17 Crimes of False Certification1
17.1 Introduction
In the most basic of terms, it is a crime to knowingly and willfully lie to the federal government. That crime is codified in the United States Code in 18 U.S.C. § 1001, in what is commonly referred to as "Section 1001."2 Section 1001 covers express false statements as well as falsifying, concealing, or withholding information from the federal government. 3 Federal prosecutors may also bring charges under Section 1001 when a person or organization fails to disclose material information on a government form when there is a duty to disclose the information; this type of crime is referred to as a material omission.4
When federal prosecutors bring charges against individuals and corporations under statutes involving false, fraudulent statements or obstructive conduct, such as, for example, witness tampering,5 false declarations before the grand jury,6 or destruction, alteration, or falsification of records in federal investigations and bankruptcy,7 they often include a charge under Section 1001.8 As a result, Section 1001 is often understood as a catch-all statute capturing all varieties of knowing and willful false statements and omissions.
From the perspective of the Department of Justice (DOJ), the purpose of Section 1001 is to "prohibit deceptive practices aimed at frustrating or impeding the legitimate functions of government departments or agencies."9 Section 1001 makes it a crime to provide false statements or entries on any matter within the jurisdiction of the executive, legislative, or judicial branch of the federal government.10 Both individuals and corporations may be prosecuted for violations of Section 1001.11 Because of its ubiquitous and omnipresent nature, it is important for compliance officers and other corporate officials to have some general familiarity with the contours of liability under Section 1001.
This chapter focuses on the elements of a Section 1001 violation, as well as the interplay between Section 1001 charges and those brought for other substantive crimes. Finally, the chapter explores the ways in which compliance officers and their compliance functions can limit liability under Section 1001.
17.2 Establishing Section 1001 Liability
In order to establish a violation of Section 1001 involving false statements, representations, or documents, the government must prove the following:
1. The accused made a statement, representation, or document that is false or fraudulent.
2. The statement, representation, or document is material.
3. The statement, representation, or document was made or used knowingly and willfully.
4. The statement, representation, or document pertained to activity within the jurisdiction of the federal agency to which it was given.12
As Section 1001 is a criminal offense, the government must prove all elements of the violation beyond a reasonable doubt.13 This section outlines important considerations for how federal prosecutors can establish each element of a Section 1001 prosecution. In the process, this chapter provides useful information to compliance officers for how to avoid violating the statute as well as understanding how a violation can occur.
17.3 First Element: Defining False Statements or Representations
As a threshold matter, to be a crime under Section 1001, the statement or representation in question must be false.14 False statements are defined broadly and "may be written or oral, sworn or unsworn, voluntarily made in regard to information sought as or required by law, signed or unsigned."15 The statute requires the statement to be actually false,16 but there is no requirement that the false statement be an express statement.17 As such, an implied false statement may also lead to Section 1001 liability.18
An express false statement is a statement, written or oral, that is literally false.19 For example, claiming wages of X (say, $100,000) on a tax return when your wages are really X+Y (say, $250,000) is an express false statement. An implied false statement is not an oral or written statement that is literally false but instead falsely implies compliance with certain statutes, regulations, or government policies.20 For example, an invoice from a government contractor in which the contractor has failed to comply with regulations governing the contract or entry into the program (such as the Federal Acquisition Regulation or Small Business Administration regulations) may produce Section 1001 liability even if the contract itself contains no express false statement of compliance.21
Section 1001 liability can also apply to both past and future statements and representations. In United States v. Shah, for example, the Fifth Circuit held that under Section 1001, "a promise may amount to a false, fictitious or fraudulent statement if it is made without any present intention of performance and under circumstances such that it plainly, albeit implicitly, represents the present existence of an intent to perform."22
17.4 Second Element: Materiality
Section 1001 liability also requires the government to establish the "materiality" of the false statement, representation, or document.23 To be material, the statement must have "a natural tendency to influence, or be capable of influencing the decision-making body to which it is addressed."24 Basically that means that the false statement must be the type that matters. Lying about your age on an application (say because you don't want to admit your real age) when your age has no bearing on the decision to grant or deny the application is likely an immaterial falsity. In contrast, lying about your income when applying for a mortgage loan or tendering a tax filing is material. Although the false statement or representation in question must be material, Section 1001 does not require the false statement or representation to actually influence the decision-maker; rather, it is sufficient that the statement merely have the capacity to influence the government.25 Because materiality is an element of the offense, a jury—not a judge—must find that the charged false statement or representation was material.26 As such, materiality is often proven through live testimony at trial.27 For example, in a fraud trial involving false declarations made at the border relating to merchandise seeking entry into the United States, the government would likely call a Customs and Border Protection official to testify that the false statement or representation in question is something that the agency cares about and is something that has the capacity to influence the agency's decision to allow the merchandise to enter the United States or how much taxes, duties, or tariffs would be assessed on the merchandise upon entry.
17.5 Third Element: "Knowing" and "Willful"
Innocent false statements or representations do not offer a basis for a conviction under Section 1001, nor do false statements that arise out of mistakes or confusion. In addition, the DOJ has recently lessened the reach of Section 1001 by clarifying the meaning of "willfulness." In the U.S. Solicitor General's brief arguing that the U.S. Supreme Court should not accept an appeal in Ajoku v. United States No. 13-7264, the Solicitor General conceded that the correct interpretation of "willfully" in Section 1001 implies that a "jury must conclude 'that [the defendant] acted with knowledge that his conduct was unlawful,"28 Later, the government reaffirmed this interpretation in the U.S. Solicitor General's brief in opposition to an appeal in Natale v. United States, No. 13-744, filed March 14, 2014. In this brief, the Solicitor General argued that the interpretation of "willfully" required a "specific intent to deceive," and reaffirmed the stance from Ajoku that Section 1001 requires proof that the defendant knew his or her conduct was unlawful.29
17.6 Jurisdictional Requirement
Section 1001 limits liability to false statements for "matters within the jurisdiction" of the federal government.30 The jurisdictional element is satisfied if the agency receiving the false statement had the power to act on the statement,31 there was an "intended" relationship between the federal government and the false statement,32 or the false statement was designed to induce government action.33
17.7 Statute of Limitations
The statute of limitations for any violation of Section 1001 is five years from the date that the false statement or representation is made to, or submitted to, the government.34
17.8 Related Crimes of False Certification
When prosecutors file substantive charges against a defendant (say, theft of government funds, for example), it is not unusual for prosecutors to include a Section 1001 charge as part of the charging instrument.35 Prosecutors often do this because the Section 1001 charge may be the easiest conduct to prove to a jury and may lead to more plea agreements; the thinking is that if all else fails, if there is a knowing and willful lie by the defendant that qualifies for prosecution, prosecutors should at least be able to prove that crime, if nothing else. Therefore, it is not unusual to see Section 1001 charged as a tag-along crime to other crimes. In this regard, Section 1001 can sometimes be viewed as a prosecutor's insurance policy for a conviction and as such, it may also lead to more plea agreements since defendants may realize that they cannot beat the Section 1001 violation.
For the same reason, Section 1001 can also be used as leverage to convince a target to cooperate with federal authorities if the person has been caught lying to federal agents, for example.36
17.9 Other Title 18 Crimes
Section 1001 is not the only false certification crime within Title 18 of the United States Code. Title 18 contains several more specific false statement statutes that criminalize false statements under specific circumstances or relating to specific conduct, such as false statements submitted to federally insured banks37 and...
