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Court of Appeals Affirms Conviction of Former Connecticut Governor Based On Expansive Interpretation of Sarbanes-Oxley

In United States v. Rowland, No. 15-985, the Second Circuit (Winter, Chin, Carney) rejected challenges by former governor of Connecticut John Rowland to both his conviction and sentence on seven counts of violating campaign finance laws and falsifying records.  In so doing, the panel issued an important decision regarding the interpretation of 18 U.S.C. § 1519, a provision of the Sarbanes-Oxley Act, which prohibits the falsification of documents for the purpose of misleading government investigators.  The Rowland decision tacks in a different direction from the Supreme Court’s recent decision in Yates v. United States, 135 S. Ct. 1074 (2015), in which the Court narrowed the reach of this statute by adopting an interpretation rooted in the statute’s purpose.  Rowland, by contrast, seems to take a broader approach. 

According to the panel’s opinion, during the 2010 and 2012 election cycles, Rowland sought paid political consulting work on behalf of two Republican congressional candidates, Mark Greenberg and Lisa Wilson-Foley.  Because at that time Rowland had already served ten months in jail on prior convictions relating to a political corruption scandal that resulted in his 2004 resignation from office, neither Rowland nor the candidates wanted Rowland’s involvement in their campaigns to be made public.  The Federal Election Commission (“FEC”) requires campaigns to disclose disbursements to individuals from official campaign funds, see 11 C.F.R. § 104.3(b)(3)(i); it therefore became vital that Rowland not receive any payment for his political consulting work directly from either campaign.  To facilitate payment through other channels, Rowland prepared and submitted to Greenberg a draft contract, under which he offered to provide “consulting services” for Greenberg’s businesses and his nonprofit organization.  Greenberg ultimately decided not to hire Rowland.  Rowland’s involvement with the Wilson-Foley campaign was more extensive.  Rather than entering into a contract with Wilson-Foley herself, Rowland was instead hired as a consultant for a nursing home company, Apple Rehab, which was run by Wilson-Foley’s husband.  Apple Rehab agreed to pay Rowland $5,000 per month for his services.  Rowland did engage in work on behalf of Apple Rehab during the campaign season, but also worked for Wilson-Foley’s campaign (over the relevant time period, Rowland participated in 787 email exchanges relating to the campaign and only 63 regarding Apple, suggesting that Rowland spent more time working on the campaign than for Apple Rehab).

Following a government investigation, Rowland was indicted and subsequently convicted at trial on seven counts, including two counts of falsification of records in violation of 18 U.S.C. § 1519, with respect to both the Greenberg and Wilson-Foley contracts.  The U.S. District Court for the District of Connecticut sentenced Rowland to thirty months’ imprisonment.  On appeal, Rowland argued that the evidence did not support his Section 1519 convictions because the contracts in question were not “falsified” within the meaning of the statute; that he was entitled to a new trial because the government improperly withheld material exculpatory evidence from the defense in violation of Brady v. Maryland, 373 U.S. 83 (1963); and that the district court committed various other errors relating to evidentiary rulings, jury instructions, and U.S. Sentencing Guidelines’ calculations.  The Second Circuit rejected each of these challenges.

Sarbanes-Oxley Obstruction of Justice Offense: 18 U.S.C. § 1519

Title 18, United States Code, Section 1519 makes it illegal for an individual to “knowingly alter[], destroy[], mutilate[], conceal[], cover[] up, falsif[y], or make[] a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States.”  Rowland contended that he could not have falsified the contracts in question as “falsification” refers only to tampering with a preexisting document, not creating a new document.  However, analyzing the statute’s plain meaning, the panel determined that “falsification” extends further and can encompass any false “represent[ation],” including a representation made in a newly drafted document.  Choosing between its canons of construction, the panel turned aside Rowland’s argument that “falsifies” should be read to have a meaning similar to that of the neighboring words in the provision (i.e., “alters, destroys, mutilates, conceals, covers up”), which suggest tampering with an existing document.  Instead, the panel reasoned that Rowland’s proposed definition of the term would make “falsifies” synonymous with “alters”—another term in Section 1519.  Because this reading would render “falsifies” superfluous, a broader reading was therefore appropriate.  Finally, the panel noted that the legislative history of Section 1519 also supported an expansive interpretation: according to the Senate Report, “Section 1519 is meant to apply broadly to any acts to destroy or fabricate physical evidence … .”  S. Rep. No. 107-146, at 14 (2002).

After the panel determined that an individual may violate Section 1519 “by creating a document that is false,” the panel considered whether the contracts at issue were in fact “falsified” by Rowland.  In support of his argument, Rowland relied on United States v. Blankenship, 382 F.3d 1110 (11th Cir. 2004), an Eleventh Circuit case interpreting a different federal statute relating to “false writing[s] or document[s],” 18 U.S.C. § 1001(a)(3).  In Blankenship, the Eleventh Circuit concluded that promises in a contract could not be “false,” even where “neither party actually intended to carry through on their promises” because “[a] ‘promise’ contained in a contract is not a certification that the promisor will actually perform the specified acts, or presently intends to perform those acts.”  Id. at 1133.  The Second Circuit, however, departed from the Eleventh Circuit’s reasoning, potentially creating a Circuit split.  The panel read Section 1519 broadly, to encompass “the creation of documents—like the contracts at issue here—that misrepresent the true nature of the parties’ negotiations, when the documents are created in order to frustrate a possible future government investigation.”  The panel commented that “importing principles of contract law into the interpretation of this criminal statute muddies the issues,” and held that “a written contract may be ‘falsified’ for purposes of § 1519 if it misrepresents the true nature of the parties’ agreement,” or “the true relationships among the parties.”  In Rowland’s case, it was clear that the documents—purporting to hire him as a business consultant (in the case of Greenberg) and an employee of Apple Rehab (in the case of Wilson-Foley)—did not reflect the arrangement actually contemplated by the parties; therefore, it was unimportant that the fictitious arrangement was memorialized in a contract rather than, for example, in a memorandum to file, which more easily could have been deemed “false.”  Because there was no shortage of evidence that Rowland intentionally drafted contracts that misrepresented his relationship with two congressional candidates, the panel determined that Section 1519 reached his conduct.

Brady Violation

Rowland next contended that Wilson-Foley made exculpatory statements during a government interview, which the government withheld from him in violation of Brady v. Maryland, 373 U.S. 83.  Under Brady, the government must disclose all material evidence favorable to a criminal defendant; evidence is material where there is “a reasonable probability that, had the evidence been disclosed to the defense, the result of the proceeding would have been different.”  United States v. Mahaffy, 693 F.3d 113, 127 (2d Cir. 2012).  Rowland argued that had he been aware of Wilson-Foley’s statements, he likely would have used those statements to challenge her husband’s testimony.  The statements in question amounted to a refusal by Wilson-Foley to admit that Rowland’s work for Apple Rehab was a “sham.” 

The Second Circuit concluded that although the government’s summary of the Wilson-Foley interview did not reference that precise language, the summary accurately conveyed “Wilson-Foley’s denial of a connection between her campaign and Rowland’s employment at Apple”—which effectively communicated the same point.  Further, the panel noted that Wilson-Foley’s position had already been revealed to the defense through other evidence.  Quoting United States v. Avellino, 136 F.3d 249, 257 (2d Cir. 1998), the panel explained, “where the undisclosed evidence merely furnishes an additional basis on which to challenge a witness whose credibility has already been shown to be questionable or who is subject to extensive attack by reason of other evidence, the undisclosed evidence may be cumulative, and hence not material.”  Finally, the panel noted that the remaining evidence of Rowland’s guilt was overwhelming, such that the use of Wilson-Foley’s additional exculpatory statements would not have changed the outcome at trial. 

Rowland’s treatment of this argument is characteristic of the Circuit’s approach to the suppression of impeachment Brady materials (i.e., Giglio materials) and seems to minimize the possible impact of the suppressed materials.  This is despite Supreme Court precedent that holds that a defendant is not required to show that a different result was more likely than not to have occurred if the evidence had been disclosed.  See Youngblood v. West Virginia, 547 U.S. 867, 870 (2006); see also Kyles v. Whitley, 514 U.S. 419, 434-35 (1995) (“A defendant need not demonstrate that after discounting the inculpatory evidence in light of the undisclosed evidence, there would not have been enough left to convict.”).

Evidentiary Rulings, Jury Instructions, and Guidelines Calculations

Rowland raised several additional unsuccessful challenges to the proceedings below.  First, Rowland objected to the district court’s determination that certain emails and text messages that Rowland wrote to Apple Rehab’s COO regarding Apple were inadmissible hearsay.  On this claim, the Second Circuit agreed that the emails and text messages should have been admitted into evidence because the writings were not offered “to prove the truth of the matter asserted” in each statement, Fed. R. Evid. 801(c); rather, they would have been introduced only to show that Rowland was, in fact, engaged in work for Apple Rehab.  The panel, however, determined that the error was harmless because Apple Rehab’s COO (the recipient of the excluded communications) testified as to the general nature of the emails and text messages, thereby making clear that they concerned Apple Rehab business.  Rowland also introduced other evidence demonstrating that he had completed some legitimate work for Apple Rehab, such that the emails and text messages would have been duplicative.  The panel therefore concluded that the erroneous exclusion of the emails and text messages would not have influenced the jury.

The panel also rejected challenges to the district court’s jury instructions and its application of a six-level sentencing enhancement for the value of the illegal payments to Rowland, see U.S.S.G. § 2C1.8, which the district court calculated to be equal to the total amount Rowland received from Apple Rehab, notwithstanding the fact that he did complete some work for Apple Rehab.  The Second Circuit endorsed the district court’s approach and agreed that “the legitimate services Rowland performed for Apple were inseparably intertwined with the services he performed for Wilson-Foleys campaign, and that Rowland would not have performed services for Apple at all but for his planned cover-up.”


The Second Circuit’s opinion is most notable for its holding on the statutory interpretation issue, which is important for a number of reasons.  First, while the Eleventh Circuit was interpreting a different federal statutory provision in Blankenship, the Second Circuit has effectively created a circuit split by reading the term “false” to apply to contractual agreements, which arguably do not include factual assertions. 

Second, the panel’s opinion is all the more significant in light of the Supreme Court’s 2015 plurality decision in Yates v. United States, 135 S. Ct. 1074, which interpreted another term in Section 1519.  In Yates, the Court focused on Section 1519’s prohibition on the destruction of “any record, document, or tangible object.”  There, a fisherman had thrown undersized red grouper overboard in order to avoid prosecution for violating federal fishing regulations, which placed lower limits on the size of grouper that could be commercially fished.  A divided Court determined that a “fish” did not constitute a “tangible object,” and limited the term to those objects “used to record or preserve information.”  Id. at 1085.  The Second Circuit acknowledged Yates in its decision and explained that while Yates adopted a narrower reading of “tangible object,” which diverged from the dictionary definition of the term, “the same interpretive clues that led the plurality in Yates to depart from the ordinary dictionary definition in that case counsel in favor of following the dictionary definition here.” 

While the Supreme Court’s narrow construction certainly does not foreclose the Second Circuit’s broad reading of a different term in the same statutory provision, the contrast is nonetheless worth noting.  Interestingly, the Second Circuit acknowledged that Rowland’s strongest interpretive argument was based on the doctrine of noscitur a sociis, or “a word is known by the company it keeps,” Yates, 135 S. Ct. at 1085—a doctrine on which the Yates plurality heavily relied in reaching its holding.  Here, Rowland pointed out that the terms immediately preceding “falsifies” in Section 1519 (“alters, destroys, mutilates, conceals, covers up”) all imply the preexistence of a document and that, therefore, a reading of “falsifies” to encompass newly created documents would be in tension with the remainder of the provision.  The Second Circuit accepted Rowland’s point, but reasoned that “when the plain meaning of ‘falsify’ and other interpretive guidelines lead to the opposite conclusion, a lone canon of construction cannot cabin the meaning of ‘falsify’ as Rowland urges.”  The panel offered a persuasive competing explanation and varied support for its reading of Section 1519, and it appears that the notice concerns that were at issue in Yates, where the Court was asked to apply a law targeted at accounting reform to fish as well as to documents, were not present in Rowland.  Nevertheless, given that the Second Circuit’s decision suggests a circuit split and addresses issues previously raised by the Supreme Court in the hotly debated Yates opinion, we may well see additional courts weighing in on the interpretation of this statutory provision in the near future.  Rowland may also be a candidate for certiorari given the Court’s longstanding interest in policing the boundaries of overbroad statutes that punish obstruction of justice.  See, e.g., Yates, supra; Arthur Andersen LLP v. United States, 544 U.S. 696 (2005) (reversing conviction because the jury instructions did not properly convey the elements of a violation of Section 1512); United States v. Aguilar, 515 U.S. 593 (1995) (affirming appellate court’s reversal of conviction under Section 1503 where the government did not prove that false statements made to FBI agents had the natural and probable effect of obstructing justice).

-By Jessica Rice and Harry Sandick