Monday, April 25, 2011

Targeting The Gate Keepers: Criminal Prosecution of In-House Counsel

The criminal trial of Lauren Stevens, Glaxo’s vice president and in-house counsel, begins tomorrow. There is a lot at stake besides the liberty of Lauren Stevens.

The government claims that Stevens made false statements and obstructed justice in responding to the FDA’s informal inquiry letter in an off-label marketing investigation. Stevens claims she merely repeated information given to her by in-house and outside counsel, and thereby relied on the accuracy of such information. She may have been sloppy but she was not acting with criminal intent.

Every white collar case boils down to state of mind – that is what is at issue here.

For the government, this case has significant implications. Is it overreaching? If it is, there will be more calls for reform and limits on prosecutorial discretion.  If the government secures a conviction, in-house counsel, compliance officers and auditors will be subjected to increased scrutiny and criminal risk.

The case was initially dismissed because the prosecutors incorrectly informed the grand jury of the law and whether or not advice of counsel negated the requisite intent for the crimes charged.

The government’s case centers on whether or not Stevens knowingly failed to provide certain information and documents which were responsive to the FDA letter. It appears that the government has specific evidence on this point – which it better have. Namely, the government is seeking to compel the testimony of a Glaxo vice president for marketing by granting him immunity from prosecution.

The latest move by the government may be a sign of desperation – if they had such evidence, they should not be securing immunity orders at the last second. It suggests that the government may be scrambling to shore up its case. If so, prosecutors acted irresponsibly.

Whatever happens, the results in this case will have great importance for in-house and outside counsel, compliance officers, and internal and external auditors.

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