The Way Criminal Law is Supposed to Work
Ben Keane /
Although sanity and common sense are frequently lacking in opinions issued by the Ninth Circuit Court of Appeals, Circuit Judge Alex Kozinski offered both those things in a concurrence he recently authored in U.S. v. Goyal. In convicting Probhat Goyal (the former CFO of Network Associates) of securities fraud, submitting false SEC filings, and making material false statements to corporate auditors, a federal jury accepted the government’s theory that Goyal should be imprisoned because Network Associates allegedly did not adhere to nuances of the Generally Accepted Accounting Principles (GAAP).
Companies routinely make lawful choices about when and how to recognize revenue for accounting purposes under GAAP, but federal prosecutors deemed it criminal in this instance for Network Associates to recognize premature revenue from certain sales. Finding no evidence of criminal conduct, a three-judge panel of the Ninth Circuit reversed the district court’s jury verdict. This extraordinary result is less remarkable, however, than Judge Kozinski’s harsh rebuke of the federal prosecutors in the case and pointed commentary on the proper foundations of the criminal law. To these topics, he penned the following: (more…)