Criminal Charges for Executive Stemming from Discovery Responses in DOJ Civil Antitrust Litigation

By on October 25, 2016

On October 14, 2016, former vice president and director of information technology of Coach USA, Inc. (Coach), Ralph Groen, entered a guilty plea for concealing and attempting to destroy documents and giving false and misleading statements under oath in a deposition during the US Department of Justice Antitrust Division’s (DOJ) investigation of a joint-venture involving Coach.

The DOJ’s complaint alleged that despite two preservation notices issued by Coach to its management team, which included Groen, Groen directed subordinates to destroy month-end backup tapes of emails and electronic records. Due to the destruction, the records were not produced to the United States during discovery. The government argued that these materials were relevant and responsive to the DOJ’s discovery requests. Additionally, Groen then falsely informed the company’s outside counsel that these materials did not exist. Groen also concealed versions of backup procedure documents that would have been relevant and responsive to the DOJ’s requests, and only provided one version. Finally, during a deposition where Groen testified as a 30(b)(6) deponent in September 2013, he lied under oath, providing false and misleading statements to the government about Coach’s document retention practices and policies.

The civil litigation from which the criminal conduct arose involved an investigation into the creation of a joint venture by two providers of hop-on/hop-off bus tours in New York City. The United States and the State of New York challenged the formation of Twin America, LLC (Twin America), a joint venture between Coach and City Sights, LLC, its primary competitor. The suit alleged that the joint venture monopolized the market for hop-on/hop-off bus services in the New York City area. A settlement was reached in the case in March 2015, resulting in the breakup of Twin America, the divestment of valuable bus stop authorizations, and the disgorgement of $7.5 million in profits from defendants. McDermott reported on the outcome at the time.

This case demonstrates the importance of being truthful with the government and the negative consequences that can result if executives attempt to mislead the government. Acting Assistant Attorney General Renata Hesse of DOJ’s Antitrust Division was quoted in DOJ’s press release as stating that, “[s]imply put, executives who obstruct Antitrust Division investigations will be vigorously prosecuted.” Assistant Director-in-Charge Paul M. Abbate of the Federal Bureau of Investigation’s (FBI) Washington Field Office similarly reflected the government’s no-nonsense view, stating that the FBI will work to “ensure that those who make false and misleading statements under oath are held accountable criminally.” Groen’s offenses carry a maximum penalty of 20 years in prison and a criminal fine of $250,000 for individuals.





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