Another chapter just closed in the long, sad case of Ian Norris, the former CEO of Morgan Crucible Co. On December 10, 2010, he was sentenced in federal court to 18 months in prison and fined $25,000 for orchestrating a conspiracy to obstruct justice in a federal grand jury investigation into price fixing of carbon brushes and related products.
It could have been worse for Norris, since the government sought a jail sentence of 33 months—the top end of the federal sentencing guideline range applicable to his case. It was still bad news for Norris, who is now nearly 68 and a cancer patient. Norris, who was detained since his July 27, 2010 conviction, hoped for a sentence of time served. Additionally, since Norris is not a U.S. citizen, he will not be eligible for halfway-house placement, and will likely be administratively confined for some time after completing his sentence as he awaits deportation. It all adds up to a long time in jail for the elderly Norris.
It didn’t have to turn out this way. The decade-long case involving Morgan Crucible started with a federal price-fixing investigation. Since 2002, the U.S. Department of Justice (DOJ) Antitrust Division scored more than $11 million in fines, and convictions of two companies and four of their executives as a result of the investigation. Only Morganite Inc., a U.S. subsidiary of Morgan Crucible, was convicted of the antitrust violation of price fixing. All the other defendants were convicted of various offenses relating to their efforts to thwart the federal antitrust investigation. These efforts included what DOJ characterized as an elaborate scheme to obstruct justice that involved witness tampering, document destruction and other forms of obstruction of justice, including the use of a false script that employees were to follow when questioned by investigators.
While it may be hard to understand what led Norris to make such a gamble, his case is the paradigm for what not to do when a business falls under criminal investigation. (See also Pepper Hamilton’s July 29, 2010 Antitrust Client Alert, “Lessons on How to Avoid Making a Bad Situation Even Worse – The Antitrust Investigation of Morgan Crucible and the Obstruction of Justice Conviction of its Former Chief Executive Officer”.)
Ironically, Norris, a citizen of the United Kingdom, was not extraditable to the United States on the antitrust charges, since price fixing was not a criminal offense in the U.K. at the time in question (although it is now). He was, however, extraditable on the obstruction charge, for which he was ultimately convicted and now sentenced. Norris would be a free man today if, in response to the price-fixing investigation, he had simply done nothing to cover up the alleged price fixing.
The lessons of Norris’ case include the importance of the creation of a strong culture of corporate and antitrust compliance, in which training is accepted and employees know that engaging in cartels or other unlawful activities will not be tolerated regardless of how they might temporarily increase revenues. Further, employees should be educated about their rights when confronted by a government investigation, and trained on what to do during the investigation without crossing the line into unlawful conduct.
Working with experienced former government prosecutors and antitrust attorneys to address issues arising under the antitrust laws and the risks from government investigations can help minimize the chances of liability for companies and employees in conducting domestic and international business. Those with questions or concerns about these issues are welcome to contact the authors.
Jeremy D. Frey and Barbara T. Sicalides