Eric Rasmusen makes a good point about the Stewart conviction's likely effect on future government investigations:
My advice is to refuse to cooperate with any federal investigation, however peripheral and safe you might seem and even if you are sure no crime has been committed. Make them come back with a subpoena and make sure you have your lawyer on hand, and so forth.
This points to a law-and-economics reason for repealing the [false statements] law: the law's effect is to hinder investigations. The police should want to encourage people to talk to them, not discourage them. In fact, ordinarily I bet it is more useful to the police to have someone tell them lies than to have the person keep quiet. Police are expert in sifting through lies and half-truths, but nobody can extract information from silence motivated by fear that talking will get the speaker in trouble regardless of whether he committed any other crimes.
My friend and colleague Eugene Volokh uses Rasmusen's post as a jumping off point for these observations:
Cases such as Martha Stewart's may discourage people (even innocent people) from talking to federal authorities at all, because they might fear that some error on their part may be characterized as a lie, and might thus mean criminal punishment. In some cases (though not in all), the person may conclude that the better course is just to say nothing. That may already often happen to witnesses who are themselves being investigated for a crime, since they are often advised to say nothing in any event. But 18 USC sec. 1001 risks also discouraging cooperation by people who are just seen as witnesses.
It's hard to tell just how serious a problem this might be, and 18 USC sec. 1001 does indeed have potentially beneficial effects, too, since it may often encourage witnesses to tell the truth. But it's worth recognizing that the law can also encourage witnesses to say as little as possible, an "anticooperative effect" that might undermine the law's beneficial effect. I discuss this general problem in my Duties to Rescue and the Anticooperative Effects of Law - but as Rasmusen and Frissell point out, the problem extends far beyond just duties to rescue.
The WSJ ($) makes much the same set of points, as well:
Maybe there's some rough justice in putting Miss Stewart in an orange jumpsuit for fibbing about the circumstances of that sale with her broker. Manifestly the jury thought so. But in a case ostensibly brought on behalf of sticking up for the forgotten "little guy," we'd like to think prosecutors might have weighed the price paid by the truly innocent here: all the Martha Stewart Living shareholders, employees, executives, and so forth whose livelihoods have suffered tremendously since this case first broke into the headlines and whose futures, like their company, are now in limbo. And it's not just Miss Stewart's company: Kmart, a big buyer of Martha's products, is going to take a hit too.
We also have doubts about what "message" this conviction really does send about lying. In hindsight we can now see that had Miss Stewart said absolutely nothing at all when investigators came calling, she would not be facing jail time today. Our guess is that the corporate defense lawyers are a more reliable guide about the message of this prosecution, and right now they're pretty much all agreed that the real lesson here is to zip up completely when the FBI starts calling. Hard to see how this is a big victory for transparency.
Finally, we come to a point we've stressed before: the absence of an underlying crime. Most of the charges against Miss Stewart were brought under Title 18, Section 1001 of the U.S. Code, which makes it a crime to lie to investigators. The dangers for overreach here should be obvious, and comments made back in 1996 by Supreme Court Justice Ruth Bader Ginsburg and recently unearthed by the New York Sun now look prophetic.
"The prospect remains that an overzealous prosecutor or investigator - aware that a person has committed some suspicious acts, but unable to make a criminal case - will create a crime by surprising the subject, asking about those acts, and receiving a false denial," Justice Ginsburg wrote in a concurring opinion in Brogan v. United States, warning against the "sweeping generality" of Section 1001's language.
In short, in the Schadenfreude afterglow of Martha Stewart's conviction we also see before us the innocent people who will pay the highest price for that prosecution, as well as a huge new incentive for CEOs to clam up next time the feds ask questions.
To all of which, I can but say "yep."
When state Insurance Commissioner Jim Brown was convicted of lying to FBI agents, I wrote that henceforth Louisiana politicos would do well to think of Brown before agreeing to talk to the feds -- and then invoke "the Jim Brown Rule."
The Jim Brown Rule is very simple: if you're a public figure in Louisiana, do not talk to the FBI.
I certainly don't advocate obstructing federal investigations, but the plain truth is that FBI agents have no legal duty to tell people the truth. On the other hand, if you're being interviewed by the FBI, you have a legal duty to tell them the truth. As Brown found out the hard way, you can go to jail if you don't.