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Briefing In Coburn / Schwartz Matter Reflects The Human Costs Of Being Charged With FCPA Offenses

As highlighted in this prior post [1], in connection with the February 2019 Foreign Corrupt Practices Act enforcement action against Cognizant Technology Solutions, the DOJ and SEC also brought related FCPA charges against Gordon Coburn (former President of the company) and Steven Schwartz (former Executive Vice President, Chief Legal and Corporate Affairs Officer).

In this recent filing [2], the DOJ is seeking to intervene in the SEC case and seeks a stay in that matter, including as to discovery, “in order to preserve the integrity of the prosecution of the Criminal Case, advance the public interest, and prevent the defendants from circumventing the narrow confines of criminal discovery through broad civil requests and related litigation.”

As highlighted below, Coburn and Schwartz’s briefs opposing the stay highlight what life is like upon being criminally and civilly charged for FCPA violations.

Coburn’s brief [3] begins:

“Gordon Coburn is a loving and supportive husband to his wife of 28 years and proud father of two young men (one emergency room doctor and one graduate student). Prior to February 15, 2019, Gordon had an unblemished record. He was working with a global investment firm providing small to mid-size companies with strategic advice and was on the advisory board of an Ivy League graduate school. That changed when the Government chose to bring coordinated criminal and civil actions against Gordon alleging violations of the Foreign Corrupt Practices Act. The pendency of these serious allegations threatens Gordon’s reputation, livelihood, and finances. He is entitled to defend against these charges and to try and clear his name without unreasonable delay. He is entitled to gather evidence now, rather than risk the loss of favorable evidence due to the vagaries of memories and data retention policies. We respectfully submit that Gordon is entitled to at least limited civil discovery because the Government chose to bring serious civil charges in coordination with its criminal charges. But the Government seeks to stay the SEC’s case in its entirety, on the theory that civil discovery may jeopardize the DOJ’s chance at a conviction by revealing material that would not have been discoverable had the Government only brought criminal charges.

This Court should reject the Government’s bid to have its cake and eat it too. As the party seeking the extraordinary remedy of a stay, the Government must make a clear showing that the interests served by a stay outweigh the potential for prejudice to Gordon. Courts have routinely applied this principle to hold that a stay is not warranted merely because the Government’s decision to bring overlapping proceedings affords criminal defendants access to civil discovery. Instead, the Government must make a particularized, non-speculative showing that proceeding with discovery will concretely harm its interest or the public interest. The Government’s motion does not even attempt that showing or address the substantial prejudice to Gordon that would result if this proceeding were stayed in its entirety pending resolution of the criminal case.

The Government’s request for a blanket stay should accordingly be denied. But Gordon does not object to entry of a partial stay permitting third-party discovery while precluding discovery from the parties and the Government’s cooperating witnesses. Such a result would accommodate Gordon’s interest in advancing his defense against the civil action, while protecting the Government from any potential prejudice.”

Elsewhere, the brief states:

“These allegations mar Gordon’s reputation, endanger his livelihood, and threaten his finances. As a direct result of the filing of the Government’s coordinated civil and criminal cases, Gordon has lost employment, including three directorships (one public company and two private companies), and his position as an operating executive at a global investment firm. He has also lost his position serving on the advisory board of an Ivy League graduate school. Gordon is 55 years old and has a limited number of prime working years ahead of him. Gordon accordingly has “a strong interest in a timely resolution” of the claims against him.”

[4]

Schwartz’s brief [5] begins:

“The government has not satisfied its burden of demonstrating that the “extraordinary remedy” of staying the SEC Case is warranted on the particular facts present here.

The crux of the government’s motion is that a stay is necessary in order to prevent Mr. Schwartz from using the civil discovery rules in the Civil Case to obtain discovery that he is not entitled to in the Criminal Case. But in making that argument, the government ignores numerous recent cases making it clear that the prosecution’s mere desire to preserve a tactical advantage in a criminal case does not in and of itself entitle it to a stay of parallel civil proceedings. And, having investigated and brought their cases together, the government and the SEC should not now be permitted to argue that they would be prejudiced by having the cases proceed on the same schedule.

Further, although the government will not be prejudiced if the SEC Case proceeds, Mr. Schwartz would be significantly prejudiced if it does not. The government’s and SEC’s cases against Mr. Schwartz are weak—relying primarily on the testimony of a single witness—but the allegations against him have been widely covered in the press and have resulted in substantial personal and professional harm. Mr. Schwartz therefore does not oppose the government’s request to intervene, but does oppose its request to stay the SEC Case.

In the alternative, if this Court grants a stay, Mr. Schwartz respectfully requests that it grant only a partial stay and permit document discovery to proceed.”

As noted in this prior post [1], Coburn and Schwartz choose to put the DOJ/SEC to its burden of proof, disputed issues will likely focus on corrupt intent, obtain or retain business and the facilitating payments exception.

Elsewhere, the brief states:

“The government argues that staying the SEC Case “will cause little to no particularized harm” to Mr. Schwartz. That is not so. First, the allegations against Mr. Schwartz by the government and the SEC have been widely reported in the press and have already resulted in substantial reputational harm to Mr. Schwartz. Mr. Schwartz, an attorney, is currently unemployed and functionally unable to work while the specter of the allegations, criminal or civil, linger. Mr. Schwartz’s family also has been profoundly harmed by the allegations against him. Second, as time passes, witnesses’ memories will fade and evidence could be lost. Under these circumstances, any delay in Mr. Schwartz’s ability to vindicate himself is highly prejudicial, such that the prejudice Mr. Schwartz faces outweighs any purported government interest.

[…]

Mr. Schwartz similarly will face significant hardship if the SEC Case is stayed. The allegations in the SEC Case—and widespread press coverage of both cases—fanned by the government and the SEC themselves, have critically damaged his personal and professional reputation and credibility. […]  [I]f the Court stays the SEC Case and Mr. Schwartz ultimately prevails— as he fully expects to do—he needlessly will have suffered additional years living under suspicion of these allegations, and will have lost valuable working years. Moreover, having long volunteered time to various charitable endeavors, Mr. Schwartz’s ability to continue doing so is complicated by his concern that, given the allegations against him, his mere association with these charities could undermine their important work.

In addition, Mr. Schwartz’s family is suffering considerably, experiencing both emotional distress and reputational harm resulting from the false allegations against him.”

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