On the Pulse...When the Government Knocks, We Are Here To Help: White Collar Crime Practice Group Profile

As the economy struggles to recover its footing, and as new, costly programs are created, the focus of the government, whether federal, state or local, increasingly has been to pursue both criminal and regulatory investigations with the goals of rooting out fraud and abuse and generating revenue. The government, often assisted by whistleblowers with a financial interest in an underlying investigation, has tools in its arsenal that permit it to send people to jail, as well as obtain restitution, treble damages and substantial regulatory and criminal fines. The businesses and professionals forced to operate in this brave new world of enforcement now can look to Marshall, Dennehey, Warner, Coleman & Goggin's White Collar Crime practice group for help. We offer clients the same high-quality representation they have come to expect over many years from our other practice groups. The White Collar Crime practice group has the know-how and the experience to help our clients respond to criminal subpoenas from a grand jury, deal with the trauma of an unannounced search of a plant or office by a team of agents armed with a search warrant, or defend them throughout the entire criminal process.

The most common ways for the government to obtain information in a criminal or regulatory investigation are the use of a subpoena for documents or testimony, interviews of those with relevant information and the less used, but exponentially more intrusive, mechanism of a search warrant. However the government chooses to proceed, we are prepared to aid our clients in responding.

A subpoena issued for documents in a civil case may be familiar to many of our clients, but a grand jury subpoena is less so. While it may be appropriate in the civil case for a company to object to a document subpoena, or simply refuse to turn over what has been requested, such a response to a grand jury subpoena may be considered by a prosecutor to be an obstruction of justice. Likewise, a decision by a company or an individual to dispose of documents, rather than turn them over to the grand jury, or hide them, will be viewed in the same way. The receipt of a grand jury subpoena, however, is not by itself an accusation by the government of wrongdoing. Rather, many times a client simply is a witness with information or documents needed by the government as part of an investigation of someone else. Before anything is turned over, it is reviewed by our group for responsiveness to the subpoena and to ferret out the contours of the government's investigation. This process helps our client understand how the client fits into the investigation and may identify problem areas, such as poor internal controls or inappropriate actions by its employees, that impact the client's business.

Where the grand jury subpoena seeks electronically stored data, we work with the prosecutor or the agents to minimize the disruption to our client's business that occurs where the demand is for a large scale production of this type of information. Because we are dealing with a subpoena, rather than the unanticipated execution of a search warrant, we have the opportunity to control the production of information in a way that allows our client to continue to operate its business unimpeded, yet demonstrates that it is cooperative and forthcoming in assisting the government with its investigation.

Where the subpoena requires our client to testify, the first thing we do is contact the prosecutor to determine the client's status. If the prosecutor views the client simply as a witness with information relevant to the grand jury investigation, the decision is straightforward. We prepare our client to testify and accompany him or her to the grand jury. However, many times the prosecutor has information suggesting the client is a person of interest to the investigation, commonly called a subject, or is a target, that is, someone who will be indicted by the grand jury. When we learn from our discussions with the prosecutor that our client is likely to be charged with a crime, we focus on protecting our client and evaluate the need for our client to assert his or her privilege against self-incrimination and remain silent if called before the grand jury. Although there is no concomitant right against self-incrimination available to a corporation, it does have an attorney-client privilege, and an act of production privilege which sometimes may be invoked by the records custodian who appears before the grand jury in response to a demand to produce company documents.

Unlike a subpoena, the execution of a search warrant is unannounced. For those present when it occurs, a search is a frightening and confusing event. For the company and counsel, a search is not something that can be controlled. Thus, the White Collar Crime practice group stresses to our clients that the best response to a search is to know in advance what to expect and do. We meet this need through an educational process in which we explain to our client and its employees the fundamentals of the law of search and seizure, the constitutional rights of the company and the employees and how to respond when a search warrant is executed at the business.

The agents conducting the search know that most people present when it occurs believe they must talk to them. The agents are trained to talk to anyone and everyone, and they know they may never again have unfettered access to such a large pool of people with information about the case under investigation. What the agents also know, but usually do not mention, is that no one is obligated to talk with them. It is for the employee alone to decide whether to talk with the agents. If the employee is willing to talk, he or she has the right to be represented by counsel during the interview. In our training session with the client and its employees, we emphasize that these rights exist and that they belong to the employee, alone. If the company agrees to provide representation to its employees before they are interviewed, this information is imparted to the employee during training. When an employee knows counsel is available at no cost, it is more likely he or she will consult with such counsel before talking with government agents. A decision by an employee to invoke the right to counsel not only protects the employee, but also may restrain the ability of the agents to gather information from frightened individuals at a time when they have just been traumatized by the specter of armed agents invading their place of employment. Training and guidance must take place in advance of an event. Once a search begins, any instruction not to talk with the searching agents, no matter how innocently conveyed, may be viewed later by a prosecutor as an obstruction of justice.

If a search warrant is executed, it is imperative that our group be contacted so that we can speak with the search team leader and begin the process of information gathering. At times, the client may not be able to reach counsel immediately, and it is here that the prior training by our group comes into play. Because our clients are prepared, they know what to do and not do during a search. Among the key points we teach our clients are:

• Never impede or interfere with the search in any way;
• Never prevent the agents from recovering the documents and items they have been authorized to seize;
• Always identify the leader of the search team and maintain communication to the extent possible as the search progresses;
• Identify as many of the other search team members as possible - important if there is a later challenge to the breadth of the warrant, or the manner of its execution;
• Always ask the search team leader for a copy of the search warrant - this helps us determine whether the agents seized items not specified by the warrant;
• Note the areas being searched, but do so without impeding or interfering with the search;
• Dismiss all non-essential employees from work - they will not be able to concentrate in any event - since this will limit the quantity of information that might be obtained by the agents' inquiries directed to these employees; and
• Object to any attempts by the agents to seize company records that are protected by the attorney-client privilege.

By following these rules, the client can make the best of an otherwise troubling situation.

Although the execution of a search warrant is a matter requiring immediate attention by our group, most of our clients will never undergo such an experience. However, if they do become enmeshed in a criminal or regulatory investigation, our primary goal is to convince the government that our client has done nothing wrong and should not be prosecuted. If the government is intent on moving forward, we work with our client to identify deficiencies in its internal controls, or other practices, that are the root causes of the illegal conduct under investigation. We then assist the client in devising a remedial plan to address those deficiencies and deter similar conduct in the future. With this accomplished, we work to persuade the government that the questionable business practices that caused our client to become the focus of the investigation no longer exist and that neither an indictment nor any other penal sanction is required.

Ultimately, if prosecution cannot be avoided, we assist the client in resolving any criminal charges in a manner that has the least amount of impact on the client and its business. For a company, this may mean a deferred prosecution agreement and monitoring, or probation, restitution and perhaps a fine. Where the client or the business is the recipient of federal health care or other program dollars, a key component of our work is to ensure that the client is not debarred from future participation in these government programs. For the individual client, we seek to mitigate potential punishment to the greatest extent permitted under any applicable sentencing guidelines or sentencing statutes. Where no acceptable resolution can be achieved either for the company or the individual, our group of experienced trial lawyers will prepare a vigorous trial defense and fight to win.

Sometimes our client may have the unfortunate distinction of being both a witness and a victim of the scheme under investigation. Indeed, this confluence of events has resulted in an emerging area of coverage being offered by several liability carriers. Particularly with smaller companies, problems arise when internal financial or other controls are not subject to necessary checks and balances but, instead, are concentrated in the hands of one employee or a small cadre. Such a concentration of power, generally accompanied by little or no operational transparency, may enable a larcenous employee to conceal an ongoing embezzlement, the payment of invoices to fictitious vendors or the receipt of kickbacks from an actual vendor. Here, our White Collar Crime practice group will conduct an internal investigation to uncover the fraudulent scheme and document the extent of the economic loss. With our client's agreement, we bring these findings to the attention of law enforcement and assist in developing a viable prosecution case. Upon a conviction of the responsible party, we will appear for the company at the time of sentencing and, as permitted under both federal and state laws, advocate for restitution. By moving so aggressively, we help our client send a message to other employees and vendors that fraud will not be tolerated and will be rooted out and dealt with to the fullest extent of the law. Lastly, because Marshall Dennehey represents clients nationally, we bring civil actions in appropriate forums against those responsible for our client's losses and are unrelenting in seeking to recover that which has been taken by fraud.

The White Collar Crime practice group works with other components of Marshall Dennehey such as the Privacy and Data Breach Security, Health Law and Professional Liability practice groups. As chair of the White Collar Crime practice group, I represent both companies and individuals in all of the areas described in this article and work with the other practice groups to provide the best possible legal assistance to our clients. Over approximately 35 years of practice, I have tried more than 50 criminal and civil jury trials to verdict, as well as a substantial number of non-jury cases, and have done extensive work representing witnesses, subjects and targets of state and federal grand jury investigations. Kevin Hextall, a shareholder, has years of criminal defense experience, including service with the Defender's Association of Philadelphia. Michael Turner, another shareholder, is an experienced criminal law practitioner, was an Assistant District Attorney in the city of Philadelphia. Please feel free to contact me with any questions or schedule a time to meet and discuss any matters of concern.

*Jack is a shareholder in our Philadelphia, Pennsylvania, office and can be reached a 215.575.2768 or jlgruenstein@mdwcg.com.

Defense Digest, Vol. 17, No. 2, June 2011