HIGHLIGHTS

  • The DOJ prosecuted a former executive of a "hop on, hop off" bus tour company for impeding an antitrust investigation by attempting to destroy records requested by the government. After pleading guilty, the court sentenced the former executive to 15 months in prison and ordered him to pay a $5,000 fine.
  • Companies should recognize the seriousness with which the DOJ treats formally issued document demands and should understand the significant consequences they and their employees face if they seek to prevent the DOJ from obtaining information it requests.

On March 23, 2017, the U.S. District Court for the Southern District of New York sentenced Ralph Groen, a former executive of a New York City tour bus company, to 15 months in prison after he pled guilty to obstruction of justice for concealing and attempting to destroy documents sought in a civil antitrust investigation and litigation. See United States v. Groen, No. 1:16-cr-00683-CM (S.D.N.Y. Mar. 23, 2017). This lengthy sentence – certainly life changing for Mr. Groen – should serve as a reminder of the importance of treating document demands from the government with seriousness, regardless of the circumstances under which the government sends a subpoena or issues a civil investigative demand. The civil investigative demand that led to trouble for Mr. Groen arose in the relatively benign context of a civil antitrust investigation into a joint venture of the two largest "hop on, hop off" tour bus companies in New York City. See United States v. Twin America, LLC, 1:12-cv-08989-ALC-GWG (S.D.N.Y. Dec. 11, 2012). Although the investigation (as well as the subsequent litigation challenging the joint venture) was somewhat small in comparison to many government antitrust investigations and cases, it led to major consequences for Mr. Groen.

United States v. Twin America, LLC

In 2012, the DOJ and the State of New York filed a Complaint against Coach USA, Inc. and International Bus Services (collectively Coach) and City Sights Twin, LLC (City Sights) to challenge their 2009 joint venture, Twin America, LLC (Twin America). Id. Prior to entering into the joint venture, Coach and City Sights had been the two primary operators of "hop-on, hop-off" tour buses in New York City and had engaged in head-to-head competition for several years by offering discounts, packages, promotions, and novel product offerings. Id. at 7-12. The DOJ and the State of New York alleged that the formation of Twin America violated the antitrust laws by creating an effective merger to monopoly that resulted in an entity with over 120 double-decker tour buses and a market share in New York City of approximately 99 percent. Id. at 15.

The case settled in March 2015, with Coach and City Sights agreeing to relinquish the complete set of City Sight's bus stop authorizations to the NYCDOT, to disgorge $7.5 million in what the DOJ characterized as ill-gotten gains, and to adopt antitrust compliance programs. See United States v. Twin America, LLC, 1:12-cv-08989-ALC-GWG (S.D.N.Y. Mar. 16, 2015).

United States v. Groen 

In October 2016, the DOJ filed obstruction of justice charges against Mr. Groen, who had been employed at the time of the DOJ's antitrust investigation of the Twin America joint venture as Coach's Vice President and Director of Information Technology. See United States v. Groen, 1:16-cr-00683-CM (S.D.N.Y. Oct. 14, 2016). According to the DOJ's criminal information, Coach issued litigation hold notices to its management, including Mr. Groen, requiring the retention and preservation of documentation relevant to the antitrust investigation. Id. at 2.Despite receiving the litigation hold notice, Mr. Groen allegedly instructed his subordinates to recall, conceal, and destroy backup tapes that contained responsive emails and other electronic documentation, which were only available on the backup tapes. Id. at 3. As a result, the documents were not produced during discovery. Id. at 3-4. Mr. Groen also told the DOJ the materials did not exist, and then concealed versions of the company's document retention procedures from the DOJ. Id. Finally, during his deposition, Mr. Groen allegedly provided false and misleading statements. Id. at 4.

Mr. Groen entered into a plea agreement and pled guilty to a one-count information charging him with obstructing an official proceeding in violation of 18 U.S.C. § 1512(c)(2). In March 2017, the U.S. District Court for the Southern District of New York sentenced him to 15 months in jail and ordered him to pay a $5,000 fine.See United States v. Groen, 1:16-cr-00683-CM (S.D.N.Y. Mar. 23, 2017).

Key Takeaways

United States v. Groen offers a few important lessons. The first is that the nature of the investigation under which the DOJ issues process should not bear on the seriousness with which companies treat any demands it makes. The investigation in which the DOJ issued its civil investigative demand to Mr. Groen's former employer was a civil antitrust matter, an area that companies should not mistakenly regard to be of low priority to the government. Companies also should not draw any conclusions concerning the seriousness of the DOJ's intentions based on their own views of the size or significance of the matter. Although the underlying antitrust claims in the United States v. Twin America case were on the mild side – in that the case involved a relatively narrow service in a single city with a fairly small amount of combined revenues for the two companies – the DOJ was not willing to treat efforts to impede its investigation with anything but the greatest seriousness. Finally, because over a year passed between the settlement of the DOJ's antitrust claims against Mr. Groen's former employer and the filing of the criminal charges against Mr. Groen, companies and their employees should recognize that the closing of one civil investigation does not mean that the government has resolved its concerns about related inquiries.

Obstruction of justice statutes aim to protect the integrity of judicial, congressional, and agency proceedings, and a charge of obstruction of justice can result from a range of conduct such as interfering with witnesses, victims, or informants; or altering, destroying, or concealing a document, object, or record.Obstruction of justice is a criminal charge and, as reflected in the DOJ's prosecution of Mr. Groen, potential penalties include both imprisonment as well as monetary fines.

The DOJ's civil investigative demands remind recipients of the significance of the formal issuance of government process, and the consequences of not complying, by including the language of the obstruction of justice statute on the demand itself. United States v. Groen serves as an important reminder of the serious nature of government investigations for both companies and employees – and emphasizes the potential repercussions individuals may face by taking actions to impede a government investigation.