Under SOX, prison possible if an in-house lawyer deliberately misleads a government regulatory agency

Thanks to Christian Liipfert for this strong warning in favor of good training, good supervision, good information governance, and good ethical compliance.

“In late 2010, Lauren Stevens, formerly an Associate General Counsel with GlaxoSmithKline, was indicted in Federal Court in connection with correspondence she had written to the Food & Drug Administration concerning off-label use of one of GSK’s drugs.

The in-house senior lawyer was also charged with violating 18 USC §1519, part of Sarbanes-Oxley. It says “whoever knowingly … destroys, … conceals, …or makes a false entry in any … document … with the intent to … influence the …proper administration of any matter within the jurisdiction of any department or agency of the United States or … in relation to or in contemplation of any such matter …, shall be … imprisoned not more than 20 years ….”

If your company is regulated by an agency of the US government, be aware of this powerful and personal risk, not only for you but also for your clients. At least five reported Federal decisions have addressed the provision, and a whole host of indictments. A good starting point is an October 15, 2010, article by Markus Funk, an attorney at Perkins Coie, available from the firm’s website.

Time to review your Compliance & Ethics training?”

I note also that GlaxoSmithKline has retained both Ropes & Gray and Steptoe & Johnson to defend the accused lawyer, which is an expensive decision. More, part of her defense is that she relied on the advice of a major law firm.

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