When Congress passed the Sarbanes-Oxley Act in 2002, it was hailed as a law protecting investors and combating accounting fraud. Among other things, the bill criminalized the destruction of records, documents, and objects in order to impede a federal investigation.
No one mentioned it could also send a fisherman to jail for tossing fish overboard.
That, however, is how federal prosecutors used the law to prosecute John Yates. While Yates was fishing for grouper in the Gulf of Mexico in 2007, agents from the Florida Fish and Wildlife Conservation Commission boarded his boat to conduct a routine inspection. According to a state officer, there were six dozen grouper on board under 20 inches in size, a violation of federal law. The officer handed Yates a civil citation and told him to bring the undersized fish to shore. Instead, he tossed them overboard.
The government charged Yates with violating the Sarbanes-Oxley anti-shredding provision, which carries a penalty of up to 20 years in prison. Yates was found guilty by a jury and served 30 days in jail. He has taken his case to the U.S. Supreme Court, contending the corporate fraud law was not meant to apply to fish.
Dispute Over Wording
Sarbanes-Oxley makes evidence destruction illegal. Specifically, its anti-shredding provision states a person who “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object” with intent to obstruct an investigation is guilty of a crime.
According to the Justice Department, grouper fall within the prohibition because they are “tangible objects” Yates knowingly destroyed. Yates disagreed, contending the law was aimed at the destruction of records. His lawyer argued the phrase “tangible objects” was included to ensure information-storing devices, such as computers or hard drives, were covered by the fraud law.
Former Rep. Michael Oxley (R-OH), the coauthor of Sarbanes-Oxley, filed an amicus brief in Yates’ favor, agreeing “tangible objects” referred to objects that store records, such as CDs and hard drives.
The title of the anti-shredding provision—”Destruction, alteration, or falsification of records in Federal investigations and bankruptcy”—would seem to confirm Yates’ reading, yet federal prosecutors argue the law criminalizes all evidence destruction.
Prosecutors Interpretation ‘Overbroad’
Ilya Shapiro, a senior fellow in constitutional studies at the Cato Institute, said the government’s reading of Sarbanes-Oxley is dubious. “If it was written in such a way as to sweep in things like destroying fish in a nonfinancial crime circumstance, then it is overbroad,” says Shapiro. “There are different ways the challengers have attacked the prosecution, both in terms of statutory interpretation and its application in this particular instance.”
Shapiro says prosecutors could have used simple obstruction of justice charges to go after Yates.
“It’s not like there is no way to prosecute hiding evidence of your crime,” he said. “Sarbanes-Oxley was specifically about documents and financial instruments and things like that. There are garden-variety local laws in place, or state laws in place, to go after this.”
Although prosecutors have an incentive to be creative, Shapiro said, “I think there are more than enough laws in place to go after these local types of regulatory violations.”
The case raises issues of over-criminalization and prosecutorial overreach in addition to questions about statutory interpretation, he said.
Some legal analysts are comparing the case to one heard by the Court last fall. In Bond v. United States, the Supreme Court refused to apply the Chemical Weapons Convention to a woman who had spread chemicals on a doorknob and caused a minor burn to the hand of her husband’s mistress. Federal prosecutors charged the woman under the chemical weapons law, but Chief Justice Roberts concluded such an interpretation “would transform the statute from one whose core concerns are acts of war, assassination, and terrorism into a massive federal anti-poisoning regime that reaches the simplest of assaults.”
If the court rules in Yates’s favor the decision would “put prosecutors on notice they need to have a little more common sense,” Shapiro said. “I imagine, between Bond and this case, there is some training being modified, or at least should be, of prosecutors.”
Ann Purvis ([email protected]) is a senior research fellow with the National Center for Policy Analysis.