Nj.com reported on March 4, 2011 in “Prosecutor: Galleon founder got tips about Goldman” that trial begins for a billionaire hedge fund founder in the east coast of the US. The government plans to establish a former Goldman Sachs board member conspired to feed Galleon fund founder inside tips during the 2008 economic crisis. An Assistant U.S. Attorney informed a federal judge in Manhattan, NY that after a former Goldman board member called Galleon fund founder with tips, the fund founder traded hundreds of thousands of shares of Goldman Sachs stock. Jury selection began March 2011 in the securities fraud trial to charge Galleon fund founder with illegal trading that carry a potential penalty of up to 185 years in prison.
As lawyers for the Galleon insider trading case discuss which taped conversations could be played for the jury at trial, people accused of white collar crime need to be aware of rules on litigation hold to prevent from making matters worst when there is a criminal case.
White collar crime in New Jersey often involves officers, agents, and employees at companies. Company representatives, once aware of litigation, are under a legal obligation to preserve all information potentially relevant to the issues raised in the lawsuits. Preserving documents means immediately protecting information, including writings, drawings, graphs, charts, photographs, sound recordings, images, data or data compilations, emails, voicemails, word processing documents, spreadsheets, engineering specifications, marketing materials, documents on back-up tapes or other media, wireless PDAs, or any other hard copy documents or electronic files stored in any medium from which information can be obtained either directly or, after translation into a reasonably usable form.
The obligations under a litigation hold are continuing and apply equally to information created after, as well as before, the date of receiving notice of a lawsuit. Once aware of white collar crime, a New Jersey company representative should identify places where potentially relevant electronic or hard copy information may be stored and to make appropriate arrangements for preservation. It is mandatory to discontinue all systems that could automatically destroy relevant data, such as email auto-delete rules, document destruction procedures, back-up tape recycling routines, and reformatting of computer equipment used by departed employees. No relevant information should be deleted from local hard drives, or shared drives, servers, or back-up drives or tapes.
Although this duty to preserve relevant documents can be onerous, the civil and criminal penalties for non-compliance can be harsh; these penalties can include monetary or evidentiary sanctions and, depending on the seriousness of the violation, dismissal with prejudice or entry of default judgments against a company.
When faced with criminal charges, it is important that a company show it took proactive steps to preserve all relevant information. Look to an experienced New Jersey criminal defense attorney for advice on evidence retention management.
