Association of Corporate CounselHouston Chapter
Meeting of June 8, 2010
What to Do When the Feds Come Knocking
In-House Responsibilities for Criminal Enforcement Matters
James HurdKenneth Polite
Charging Considerations
LEGAL STANDARDS
Treat Corporations Like Individuals Benefits of Corporate Prosecutions Respondeat Superior Vicarious Liability for Acts of Agents Individual vs. Corporate Prosecutions
Charging Considerations
Historical Background
Purposes of the Criminal Law Punishment Deterrence Protection of the Public Rehabilitation Restitution
The Opening Salvo
Initial Notice of an Investigation Search Warrant Grand Jury Subpoena Questioning Witnesses
Early Involvement by Counsel is ESSENTIAL
Initial Corporate Response
Protection of EvidenceSuspend Document Destruction Policies
Litigation Hold StrategyOther Considerations for Documents and Electronic Data
Initial Corporate Response
Protection of Employees Notify Employees Should Counsel be Provided to Employees?
Initial Corporate Response
Protection of Board of Directors and Management
Prompt DisclosureSpecial Committees?D & O Insurance Issues? Internal Investigation?
Search Warrant Response
Discussion with AgentsRequest a Copy of the WarrantAdvise that Employees are not Prepared to be Interviewed at the Time of Execution of the Warrant
Search Warrant Response
Advice to the ClientDo Not Interfere with AgentsRequest Business Cards from the Agents
Request the Presence of Counsel at any Interviews
Search Warrant Response
Call the ProsecutorAscertain the Nature of the Investigation
Pledge Cooperation (if Authorized)
Negotiate Employee Interviews, if Requested by the Prosecutor
Document Requests
Grand Jury Subpoena, Administrative Subpoena or Other
Can Scope of Subpoena be Limited?
Negotiate a Timeline for Production
Coordinating the Defense
Dealing with the Prosecutor: Establish a Good Working
Relationship Credibility is Critical Effective Communication
Coordinating the Defense
Counsel for Employees & Officers: Must Coordinate with Other
Defense Counsel Joint Defense Agreements
Oral vs. Written
Parallel Proceedings
Should Counsel Seek to Stay Pending Civil Litigation?
• Discretion of the Court• Untenable Choices:
• Whether to waive right against self-incrimination to avoid deprivation of property without due process, or
• Risk making statements that could be used in a criminal prosecution
Cooperation
A essential factor in a prosecutor’s exercise of discretion
Generally, one of nine factors considered by federal prosecutors in “Principles of Federal Prosecution of Business Organizations”
Cooperation
Forms of Cooperation1) Waiver of the attorney-client
privilege2) No advance legal fees or indemnity
to employees3) Full and complete disclosure of facts
(from internal investigation)4) Records of interviews
Refusal to Cooperate
May Result In: Aggressive investigation
methods Numerous grand jury subpoenas Possible search warrants Regulatory reprisals
Plea Bargaining
Prosecutors seek the most serious, readily provable charges
Financial audits Employee interviews Corporate Plea in Exchange for Non-
Prosecution of Individual Employees and Officers
Special Considerations
Plea must be entered by a corporate representative
Requires a resolution of the board of directors
Debarment Considerations Regulatory Consequences
Deferred & Non-Prosecution Agreements
Alternatives to Prosecution May Include Civil or Regulatory
Enforcement Two Important Considerations:
Timely Cooperation Is It In The Public Interest?
Outside Monitors Often Required
Other Considerations
Sentencing Guidelines Has the company self-reported,
cooperated and accepted responsibility?
Has the company tolerated criminal activity?
Are effective compliance and ethics programs in place?
Analysis of pecuniary gain to company or loss to victims
Association of Corporate CounselHouston Chapter
June 8, 2010 Meeting
James A. [email protected]
Kenneth [email protected]
