Comprehensive Guide to White-Collar Criminal Defense: Government Investigations

Introduction to Government Investigations

Federal government investigations into white-collar crimes typically involve a number of different steps, both covert and overt. Dynamis LLP attorneys have led hundreds of government investigations (and defended against dozens). Understanding the investigative procedures, potential offenses, and appropriate responses is crucial for effective navigation and defense.

1. Understanding Federal Investigations

Federal investigations are inquiries conducted by government agencies to determine whether violations of federal laws have occurred. In white-collar cases, these investigations often involve:

• Federal Grand Jury Investigations: Prosecutors utilize the grand jury process to develop and assess evidence.

• Subpoenas and Document Requests: Legal orders, typically grand jury subpoenas, that compel individuals or entities to provide documents or testimony.

• Other Investigative Tactics: Methods include interviews of witnesses, surveillance, search warrants, and forensic analysis.

Common triggers for these investigations include whistleblower complaints, suspicious financial activity, trading activity, and regulatory audits.

2. Common Types of White-Collar Offenses Investigated by Federal Authorities

Federal investigations are a significant amount of work. There is no such thing as an “easy” or “minimal” federal investigation. Accordingly, the use of scarce resources is a paramount consideration when federal agents and prosecutors decide to open a federal investigation. Accordingly, federal authorities focus their investigations on:

• Fraud: Deceptive practices like wire fraud, mail fraud, healthcare fraud, tax fraud and securities fraud.

• Insider Trading: Trading securities based on nonpublic, material information.

• Money Laundering: Concealing origins of illegally obtained funds.

• Embezzlement and Bribery: Misappropriation of funds and offering or accepting bribes.

• Antitrust Violations: Activities that restrain trade or reduce market competition.

Critically, there are certain monetary cut-offs for whether federal investigators decide to open a case. These cut-offs are guidelines rather than rules. For example, tax fraud cases typically require a loss of at least $500,000, while most complex frauds investigated by the federal government involve amounts over $1 million. Agencies like the DOJ, SEC, FBI, and IRS play pivotal roles in these investigations.

3. What Happens During a Federal Investigation?

Federal investigations typically progress through several stages:

• Initiation: Triggered by complaints, audits, or detected irregularities.

• Evidence Collection: Gathering documents, conducting interviews, and serving subpoenas. There are two main types of subpoenas:

  • Subpoena Duces Tecum: Requires the production of documents or records.

  • Subpoena Ad Testificandum: Requires an individual to provide testimony under oath.

  • Example: The SEC may issue subpoenas to corporate officers to produce emails and internal communications related to potential insider trading. Likewise federal prosecutors may issue a grand jury subpoena to obtain bank records.

  • Witness Interviews: Investigators interview key witnesses, employees, or third parties who may have information about the alleged misconduct. Depositions involve sworn testimony and can be used as evidence in court.

• Evidence Collection (Part II): Government investigators often obtain and execute search warrants and wiretaps.

  • If investigators believe there is evidence that may be concealed or destroyed, they can obtain search warrants to seize documents, computers, or other evidence. Search warrants require probable cause and judicial approval.

  • In some cases, investigators use surveillance, including wiretaps, to monitor communications. This is common in complex cases involving conspiracies, such as insider trading or bribery.

• Decision to Prosecute or Decline: Once evidence is collected and analyzed, federal prosecutors decide whether to pursue criminal charges. This decision depends on:

  • Strength of Evidence:
    Prosecutors must believe there is enough evidence to secure a conviction beyond a reasonable doubt.

  • Public Interest:
    Cases with significant public or financial impact are more likely to result in prosecution.

  • Large monetary amount or number of victims: The larger the scale of the fraud the more likely federal agents will get involved.

  • Agencies like the DOJ, SEC, FBI, and IRS play pivotal roles in these investigations.

• If prosecutors decide to proceed with charges, the case moves to the indictment stage:

  • Grand Jury Proceedings:
    Federal prosecutors present evidence to a grand jury, which determines whether there is probable cause to issue an indictment.

    • Spoiler Alert: A grand jury always does what the prosecutor asks.

4. How to Respond to a Federal Investigation

Facing a federal investigation requires careful and informed actions:

• Secure Legal Counsel: Engage an attorney experienced in federal investigations early.

  • Clients often ask - “When should I obtain an attorney?” It is understandable that a person does not want to spend money before they need to. However, it is critical to engage an attorney to help craft a defense and potentially meet with investigators and explain why you should not be charged with a crime.

• Preserve Evidence: Ensure all relevant documents and data are maintained.

  • Of course, it is illegal to knowingly obstruct an investigation. But even beyond that, emails, voicemails, and text messages often form the backbone of a defense. Preservation of these materials is key.

• Engage Cautiously with Agencies: Coordinate responses through legal counsel to avoid self-incrimination.

  • People are often convinced that if they just tell investigators their story, the investigators will simply go away. This is rarely the case. Clients often end up locking themselves into a story without any ability to change it when they remember additional, potentially exculpatory details.

Missteps, such as making false statements or obstructing justice, can exacerbate legal challenges.

5. The Role of a White-Collar Defense Lawyer

Facing a federal investigation or charges for white-collar crimes can be overwhelming. A skilled white-collar defense lawyer plays a pivotal role in safeguarding the interests of individuals and businesses. Here’s how their expertise can make a critical difference:

Strategic Counsel: Navigating Complex Legal Landscapes

Federal investigations involve a labyrinth of laws, regulations, and procedural requirements. A white-collar defense attorney provides:

• Understanding of the Law:
  They analyze the statutes under which the investigation is being conducted, such as the Securities Exchange Act, Sarbanes-Oxley Act, or 18 U.S.C. § 1348, to identify potential defenses.

  • Example: Crafting a defense strategy against insider trading charges by challenging the materiality or timing of the information in question.

• Case Analysis:
  Lawyers evaluate the evidence presented by federal agencies, identify weaknesses in the prosecution’s case, and uncover exculpatory evidence.

• Tailored Strategies:
  Every case is unique, requiring a customized defense plan. Whether the goal is to negotiate a settlement, seek a dismissal, or prepare for trial, an experienced lawyer ensures that strategies align with the client’s objectives.

Negotiation with Prosecutors: Mitigating Charges or Penalties

White-collar defense attorneys often engage directly with prosecutors to negotiate various outcomes, which may include:

• Avoiding Formal Charges:
  In some cases, generally through a presentation of evidence, attorneys can persuade prosecutors to drop investigations or resolve issues without filing criminal charges.

• Plea Agreements:
  If charges are unavoidable, and a client decides to plead guilty, a skilled attorney negotiates plea deals to reduce the severity of charges or penalties.

  • Example: Reducing a potential prison sentence by negotiating a plea to a lesser offense, such as a misdemeanor rather than a felony.

• Indictment or Arrest:

  Like with a plea agreement, even if a person is charged and fights the case, a prosecutor’s advocacy prior to charges can reduce the charges brought by the government.

• Deferred Prosecution Agreements (DPAs):
  For corporations, and occasionally individuals, lawyers may negotiate DPAs, allowing the company or individual to avoid criminal conviction in exchange for compliance reforms and financial penalties.

Additional Roles of a White-Collar Defense Lawyer

• Managing Parallel Proceedings:
  White-collar cases often involve simultaneous civil, criminal, and regulatory investigations, particularly when the SEC is involved. A skilled lawyer coordinates these proceedings to avoid conflicting outcomes.

• Litigation and Trial Representation:
  If a case proceeds to indictment and then goes to trial, the attorney will, obviously, advocate on the client’s behalf before a judge and jury.

• Client Education:
  Attorneys help clients understand their rights and obligations, reducing the likelihood of inadvertent missteps during investigations.

Attorneys are critical to helping individuals and corporations through what can be a very stressful experience. Do not wait until charges have already been filed. Proactive engagement is key.

For expert legal advice, contact attorneys at Dynamis LLP or email whitecollar@dynamisllp.com, today. We’re here to guide you through every step of your defense.