Monday, October 10, 2011

Case o' The Week: "Willful" Obstruction of Justice - for Unknown Investigation? Gilchrist and U.S.S.C. § 3C1.1

Don't lie. Or, at the very least, don't lie in a civil deposition when the feds have an investigation underway. If you do, obstruction of justice awaits (even if you don't know of the federal investigation at the time of the lie!) United States v. Gilchrist, 2011 WL 4537789 (9th Cir. Oct. 3, 2011), decision available here.

Players: Hard-fought appeal by our ND Cal CJA colleague Bob Waggener. Appeal from sentencing imposed by D.J. Susan Illston, ND Cal. Decision by Judge Carlos Bea (above left).

Facts: Gilchrist had a check–kiting and fraud scheme running with Wells Fargo. Id. at *1. When caught, he made a fraud claim against Wells Fargo – and civilly sued the bank! Id. at *2. Unbeknownst to Gilchrist, the FBI picked up the referral from Wells Fargo and began an investigation. Id. at *2. Gilchrist then perjured himself in depositions related to the civil suit. Id. at *2.

Gilchrist was ultimately charged federally and pleaded guilty to federal embezzlement and bank fraud. Id. at *1-*2. At sentencing Judge Illston imposed the “obstruction of justice” enhancement under USSG § 3C1.1, adding two levels for Gilchrist’s lies during the civil depositions. Id. at *3.

Issue(s): “[Gilchrist’s] primary contention is that because he did not know he was the subject of a pending criminal investigation at the time he committed perjury in a civil suit concerning the very same conduct later charged in the criminal Indictment, the district court erred in applying U.S.S.C. § 3C1.1 to enhance his sentence for willfully obstructing justice.” Id. at *1.

Held:We agree with our sister circuits that ‘willful means only that the defendant have engaged in intentional or deliberate acts designed to obstruct any potential investigation, at the time an investigation was in fact pending; it does not mean the defendant had to know for certain that the investigation was pending.” Id. at *9.

Of Note: When the challenge is that a district court abused her discretion at sentencing, what is the standard of review? Hinkson, it turns out. We’ve bellyached about the regrettable new Hinkson standard for abuse of discretion from 2009, concocted in the context of evidentiary rulings for a federal conviction. See blog entry here. In Gilchrist, Judge Bea expressly relies upon that hugely deferential standard while reviewing Judge Illston’s sentence. See id. at *6.

Hinkson is a formidable hurdle if you are a defendant alleging an abuse of discretion at sentencing. If you are a defendant defending a sentence against government attack, however, be sure to tuck up under Hinkson’s remarkably deferential wings (the Ressam en banc case is a great example, where the government is challenging the substantive reasonableness of a sentence).

How to Use: Gilchrist adopts a new and unwelcome rule in the Ninth Circuit: you can get hit with obstruction for lying during civil depositions, even if you weren’t aware of a federal investigation when you lied. In an era where banks and Silicon Valley firms have shouldered the bulk of the FBI’s white collar investigation responsibilities, this new rule is yet another thing to worry about in civil depositions – and is a new basis for asserting the Fifth during a depo.

The one solace is that Judge Bea emphasizes a distinction between the Ninth’s rule and the rule in (some) other circuits: the federal investigation must actually be underway when the civil perjury takes place.

For Further Reading: Have you been watching Ken Burns’ great new documentary, Prohibition, on PBS? (You should). Sentence guru Professor Berman has, and has written a terrific post on the series here. The good Prof muses on the parallels between the prohibition of booze a century ago, and the federal prohibition of pot today. It’s a particularly timely analogy, as the Obama administration flip-flops on its earlier position and is now sending target letters to marijuana dispensaries – clinics that are in full compliance with state regulations. See Associated Press article, here.

Image of the Honorable Carlos Bea from Image of Medical Marijuana from Image of Prohibition promo from

Steven Kalar, Senior Litigator ND Cal FPD. Website at


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