after just a few hours of deliberation, a jury in federal district court in Washington, DC found former White House counsel Gregory Craig not guilty of one count of making a false statement.

Mr. Craig had an excellent legal team and plenty of funds to pay them (he’s a former Skadden partner). Even that amazing group of lawyers couldn’t convince the Department of Justice not to indict him in the first place.

That’s because it’s notoriously easy for a prosecutor to charge someone with false statements. That said, any defense lawyer will tell you that when a prosecutor threatens a false statement charge—without an underlying substantive charge—the government has a weak case.

One Thousand One

For starters, you need to get the lingo right. White-collar defense lawyers refer to this charge either as “false statements” or “a one thousand one.” That’s a reference to the U.S. Code section that governs, 18 U.S.C. § 1001. Don’t confuse false statements with perjury. Perjury requires that the false statement have been made under oath. For a false statement charge, the statement need only have been made during as part of some sort of government action or investigation or proceeding. Most often, it’s based on a false statement made by a witness to a government agent.

Here’s the language of section 1001:

18 U.S. Code § 1001. Statements or entries generally

(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully—

(1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact;

(2) makes any materially false, fictitious, or fraudulent statement or representation; or

(3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry;

shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331), imprisoned not more than 8 years, or both. If the matter relates to an offense under chapter 109A, 109B, 110, or 117, or section 1591, then the term of imprisonment imposed under this section shall be not more than 8 years.

(b) Subsection (a) does not apply to a party to a judicial proceeding, or that party’s counsel, for statements, representations, writings or documents submitted by such party or counsel to a judge or magistrate in that proceeding.

(c) With respect to any matter within the jurisdiction of the legislative branch, subsection (a) shall apply only to—

(1) administrative matters, including a claim for payment, a matter related to the procurement of property or services, personnel or employment practices, or support services, or a document required by law, rule, or regulation to be submitted to the Congress or any office or officer within the legislative branch; or

(2) any investigation or review, conducted pursuant to the authority of any committee, subcommittee, commission or office of the Congress, consistent with applicable rules of the House or Senate.

To win a false statement charge, the government must prove five elements:

(1) the defendant must make a statement, or have a duty to disclose the information;

(2) the statement must be false, or there must be acts amounting to concealment;

(3) the statement or concealed facts must be material;

(4) the person must make the statement or conceal the facts knowingly and willfully; and

(5) the statement or concealed information must concern a matter within the jurisdiction of a federal department or agency.

United States v. Moore, 446 F.3d 671, 677 (7th Cir. 2006).

Materiality Matters

The most common defenses to a false statement charge are (1) the statements were not material and (2) the defendant did not make the false statements “knowingly and willfully.”

A fact is material if it is capable of influencing or affecting a federal agency. That’s a fairly broad standard since nearly every statement made to a government agency or official in any context is “capable” of influencing the government agency. If it isn’t, then why is the private citizen making the statement in the first place?

Materiality is very fact specific. For example, let’s say a sales rep is interviewed by a government agent. During the interview, she tells the agent that she started working at the company in July 2015 rather than June 2015. If everything relevant in the case happened in December 2015, then getting the date wrong wouldn’t matter and it wouldn’t be material. But if the company is under investigation for bribery that occurred in this sales rep’s district in June 2015, then her “false” statement is all of a sudden very material. She may be hiding the fact that she worked there when the bribes were paid.

Prosecutors Love to Threaten False Statement Charges—Consider Calling Their Bluff

I’ve been in several cases where the prosecutors have threatened false statement charges. Most often, those charges are based on what my client said in an interview with a federal agent. These interviews are captured only by an agent’s 302 and are not recorded.

I’m quite convinced that one reason agents don’t record these interviews is because they don’t want a record of how much arm-twisting happened during the interview. (I don’t mean physical arm-twisting; I mean coercive statements about the repercussions of not “cooperating” the way the agents want, the confusing and vague questions,  and so forth).

Another reason agents don’t record these interviews is because it would create a definitive record that would make false statement charges much more difficult to bring, because the recording would need to be turned over in discovery. It’s much easier to write a 302 that is strongly shaded to the government’s narrative, and then threaten a false statement charge if the witness denies making those statements later.

In any lengthy interview by the FBI in a white-collar case, there will be lots of questions. In many of these interviews, there will be questions about who attended a meeting, what was said during the meeting, when the meeting happened and so forth. Often, the questions are about events that happened a year or more before.

Try this experiment: What meetings did you attend on Wednesday, June 6, 2018? Don’t look at your calendar to check first. Who else was there? What did you talk about during the meeting? Who said what during the meeting? What documents did you look at during the meeting? Was there a PowerPoint presentation? Did you send any follow-up emails after the meeting?

Now picture trying to answer those questions when two armed FBI agents are sitting in your living room, staring at you like you are a criminal.

If you were asked those questions by your boss at work, you’d check your calendar to see who responded to the Outlook invite, you’d check your emails to see if there was an agenda sent ahead of time, you’d look in your notebook to see if you took any contemporaneous notes. In a surprise FBI interview? There’s no chance to do any of this.

Getting the answers to these types of questions wrong in normal situations is viewed as nothing more than a typical faulty memory. Getting the answers wrong in an FBI interview is the basis of a false statement charge.

When a prosecutor has a strong case against your client, the charges will include “substantive” charges, meaning that they are charges of a real crime—like fraud, or bribery, or money laundering—and not just “process”-type crimes like obstruction or false statements.

When a prosecutor threatens only a false statement charge, there’s usually a weak substantive case. After a time-consuming investigation, a prosecutor no doubt feels a natural need to extract some plea deal from a defendant, no matter how minor the charge, to justify the time and resources that went into the investigation in the first place.

The sad fact is that it’s much too easy to find a “false” statement in an FBI interview, and it’s far too common for prosecutors to threaten a § 1001 charge when there’s nothing else to charge.

When I hear a prosecutor threatening a false statement charge and nothing else, it’s a red flag that the rest of the case is weak. It’s also a good sign that we should keep fighting and call their bluff. Charging a false statement is easy, winning one at trial is a lot harder.

Greg Craig was lucky to have the resources to pay for an excellent legal team. I’m sure he was thrilled with the outcome. I’m equally sure he would have traded the feeling of victory when the foreperson read the “not guilty” verdict for the prosecutor’s decision not to charge him in the first place.

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