The defendant Vice President of Human Resources (Jensen) appealed her conviction for falsifying corporate books and records in willful violation of the federal securities laws based upon her participation in a stock option backdating scheme used to compensate employees. Jensen’s conviction, along with that of the company’s former CEO, represented the first criminal convictions for backdating practices that were once, according to the appellate court, widespread, particularly in Silicon Valley, where the defendant’s company was located. (The ex-CEO’s conviction was reversed and remanded to the District Court for a new trial due to prosecutorial misconduct.)
The principal issue at Jensen’s trial was whether she possessed criminal intent. The District Court rejected Jensen’s request for an instruction that would have required the jury to find that she knew what law she was violating in order to find that she had the requisite intent. Instead, the District Court instructed the jury that it must find that the government proved Jensen acted with knowledge that her falsification of records was “wrongful” in order to find that she had acted “willfully” and, thus, with the requisite intent to support the criminal claim asserted against her.
Citing to precedent and legislative history that specifically foreclosed the defendant’s interpretation of the “willfulness” requirement, the appellate court affirmed the conviction, reiterating that a willful falsification does not require knowledge of a specific law being violated, but only that the defendant knowingly committed the act of falsification. In making its ruling, the Court further held that there was no different or higher standard applicable when the violation alleged was of a federal securities law. (United States v. Reyes, 2009 WL 2501920 (9th Cir. Aug. 18, 2009))