Civil law and criminal law overlap so that a given situation may involve both the possibility of an administrative agency civil action involving a fine or an injunction and potential criminal charges against both the business entity and individual executives. This comment provides a brief and incomplete educational overview of suggestions for executives when it appears that her or his employer is under government investigation. Always consult an experienced attorney in specific situations.
The following educational suggestions are not sequential events but possible simultaneous actions.
1. Realize that the government may be simultaneously conducting a public non-criminal administrative agency inquiry and an undisclosed criminal investigation. For example, the Securities and Exchange Commission (SEC) may request information by utilizing Form 1662. That form states that the information provided may be shared with federal, state, local, or foreign law enforcement agencies. One must assume that information furnished to an administrative agency will be shared with other agencies including prosecutors. Parallel civil and criminal investigations present complex questions; however, they do not violate double jeopardy. Realize that even good intentioned executives may inadvertently stumble into a criminal violation. Thus, do not suppose that your good faith and honest intentions provide an absolute shield from potential criminal liability.
2. Realize that the Federal Sentencing Guidelines for Organizations provide an incentive for a business to take prompt remedial actions when wrongdoing is uncovered. A press release may read that "rogue employees" engaged in unlawful conduct without the knowledge or authorization of upper management. The business will seek to isolate the wronging to minimize potential fines and, most of all, to preserve federal contractor status. Upper executives often assert that they were deceived by subordinates. Do not expect the business to be loyal to your best interests.
3. Given the risk that an administrative agency inquiry may become a criminal case, do not delay in obtaining a personal criminal defense attorney. Your attorney should monitor the investigation as it unfolds and protect you from pitfalls. An organization's corporate attorney represents the corporation and the corporation's interests may be adverse to your interests. If the corporate attorney does not represent you, then your communications with the corporation's attorney are not privileged. This means that these communications may be revealed in a criminal proceeding. Be absolutely informed concerning this danger before engaging in any communications. Additionally, determine if your employer will pay your attorney's fees.
4. Does your selected attorney have expertise in the defense of white collar crime? Note that a corporate attorney that routinely addresses contractual matters, for example, may not be sufficiently experienced in criminal law. It is critical that your Fifth Amendment privilege against self-incrimination not be inadvertently waived (given up). For example, providing information or a summary of events favorable to your position may open the door to contradictory unfavorable information being presented. This is highly complex and is briefly discussed below.
5. Do not create timelines or other summary documents, either for your employer or an administrative agency, without the request and participation of your attorney. Attempt to make these items privileged communications with your attorney. One may unwittingly provide evidence that will be utilized in a criminal or civil case. For example, a "Wells notice" (named for a 1972 SEC committee) is a letter that the SEC sends when it plans to take civil enforcement actions. Responding to a Wells notice is not privileged. Consult your attorney. It may be best not to respond unless there are clear factual errors or there exists an extremely strong argument against the enforcement action.
6. Follow your personal attorney's instructions. This is not a time for uncounseled actions. All of the items in this brief comment are predicated on your attorney's involvement and approval.
7. Do you possess information that may be utilized to become a statutorily protected whistleblower or to perhaps entitle you to a reward under legislation such as the federal False Claims Act? Consult your attorney.
8. Realize that in cooperating with your employer's internal investigation, you may be providing evidence that your employer will ultimately transfer to the government. However, the failure to cooperate with the internal investigation may result in termination by your employer. This dilemma must be thoughtfully discussed with your attorney. The phrase "Upjohn Warning" refers to a famous U.S. Supreme Court decision in 1981 (Upjohn v. United States). It requires that employees being interviewed in an internal investigation be informed that the company may waive (give up) the attorney-client privilege and provide the statements to the government. Without such a warning, the employee being interviewed may be able to assert attorney-client privilege. Is a written joint defense agreement between you and your employer that limits disclosures possible?
9. Do not delay in contacting your directors and officers liability insurance carrier. Of course, well in advance of any potential problem, one should have obtained insurance coverage and clearly understood any exclusions and limitations. Since criminal and civil matters often are linked, your liability insurance coverage may be available. When purchasing this insurance, one should have a policy provision that pays attorney's fees and other expenses as they are billed to you and not at the end of a lengthy litigation.
10. Note that corporations and other business entities traditionally may not assert the Fifth Amendment privilege against self-incrimination. Hence, corporate records that you hold in a representative capacity may not be shielded from disclosure. However, the act of producing records sometimes involves compelled communication that could trigger the privilege against self-incrimination. Document content is irrelevant under this analysis. Is a subpoena (an order to produce records or to testify) directed to you personally, in which case it may be challenged, or to the corporate entity? Furthermore, if the subpoena requires you to acknowledge that such records actually exist, this may violate self-incrimination. While it is unlikely that corporations will ever be fully granted a self-incrimination privilege, legal trends suggest that the circumstances under which corporate record production may be compelled will be progressively narrowed. Consult your attorney.
11. Do not lie to governmental investigators. You may choose to be silent, but do not lie. A federal statute prohibits a person from making materially false or fraudulent statements or creating materially false documents (18 U.S.C. Sec. 1001). An individual does not have to be in court or under oath for this statute to apply. The lie may be prosecuted even if the underlying investigation results in no legal action being taken. Martha Stewart was convicted under this provision.
12. Do not conspire with others to commit a crime. Both federal law (18 U.S.C. Sec. 371) and state law make it a criminal offense to conspire to commit a criminal offense and to perform an act in furtherance of the agreement (such as creating a false bookkeeping entry). Conspiracy may occur without an underlying crime having actually been committed and even if a co-conspirator is not charged, or is found not guilty or granted immunity from prosecution.
13. Do not tamper with a witness, victim, or informant in an attempt to prevent these individuals from testifying or to have them withhold testimony. The federal obstruction of justice statute is quite broad (18 U.S.C. Sec. 1512). Of course, violence or threats of violence are covered. Intimidation, corrupt persuasion, and harassment are also included. Administrative agency proceedings as well as judicial proceedings are subject to this statute. A related federal statute criminalizes bribery utilized to obstruct a criminal investigation (18 U.S.C. Sec. 1510).
14. Do not retaliate against a witness, victim, or informant (18U.S.C. Sec. 1513). Physical harm is not required. A violation may include interference with one's livelihood. Additionally, many statutes contain separate anti-retaliation provisions.
15. Do not destroy, alter, or falsify records (18 U.S.C. Sec. 1519). Actions undertaken to impede a criminal investigation are clear violations. The provision also applies to bankruptcy cases. Note that an actually announced official proceeding may not need to exist in order to have a violation. Business and individuals need to carefully review with legal counsel document retention and destruction policies well in advance of any specific situation.
16. Do attempt, through your attorney, to learn as much as possible about the investigation being conducted. Federal Rules of Criminal Procedure 16 details items that a criminal defendant may obtain from the prosecution. Additionally, the U.S. Supreme Court has stated that evidence that is material (significant) to guilt or punishment cannot be withheld or suppressed by the prosecution and must be furnished to the defendant upon request (Brady v. Maryland, 1963). Discovery is a complex area of the law that requires consultation with an experienced attorney.
17. Consult with your attorney concerning possible self-disclosure and remedial protocols. For example, the U.S. Department of Health and Human Services provides for voluntary identity, disclosure, and resolution of potential fraud related to a federal health care program. The Federal Sentencing Guidelines for Organizations provide incentives for businesses to take prompt remedial actions when illegal activity is uncovered. In these situations a conflict of interest may exist between an employee and a corporate employer. Due care is advised.
18. If a criminal investigation is underway, determine if a deferred prosecution (criminal charges have been filed) or non-prosecution (no criminal charges have been filed) agreement is possible. These have become increasingly common in the area of corporate crime. A corporation may agree to cooperate with the government in making a criminal case against individual employees and enact significant internal operational changes. Again, the interests of employees and the employer may conflict.
19. Determine if an integrity agreement is possible. These are often entered into so that a business will not lose government contractor status or access to federal funds such as Medicare. A variety of protocols and "reportable events" will be part of a package. Occasionally an individual may obtain such an agreement.
20. Be cautious about providing testimony in an administrative proceeding or civil case if a future criminal case is possible. Perhaps the civil action may be "stayed" (stopped) while a criminal case is pending. Essentially, what one communicates by deposition, documents, or courtroom testimony in a civil case may likely be utilized in a criminal case. Consult your attorney.
21. Be cautious concerning promises of leniency or other benefits made by government officials in exchange for cooperation. The investigator or official may lack authority to make legally binding promises. Numerous judicial decisions state that an official cannot alter the law by making promises. Consult your attorney.
22. Determine if an immunity agreement in exchange for your testimony is possible. Immunity agreements are complex and require consultation with experienced legal counsel. "Transactional" (blanket) immunity is broader than "testimonial" (what you say won't be used against you) immunity. Also, there are multiple jurisdictions (federal and state, for example) that often must be involved. It does not violate double jeopardy to have multiple prosecutions when they occur in different jurisdictions.
This comment provides a brief and incomplete educational overview of a complex topic and is not intended to provide legal advice. Always consult an experienced attorney in specific situations.