Successful businesswoman and TV celebrity Martha Stewart put a substantial portion of her wealth into the stock market. Holdings included shares in the cancer drug company ImClone Systems Inc. (now a part of Eli Lilly and Co.), which she promptly sold after receiving inside information that the company's CEO was dumping all of his stock as well. But when questioned by federal officials who were looking into possible securities fraud, Stewart lied about receiving (and acting upon) this inside information.
Stewart was convicted in 2004 of intentionally making false statements to federal officials (among other felony charges) and sentenced to five months in a minimum-security federal prison. Making false statements to federal officials is a crime against the government, similar to the crime of perjury in that false statements undermine the integrity of a functioning government.
This article focuses on federal law prohibiting the willful communication of false statements to federal officials, the elements of the offense, and common penalties.
False Statements and U.S. Code
The code section criminalizing untrue statements to federal officials can found at 18 U.S.C. § 1001. It specifically states that "whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully" does any of the following has committed a criminal offense:
- Falsifies, conceals, or covers up by any trick, scheme, or device a material fact;
- Makes any materially false, fictitious, or fraudulent statement or representation; or
- Makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry.
This type of crime is considered a "process offense," since it interferes with the procedures of the justice system. In some cases, a suspect or defendant in a white collar crime case won't be convicted of (nor even charged with) the underlying crime but still may be convicted of lying about the conduct. For example, Stewart was never charged with insider trading -- the underlying crime for which she was being investigated -- but was convicted of making false statements about her dubious stock trades to Federal Bureau of Investigation (FBI) and Securities and Exchange (SEC) officials.
Other instances in which the federal false statements statute may be invoked include legislative hearings (such as Senate confirmation hearings), interviews with Food and Drug Administration (FDA) officials, and investigations into terrorist plots, to name a few. The code specifically refers to administrative matters, investigations, reviews, and Congressional hearings and doesn't apply to judicial proceedings.
Making False Statements: Elements of the Crime
In order to get a conviction on these types of charges, federal prosecutors must prove beyond a reasonable doubt that the:
- Defendant made a false statement or used written materials containing a false statement during a procedure (such as a hearing or interview) within the jurisdiction of a government agency or department (such as the FBI or the U.S. Senate);
- Defendant acted willfully; and
- Statement was material to the business of the government agency or department (i.e. relevant to, and with the potential to influence, its decisions or activities)
Penalties Upon Conviction
Anyone convicted of making false statements in violation of federal statute faces a prison term of up to five years and a fine of up to $250,000. If the offense involves terrorism, anyone convicted of making false statements faces up to eight years in prison.
Arrested for Making False Statements? Get Legal Help
Whether you've been charged with making false statements to federal officials, federal income tax evasion, or some other crime against the federal government, the punishments can be severe. Considering the consequences, it's in your best interests to reach out to a local criminal defense attorney who will be experienced in these matters and can advise you on your options moving forward.
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