January 26, 2006
Former Inso General Counsel Sentenced to a Year-and-a-Day for Perjury
Being a general counsel for a corporation is getting to be almost as precarious as being a chief financial officer (see post below). Bruce Hill, who was the general counsel for Inso Corp., was convicted in June 2005 of one count of perjury for lying to the SEC in its investigation of accounting fraud at the company. The jury deadlocked on securities fraud and conspiracy counts of the indictment, and after sentencing the government dismissed those charges. Hill received a sentence of a year-and-a-day for the perjury conviction. The effect of giving him the extra day actually reduces his sentence because he is then eligible for good time credits that can reduce his sentence by 15%, so he will only have to serve a bit over ten months. According to a press release from the U.S. Attorney's Office for the District of Massachusetts (here):
Evidence presented during the month-long trial proved that at the end of September 1998, Inso Corporation, Inc. arranged a sham transaction whereby a Malaysian software distributor signed a purchase order for roughly $3 million upon assurances that Inso would actually sell the software to another customer within a few days or weeks.
At the end of 1998, HILL, who was the Vice President, Secretary, and General Counsel of Inso, played a pivotal role in arranging a series of deals that were designed to create the appearance that the Malaysian software distributor had paid Inso $3 million for software products that Inso had reported as sold during the third quarter of 1998. In sworn testimony before the SEC, HILL disavowed any knowledge about the preparation of a fraudulent certificate which purported to reflect approval by Inso's Board of Directors of the issuance of approximately $4 million in letters of credit that were used to create the appearance that Inso received $3 million in payment for the reported third quarter sale. At trial, the United States presented evidence that HILL had personally directed the preparation of the fraudulent certificate and approved its signing.
Share prices for Inso's stock tumbled in February 1999, when the company publicly announced that it would need to restate its revenues from the first three quarters of 1998. The company is no longer publicly traded.
Interestingly, that factual recitation relates to the counts on which the jury did not convict Hill, but the press release adds that "United States District Judge Douglas P. Woodlock  noted his finding that – based on a preponderance of the evidence – HILL did conspire to commit fraud in connection with the reporting of revenues . . . ." After Booker, there has been some doubt regarding the applicability of the preponderance of the evidence standard for sentencing factors beyond the offense of conviction. The sentence may well have been influenced by the judge's finding of Hill's participation in the fraud, despite the inability of the jury to find him guilty of securities fraud and other counts beyond a reasonable doubt. At the same time, a conviction for perjury by a lawyer in a government investigation, particularly by the general counsel of the corporation, is a situation that would often trigger a higher sentence. The sentence will likely be yet another issue on appeal in the case. (ph)
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It is not precarious to be a General Counsel
It is precarious to be a good General Counsel based upon bad ethics
Posted by: Laser Haas | Jul 23, 2007 7:48:25 PM