Early intervention by counsel in criminal investigations will likely result in the government forgoing the use of more invasive investigative tools.
The COVID-19 pandemic has caused unprecedented disruptions and triggered an equally unprecedented flood of government relief for businesses—many of which have limited experience with compliance, regulators or law enforcement. When this disruption passes, we anticipate a surge in allegations of fraud and misuse of government funds, including those made by former employees with financial incentives to make them. It is critical that businesses retain and consult with counsel quickly in order to protect themselves when confronted with a federal investigation. This Alert identifies critical points for consideration in three situations:
- Service of a civil investigative demand or grand jury subpoena
- An unannounced search of company premises
- Receipt of a target or subject letter
Civil Investigative Demands/Grand Jury Subpoenas
Do not ignore it. Civil investigative demands (CIDs) and subpoenas are legal documents that require the recipient to provide records, or possibly, live testimony. These requests can be issued by grand juries investigating potential criminal misconduct, or administrative agencies charged with enforcing specific regulations. Note, a CID and subpoena are not mutually exclusive—a CID and grand jury subpoena can concern the same subject matter. In either case, CIDs and subpoenas are important legal documents that cannot be ignored without risk of serious penalty.
Contact counsel immediately. It is critical that counsel be involved as early as possible in crafting a response to the CID or subpoena. Counsel may be able to negotiate the scope of the document requests or the need for a company official to appear and provide testimony. Counsel may also be able obtain insight into the government’s investigative priorities that may not be obvious from the face of the CID or subpoena. Moreover, involving counsel early will protect the internal investigation undertaken by the company in response to the subpoena from disclosure because of the attorney-client privilege. Early intervention by counsel in criminal investigations will likely result in the government forgoing the use of more invasive investigative tools―e.g., search warrants, unannounced interviews of employees, etc.
Secure and protect the attorney-client privilege. The attorney-client privilege prevents the disclosure of confidential communications between a lawyer and their client made for the purpose of providing or receiving legal advice. Protecting the privilege gives subpoena recipients some measure of control over what the government might legally review. If a company does not work with counsel, the efforts it undertakes to respond—for instance, internal communications about what to include in the subpoena response and what to exclude—may all be subject to review by the government.
Determine whether a counsel-directed internal investigation is warranted. It is often in the company’s interests to investigate the circumstances surrounding its receipt of a CID or subpoena. Quickly getting to the bottom of any alleged misconduct puts the company in a stronger position to negotiate a resolution with law enforcement or regulators. However, an internal investigation is not needed in all situations, especially where a recipient is not the primary target of an investigation. In all cases, counsel should be consulted and involved in the decision to conduct an internal investigation.
Preserve critical evidence. Once an organization receives a CID or subpoena, it is imperative that all reasonable steps are taken to preserve the requested documents and information, as well as any other documents that might be relevant. Doing so ensures that no possibly exculpatory physical or electronically stored evidence is lost to routine document destruction policies. Moreover, a failure to preserve records after receiving a CID or subpoena may give rise to additional penalties, or even allegations of obstruction of justice.
Do not discuss the CID or subpoena, or take any action that might be construed as retaliatory, without the prior advice of counsel. At the outset, only key decision-makers and employees that need to know about the CID or subpoena, such as IT professionals involved in collecting requested data, should be informed of its existence. If the company is able to determine the identity of the employee who triggered the CID or subpoena, no action should be taken until counsel can advise on what, if any, steps might be taken to protect the company from additional complaints.
Law Enforcement Search
Prepare for the possibility of a search by working with legal counsel to develop a written plan for any unplanned contact between company employees and law enforcement. A law enforcement contact plan should lay out clearly defined lines of communication between employees and senior management, and prominently identify the name and contact information of the company’s legal counsel.
Prior to any search, advise employees of their rights if asked to speak to law enforcement, but do not instruct them to remain silent. Individuals have the right to speak to law enforcement, not to speak to law enforcement or to refuse to speak with law enforcement without the presence of legal counsel. Employees should be instructed of these rights. Employees may also be instructed that it is not usually in their personal interest to speak to law enforcement without counsel and that counsel may be provided. However, the company should not instruct its employees to remain silent—such an instruction might result in an obstruction of justice charge.
Instruct employees to request any warrant or other document authorizing the search, but not to interfere with the officers’ search if they refuse to provide one or do not have one. The company and its employees have the right to ask officers to show any warrant or other document authorizing their entrance to and presence on the company premises. However, if they do not have one or refuse to show it, employees should be instructed to not interfere with the search. Interference might result in an obstruction of justice charge.
Direct employees to document as much of a law enforcement search as possible, both while it is happening and immediately afterward. One or more employees should accompany officers on their search of the company’s premises, if permitted. Those employees should keep careful notes of each location the officers searched, any records officers or agents asked employees to provide or any other request for information the authorities might make. If permitted, employees should make copies of any records seized. Employees should also politely request a property receipt for anything seized during the search. In most jurisdictions, the government is required to leave a copy of both the search warrant and a property receipt of the items taken from the premises searched.
After the search is completed, do not attempt to “clean up” until consulting legal counsel. All areas searched by law enforcement should be secured immediately after officers leave the premises. Photographs of those areas should be taken. Employees should be interviewed and any notes taken by those employees copied and reviewed. Any security footage should be secured and any automatic deletion or overwriting policy suspended. Regular trash and shredding services should also be suspended temporarily. Counsel should be consulted prior to any cleanup efforts.
Seek advice from both legal and public relations professionals, before issuing any public statement. Members of the news media may appear at your premises during the search or request comment after learning of the search through law enforcement or other sources. Politely decline the invitation to comment. Also, the company and employees should refrain from commenting upon the search on social media platforms, such as Facebook, Twitter, LinkedIn or any others. As always, any statement that the company or an individual employee may make about the company can be used against it. Depending on the nature of the investigation, the company involved and the level of interest from the media and the public, the situation may call for the implementation of a crisis management plan, an activity that necessarily should involve counsel.
Contact counsel immediately. It is the Department of Justice’s policy to provide written notice of the right to testify before a grand jury to “targets” and “subjects” of federal criminal investigations. A “target” is a “person as to whom the prosecutor or grand jury has substantial evidence linking him or her to the commission of a crime and who, in the judgment of the prosecutor, is a putative defendant.” A “subject,” by contrast, is a person “whose conduct is within the scope of a grand jury’s investigation.” These same definitions apply to entities and corporations. If a target or subject letter is received, counsel should be contacted immediately.
Once the immediate danger from the pandemic dissipates, we anticipate increased law enforcement activity focused on the vast amounts of relief funds that individuals and businesses received. Companies would be well-advised to carefully plan for how they might respond if they receive CIDs or subpoenas, are the subject of an unannounced search, or are identified in subject or target letters. Early involvement of legal counsel and careful preparation can help prevent a situation that begins as a mild annoyance but then develops into a crisis that carries severe criminal penalties.
About Duane Morris
Duane Morris has created a COVID-19 Strategy Team to help organizations plan, respond to and address this fast-moving situation. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.
For More Information
If you have any questions about this Alert, please contact Brett M. Feldman, Michael M. Mustokoff, Daniel R. Walworth, any of the attorneys in our White-Collar Criminal Defense, Corporate Investigations and Regulatory Compliance Group or the attorney in the firm with whom you are regularly in contact.
Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.