Print Print

Executive to Serve Prison Time For Altering Documents Submitted During Merge Investigation

In a rare action, the US Department of Justice (DOJ) filed criminal felony charges against an individual corporate executive in connection with a company’s Hart-Scott-Rodino Act (HSR) premerger notification. On May 3, 2012, DOJ filed criminal felony charges against Kyoungwon Pyo, a senior vice president for corporate strategy at South Korean-based Hyosung Corporation.1 In a plea agreement, subject to court approval, Kyoungwon Pyo agreed to plead guilty and serve five months in a US prison for obstruction of justice charges in connection with altering documents submitted to the DOJ and the Federal Trade Commission (FTC) as part of a premerger investigation of a proposed acquisition in the automated teller machine (ATM) industry. Previously, in August, 2011, the parent entity of Hyosung Corporation, Nautilus Hyosung Holdings Inc. (NHI), pleaded guilty and agreed to pay a $200,000 criminal fine in connection with similar obstruction of justice charges.2


In August 2008, NHI submitted an HSR notification regarding its proposed acquisition of Triton Systems of Delaware, Inc., a competing manufacturer of ATMs. According to Count I of the criminal charge, Pyo, and subordinates at his direction, destroyed, concealed, and altered numerous existing corporate documents that were responsive to Item 4(c) of the HSR notification with the intent to impair the use and integrity of the documents filed in an official proceeding. Through the alterations, Pyo misrepresented market shares, competition, competitors, markets, potential for sales growth or expansion into product or geographic markets to minimize the competitive impact of the proposed acquisition.

During the DOJ’s civil merger investigation in connection with the HSR filing, the agency requested preexisting business and strategic plans for the years 2006, 2007, and 2008 related to the company’s ATM business. According to Count II of the criminal charge, Pyo materially altered the requested documents before submission to the DOJ, which again misrepresented and minimized the competitive impact of the proposed acquisition.

Months after the altered documents were submitted, while the merger investigation was ongoing, NHI voluntarily disclosed that numerous documents were altered prior to submission to the government. After the disclosure, NHI cooperated in the DOJ’s criminal investigation of the full nature and scope of the obstructive conduct, and agreed to plead guilty and pay a fine in connection with the conduct. NHI’s plea agreement with DOJ excluded Pyo from the DOJ’s agreement not to bring further criminal charges against NHI, its officers and employees. NHI and Triton ultimately abandoned the transaction.


  • This case constitutes a very unusual instance when obstruction of justice charges were filed against an individual following a civil merger investigation. For individuals, an obstruction of justice charge carries a maximum penalty of 20 years in prison and a criminal fine of $250,000. For corporations an obstruction of justice charge carries a maximum criminal fine of $500,000 per count. The penalties obtained by DOJ against the executive, and previously against the company, highlight the caution and diligence entities should use in preparation of HSR filings and responses to DOJ and FTC information requests, which constitute an “official proceeding” for purposes of the criminal obstruction statutes.
  • Further, this case indicates that the DOJ will treat alteration of documents as a strict liability offense. The DOJ did not allege the falsified information impaired its review of the transaction – however, the company did disclose the alterations before the investigation was closed.
  • The prosecution and penalties in this case also reinforce the importance that the antitrust agencies place on the role of the documents that companies include in their HSR filings as well as those submitted during a merger investigation – the initial waiting period and in response to formal requests for additional information and documentary materials (Second Requests).
  • Although care should be exercised in preparing documents in connection with an acquisition to avoid unnecessarily portraying the potential impact of the transaction in a negative light, such documents should not intentionally misrepresent information, and preexisting documents should not be altered in any way.
  • Finally, this matter highlights the critical importance of maintaining a culture of ethics and legal compliance throughout an organization. Simply put, no transaction is worth putting a company’s integrity and hard-earned reputation at risk.
Endnotes    (↵ returns to text)

  1. See DOJ Press Release available at
  2. See DOJ Press Release, available at