## Facts

- LaSalle Portfolio Management, Inc. (LPM, Inc.) earned management and incentive fees for investment advisory services.
- In the early 1990s, LPM, Inc. partners (including Vincent Malanga) pursued an offshore Bermuda entity intended to help foreign investors avoid U.S. taxation on investment income.
- With assistance from John Fassnacht (a CPA) and a Bermuda law firm, LaSalle Portfolio Management, Ltd. (LPM, Ltd.) was incorporated in Bermuda in 1993.
- LPM, Inc. expected a $1.35 million incentive fee from a foreign client; the partners directed that the payment be made to a Bermuda bank account for LPM, Ltd. rather than to LPM, Inc.
- After a former employee was expected to report the arrangement, Fassnacht, Malanga, and another partner devised a “cover story” and generated documents to portray the payment as legitimate compensation to the Bermuda entity (or an associated individual), rather than taxable income to LPM, Inc.
- The former employee contacted the IRS, triggering an investigation that developed into a federal grand jury investigation.
- Evidence showed that after a grand jury subpoena was served on Fassnacht, recorded conversations and testimony supported that the defendants discussed subpoenaed documents and anticipated grand jury testimony.
- The government presented evidence that false statements and fabricated documents supporting the cover story continued and intensified after the defendants became aware of the grand jury.

## Issues

1. Whether the obstruction-of-justice count under 18 U.S.C. § 1503 was adequately charged, including whether the indictment provided sufficient notice of the alleged obstructive conduct tied to a grand jury proceeding.
2. Whether the evidence was sufficient to prove defendants acted “corruptly” with the intent to obstruct a pending grand jury proceeding (the required nexus), rather than merely attempting to mislead an IRS administrative investigation.

## Decision

- The Seventh Circuit affirmed the convictions for obstruction of justice under 18 U.S.C. § 1503.
- The indictment was sufficient because it identified the grand jury proceeding, the relevant time frame, and the obstructive acts, providing adequate notice.
- The evidence permitted a rational jury to find that defendants knew of the grand jury proceeding and acted with the purpose of influencing or impeding it.
- Although parts of the concealment effort began before the grand jury, post-subpoena fabrication and false statements aimed at subpoena compliance and testimony supported the required nexus to the grand jury.

## Legal Principles

- An indictment is sufficient if it states the offense’s elements, identifies the proceeding at issue, describes the obstructive acts, and provides enough information to prepare a defense and plead former jeopardy; it need not include full evidentiary detail.
- Obstruction under 18 U.S.C. § 1503 requires corrupt intent to obstruct the due administration of justice in a pending judicial proceeding, including a grand jury.
- The government must prove a nexus between the defendant’s acts and the judicial proceeding: awareness (or reasonable foreseeability) of the proceeding and acts directed at influencing, obstructing, or impeding it.
- Conduct that began as concealment from an administrative investigation can satisfy § 1503 when, after the defendant learns of a grand jury, the defendant continues or tailors false documents or statements to affect the grand jury’s evidence-gathering and testimony.

## Conclusion

The Seventh Circuit upheld the § 1503 obstruction convictions because the obstruction count gave adequate notice and the trial evidence—especially post-subpoena conduct and recorded discussions—supported a finding that defendants knowingly and corruptly used false documents and statements to impede a pending grand jury proceeding.


United States v. Fassnacht, 332 F.3d 440 (7th Cir. 2003)