Most of us should know that we increase the odds of being charged with a federal or state crime by not consulting a knowledgeable, skilled and experienced criminal defense attorney before speaking with prosecutors or their investigators. It’s dangerous, because what you say can be used against you.
But the same danger can exist in a civil context when government agencies or regulators engage in so-called “parallel investigations.” Today, speaking with civil regulators without first consulting a defense attorney who understands how prosecutors can be involved in or use information collected in a civil investigation can lead to criminal indictment and conviction.
The New York Times recently reported on a parallel investigation that resulted in not just one, but two criminal indictments that blindsided a young lawyer. Unfortunately, and ironically, the lawyer had not first consulted a criminal defense attorney before he willingly spoke with the SEC, apparently assuming he was only a fact witness.
Law School, Clerkships, Indictment
After leaving his business relationship manager position at Dewey & LeBoeuf LLP (“Dewey”), the young man graduated magna cum laude from Georgetown Law School, clerked for a U.S. District Court, now clerks for a federal appeals court, and has received an offer of employment from a prestigious national law firm.
The twice-indicted lawyer first had spoken with Manhattan District Attorney prosecutors who were looking into defunct Dewey’s finances, assuming he simply was providing background information about the bankrupt law firm. But later in the year, he willingly accepted an SEC invitation, traveling to Washington, D.C. as the administrative agency investigated a Dewey bond offering that transpired after he left the law firm.
Before the second, SEC interview the young lawyer failed to object when asked if the Manhattan DA prosecutors with whom he already had spoken could “sit in.” The result was a surprise indictment for scheming to defraud and another for six alleged false accounting entries. He started out believing he was helping a civil agency and eventually was skewered in a parallel investigation.
Even If It Doesn’t Appear to Involve Criminal Conduct
With ever-expanding federal and state governments reaching into areas of the law or cases that may not appear to involve criminal conduct, it is equally imperative that a person speak with experienced counsel before deciding to talk with law enforcement or any regulatory body. As we have seen in this case, SEC, FDA, FCC, IRS and other “administrative or civil” inquiries can often open the door to criminal investigators.
Administrative agencies’ jurisdiction over certain types of transactions or licensed professionals can trigger parallel investigations. Too often those contacted by regulators assume there is neither harm nor exposure by speaking with such agencies, believing they would appear suspicious if they brought counsel with them. On the contrary, state and especially federal government expansive interpretations of fraud, fiduciary duty, duty to disclose and money laundering compel a prudent person to consult with counsel prior to any discussions with these types of agencies.
How It Can Happen
Laws have become so complex that attorneys must be current on all potential scenarios that turn civil inquiries into parallel criminal investigations. For example, physicians and dentists who waive co-pays from patients so they may afford proper care can easily be exposed to potential criminal violations once they submit those claims to private insurers or Medicare.
Criminal and civil securities violations may be lodged against individuals for revealing confidential or protected work product. They may inadvertently reveal information that someone uses to trade on the company’s stock. If the information is material and non-public, the employee can be charged with securities violations resulting in potential jail time, forfeiture and fines.
Physicians and other healthcare professionals may be exposed to criminal violations if they accept monies, equipment or services from certain individuals or vendors. The list is seemingly endless and case law is ever-expanding the reach of federal and state prosecutors.
Before You “Help” or “Assist” in an Inquiry
Anyone asked by a government agency to “help” or “assist” in an inquiry would be wise to consult first with experienced criminal defense counsel to fully protect his or her rights. If an agent shows up at your home or office, or calls you, and asks to speak with you, the best response is to say that you would be glad to help, but first must consult with your attorney.
Too often clients from a broad range of industries and professional sectors who come to our offices have told us they “only spoke to the agents for a few minutes.” But many of those “brief” encounters turn out to be much longer and more substantial than the person remembers. They often lead to the person being charged with a crime based upon his or her own words, sometimes a charge of lying to a federal agent.
The best and most cautious approach is to decline to speak, get the business cards of agents who approach you, or complete contact for someone who calls, and then contact an experienced criminal defense attorney immediately.
Contacting a defense attorney first may prevent or avoid charges.
Unfortunately, the young lawyer in trying to help may have “represented himself” into two totally unexpected indictments.