Thursday, July 27, 2006

Court Suppresses Two Statements in KPMG Defendants' Cases

Judge Lewis Kaplan has issued yet another Order in the KPMG defendants case that indicates that government coercion will not be tolerated.  In a thoughtful and well-written Order he states:

"Having considered the evidence, the Court is persuaded that the government is responsible for the pressure that KPMG put on its employees. It threatened KPMG with the corporate equivalent of capital punishment. KPMG took the only course open to it. In the words of its chief legal officer, KPMG did everything it could "to be able to say at the right time and with the right audience, we’re in full compliance with the Thompson Memorandum." It exerted substantial pressure on its employees to waive their constitutional rights. (footnote omitted)"

In the conclusion of the 37 page Order the court states:

"In this case, the pressure that was exerted on the Moving Defendants was a product of intentional government action. The government brandished a big stick – it threatened to indict KPMG. And it held out a very large carrot. It offered KPMG the hope of avoiding the fate of Arthur Andersen if KPMG could deliver to the USAO employees who would talk, notwithstanding their constitutional right to remain silent, and strip those employees of economic means of defending themselves. In two instances, that pressure resulted in statements that otherwise would not have been made. In seven, the evidence does not warrant that conclusion. The coerced statements and their fruits must be suppressed.

It is no answer for the government to say that these aspects of the Thompson Memorandum are needed to fight corporate crime. Those responsible should be prosecuted and, if convicted, punished. But the end does not justify the means."

Although the suppression of these two statements may not prove consequential to the government's case, the court is making it very clear that undue coercion on the part of the government will not be tolerated.  The fact that the court did not suppress all statements in this case further indicates the thoughtfulness of the decision. 

Opinion -

Download opinion_re_smith_and_watson_statements_doc_650_2.pdf

(esp)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2006/07/court_suppresse.html

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