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 officials with the Securities and Exchange Commission (SEC) and Federal Bureau of Investigation (FBI), 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, penalties, and more.
False Statements and U.S. Code
The code section criminalizing false 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 the crime of making false statements:
- 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 will not 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 FBI and 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 does not 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 each of the following elements:
- 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 18 U.S.C. § 1001 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.
Get a Legal Review of Your Criminal Charges
Whether you have been charged of making false statements to federal officials, federal income tax evasion, or some other crime against the federal government, the punishments can be severe. It's in your best interest to work with an attorney experienced in these matters. Get started today with a free legal evaluation of your criminal charges.