Legal Traps for Unwary Managers during Corporate Criminal Investigations

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In today's legal climate, managers are learning that it's essential to be on your guard (and your best behavior), even during internal criminal investigations. Two dramatic developments underscore the personal risk to unwary managers.

The most significant development involves the April 9, 2004 guilty plea to obstruction of justice charges by three former executives of Computer Associates. Readers will recall that Martha Stewart was convicted of lying to federal investigators looking into securities violations. Although this type of lying isn't a form of perjury, because it isn't usually under oath, federal law makes it a felony--obstruction of justice--because it impedes a government investigation of other crimes.

The Computer Associates case also involves obstruction of a federal criminal investigation by individuals who lied to the investigators. A garden-variety obstruction case? Not exactly. The managers didn't lie to either government investigators or a grand jury. Instead, they pied guilty to misleading the investigators--through lies to their company's lawyers--who were conducting the internal investigation. The guilty pleas were based on the theory that the managers knew their lies would be passed directly to the federal investigators by the lawyers who conducted the investigation.

When the federal investigation became public in February 2002, the …