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Maritime Law--SCOTUS Rules Fish Not Tangible Object Under Sarbanes-Oxley


Can a law written to punish the "Enrons" of the world for shredding or doing away with records also be used to convict a Florida fisherman who tossed his undersized catch into the sea in an effort to avoid penalties? This was a question I asked in my blog back in July 12, 2014 Can Fisherman's Case Recast Sarbanes-Oxley?



The U.S. Supreme Court has ruled "no". The question before the U.S. Supreme Court was whether fish are deemed by the government to be a “tangible object”, such that if destroyed with the intent to obstruct an investigation, it would be a crime.  
 
As background, while inspecting a commercial fishing vessel in the Gulf of Mexico, a federal agent found that the catch contained undersized red grouper, in violation of conservation regulations, and instructed the captain, Yates, to keep the undersized fish segregated from the rest of the catch until the ship returned to port. After the officer departed, Yates told the crew to throw the undersized fish overboard. Yates was convicted of destroying, concealing, and covering up undersized fish to impede a federal investigation under 18 U.S.C. section 519, which applies when a person “knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence” a federal investigation. Yates argued that section 1519 originated in the Sarbanes-Oxley Act to protect investors, and that its reference to “tangible object” includes objects used to store information, such as computer hard drives.
 
The Eleventh Circuit affirmed. The Supreme Court reversed, holding that “tangible object” refers to one used to record or preserve information. Section 1519’s position within Title 18, Chapter 73 and its title, “Destruction, alteration, or falsification of records in Federal investigations and bankruptcy,” signal that it was not intended to serve as a cross-the-board ban on the destruction of physical evidence. The words immediately surrounding “tangible object,” “falsifies, or makes a false entry in any record [or] document,” also indicate the contextual meaning of that term. Even if traditional tools of statutory construction leave any doubt about the meaning of the term, it would be appropriate to invoke the rule of lenity.
 
If you wish to contact me or are interested in receiving a copy of the SCOTUS decision, please feel free to contact me at mov@chaloslaw.com.

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