What Would Happen To You If You "Lose" 50,000 Emails You Should Have Kept?

It seems that our moral betters at the FBI have now "lost" some 50,000 or so Strzok/Page texts and/or emails sent in the period of December 2016 to May 2017.  The mysterious disappearance follows a series of other well-known such disappearances, including the Lois Lerner/IRS emails and the Hillary Clinton/Benghazi emails, let alone the entire Hillary Clinton private email server said to have contained some 30,000 documents.  The Wall Street Journal yesterday quotes the FBI as attributing its latest "loss" to "misconfiguration issues related to rollouts, provisioning, and software upgrades.”  Sure.  At this point, does anyone on the planet believe a word they say?

Meanwhile, Lois Lerner retired with a full taxpayer-funded pension, Hillary is off making speeches and selling books, and Strzok continues to work for the FBI in the Human Resources Department. Prosecution?  What's that?  But perhaps you are wondering, what would happen to a non-Washington-insider like you if you had suffered a similar "loss" of emails or texts that were obviously of the highest interest to government or Congressional investigators?

For guidance, you could look to the famous story of the Arthur Andersen accounting firm.  Andersen had been the auditor for Enron.  In 2001 Enron revealed various financial problems that led to its collapse.  At a time when no subpoenas or document requests were outstanding, Andersen employees were then alleged to have shredded documents relating to the Enron audits (these were hard copy documents back in those ancient days).  Then Deputy Attorney General Larry Thompson was quoted as saying "At the time [the documents were destroyed], Andersen knew full well that these documents were relevant."  In 2002 Andersen was indicted for obstruction of justice for the document destruction.  Almost immediately the firm collapsed.  About 85,000 people -- nearly all of whom had nothing to do with the Enron audit or document shredding -- lost their jobs.  Andersen was then convicted of obstruction for the document destruction.  In 2005 the conviction was overturned by the Supreme Court, but by that time it was irrelevant -- the firm was long gone.

Or consider the case of Frank Quattrone.  During the time of the "dot com bubble" at the beginning of the millennium, he was the highest-flying investment banker on Wall Street -- the guy who took Amazon.com public!  Obviously he was a guy with a target on his back for ambitious federal prosecutors.  Here is a comprehensive write-up of the Quattrone prosecution from the Atlas Society in 2004 (sympathetic to Quattrone).  The case arose out of events in late 2000, when the "dot com" stock bubble was just starting to burst.  Federal prosecutors had begun an investigation of so-called stock "allocation" practices in the securities industry (that is, which firm gets to sell how much of a hot IPO), a subject that involved Quattrone little if at all.  Certainly, he was never charged with any substantive wrongdoing for anything relating to "allocation" practices.  But at this time, Quattrone was alleged to have authorized a colleague to send an email to his team encouraging them to use the end-of-year slow period to purge files on closed deals of things like "notes,  . . . drafts, . . . valuation analysis, . . . copies of the roadshow, . . . markups, . . . selling memos, . . . IBC or EVC memos, . . . [and] internal memos."   The specific context of the prospective file purge was not the federal investigation, but rather anticipated private lawsuits arising out of the stock price declines, none of which had in fact been commenced.  Quattrone was indicted for obstruction of justice.  His first trial ended in a hung jury, but at a second trial he was convicted, and sentenced to 18 months in jail.  However, again the Supreme Court ultimately reversed.  Needless to say, all of this threw a monkey wrench into Quattrone's previously high-flying career.

Then there's the case of Morgan Stanley.  In September 2001, its headquarters was in the World Trade Center.  When the towers collapsed, it lost large amounts of its hard-copy files, which were much more important then than today.  That's about as legitimate a reason for losing documents as you could come up with!  But not to petty and vindictive regulators.  When many litigants with claims against MS complained that MS was not producing documents, the financial industry regulator FINRA investigated.  It ultimately found that MS had substantial amounts of the missing documents on "back-up tapes" (possible to search, but only with great difficulty and expense) and imposed a fine of $12.5 million on MS. 

You might wonder why I'm reaching back to the early 2000s to come up with these examples.  I have looked for some more recent instances, but haven't found them.  I think that's because, in today's era, emails just don't disappear, even if you try to make them disappear.  That's certainly how my email accounts work.  Nor are major corporations, and particularly banks and securities firms, about to take any chances with this.  The default has become that everything is kept, which can be done at almost no cost, and handled by the outside providers like Google or Apple or Samsung or Verizon or AT&T or maybe all of them at the same time.  The old rule that you are allowed to destroy documents as long as they are not subject to a subpoena or document demand is long, long gone.  For a private entity -- such as you -- everything will be found, even if you have tried very hard to obliterate it.  

But the applicable rules sure do seem to be different for the government insiders, don't they?  Somehow, every time there's some collection of emails or texts of a government agency like the IRS or State Department or FBI that the public really, really would like to see, they have been "lost" through some quirk or accident.  If you believe them.  

And, by the way, for these purposes, neither President Donald Trump nor any high-ranking member of his administration should be considered a "government insider."  That designation is reserved for those who follow the official Washington, D.C. political groupthink.