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:
This case has consumed an inordinate amount of taxpayer resources, and has no doubt devastated the defendant’s personal and professional life. The defendant’s former employer also paid a price, footing a multimillion dollar bill for the defense. And, in the end, the government couldn’t prove that the defendant engaged in any criminal conduct. This is just one of a string of recent cases in which courts have found that federal prosecutors overreached by trying to stretch criminal law beyond its proper bounds…
This is not the way criminal law is supposed to work. Civil law often covers conduct that falls in a gray area of arguable legality. But criminal law should clearly separate conduct that is criminal from conduct that is legal. This is not only because of the dire consequences of a conviction—including disenfranchisement, incarceration and even deportation—but also because criminal law represents the community’s sense of the type of behavior that merits the moral condemnation of society. . . . When prosecutors have to stretch the law or the evidence to secure a conviction, as they did here, it can hardly be said that such moral judgment is warranted.
Judge Kozinski’s words do much to accentuate a very real problem that is currently undermining the civil liberties of all Americans – the phenomenon of overcriminalization. The exponential growth of the federal criminal law over the last few decades has created a labyrinthine collection of statutes and regulations that allows the government to subject individuals whose conduct is either unintentional or not otherwise blameworthy to criminal sanctions – society’s most severe form of punishment and moral condemnation. This is a fundamental departure from the traditional moorings of American criminal law, and one that has garnered great attention from organizations and individuals on both sides of the political aisle.
Over the last few years, The Heritage Foundation and a wide-ranging group of partners – including such organizations as the American Bar Association, American Civil Liberties Union, National Association of Criminal Defense Lawyers (NACDL), Washington Legal Foundation, and the Manhattan Institute – have been at the forefront of a bipartisan coalition leading the charge against overcriminalization in America. During this time, Heritage has worked to spearhead two congressional hearings on the subject and to co-author a joint report on the degradation of adequate criminal intent requirements in federal law. With the 112th Congress convening in a few weeks, Heritage and its coalition partners are calling upon both Republicans and Democrats to help return criminal law to the way it is “supposed to work.”
To that end, Members of Congress (new and old alike) would be well served to take on the problem of overcriminalization and consider the common-sense, non-partisan solutions offered by Heritage and NACDL in their joint Without Intent report. Former Attorney General Ed Meese discussed one such reform here – a House rule requiring every bill that proposes or modifies a federal crime to be referred to the House Judiciary Committee before heading to the floor. Working to implement that change and the handful of other reform proposals discussed in Without Intent will go a long way toward eliminating the problems highlighted by Judge Kozinski and tempering a real threat to our constitutional framework of criminal justice.