CONDUCTING INTERNAL INVESTIGATIONS GATHERING EVIDENCE AND PROTECTING YOUR COMPANY GLOBAL HEADQUARTERS the gregor building 716 West Ave Austin, TX 78701-2727 USA
TABLE OF CONTENTS INTRODUCTION About This Course... 1 Continuing Professional Education Credit... 3 I. PREPARING FOR AN INVESTIGATION When Is an Investigation Necessary?... 5 Video... 6 Employer s Duty to Investigate... 6 Video... 8 Statutory Disclosure Requirements... 8 Monitoring and Public Reporting Statutes... 8 Sarbanes-Oxley Act... 11 Video... 18 Video... 19 Video... 22 False Statement Statutes... 26 Civil Law Standard of Care and Duty to Company and Shareholders... 27 Accountants and Auditors Duties to Investigate... 32 External Auditors... 35 PCAOB Auditing Standard No. 5... 44 Planning the Investigation... 47 Video... 47 Selecting the Investigation Team... 47 Video... 49 Investigative Strategy: Fraud Examination Methodology... 50 Video... 50 Video... 54 Video... 54 Review Questions... 56 II. COLLECTING DOCUMENTARY EVIDENCE Introduction... 59 Laws Governing Public Record Information... 60 Freedom of Information Act... 60 Fair Credit Reporting Act... 61 Gramm-Leach-Bliley Act... 64 Telephone Records and Privacy Protection Act of 2006... 65 Right to Financial Privacy Act... 66 Driver s Privacy Protection Act... 66 Health Insurance Portability and Accountability Act... 67 Sources of Information... 67 Public Sources of Information... 68 Video... 69 i
II. COLLECTING DOCUMENTARY EVIDENCE (CONT.) City Government Records... 69 County Government Records... 71 Video... 76 State Government Records... 76 Federal Government Records... 82 Using Databases to Find Information... 91 Locating People Using Online Records... 91 Obtaining Financial Information and Locating Assets... 92 Finding Legal Records... 93 Conducting Background Checks... 94 Public Record Database Vendors... 96 Investigating with the Internet... 100 Pitfalls of the Internet... 100 Search Engines... 100 A Guide to Successful Searching... 101 Directories... 102 Meta-Search Engines... 103 Useful Websites... 104 Review Questions... 105 III. WORKPLACE SEARCHES Introduction... 107 Constitutional Privacy Rights: The Fourth Amendment... 107 Public Employers Versus Private Employers... 108 Employee Privacy Rights Under the Fourth Amendment... 109 State Constitutions... 117 Effect of a Violation of an Employee s Constitutional Rights... 117 The Exclusionary Rule... 117 Civil Liability for Damages (42 U.S.C. 1983)... 118 Common Law Invasion of Privacy: Intrusion Upon Seclusion... 118 Reducing Employees Expectation of Privacy... 119 Balancing the Need to Search or Conduct Surveillance and the Employee s Privacy Rights... 120 Other Tort Liabilities in Connection with Searches and Surveillance... 120 Other Prohibitions Regarding Searches... 121 Searching Employees Mail... 121 Federal and State Nondiscrimination Statutes... 121 Monitoring Employees Phone Calls... 121 Pen Registers... 122 Monitoring Employees Email... 123 Monitoring Employees Internet Activity... 124 Monitoring Social Media... 124 Video Surveillance of Employees... 125 Searching Employees Trash... 125 Special Privacy Rights Under Collective Bargaining Agreements... 126 ii
III. WORKPLACE SEARCHES (CONT.) State Statutes... 126 Sample Workplace Policy for Workplace Searches... 126 Obtaining Evidence by Subpoena... 127 Review Questions... 130 IV. ANALYZING AND ORGANIZING EVIDENCE Forensic Examination of Documents... 133 Sources for Expert Document Examinations... 133 Types of Forensic Document Examinations... 134 Handling Documents as Physical Evidence... 135 Recognizing Phony Documents... 137 Photocopies... 138 Organizing Documentary Evidence... 138 Chronologies... 139 To-Do Lists... 139 Using Computer Software to Organize Documents and Other Data... 139 Digital Evidence... 140 Understanding Digital Evidence... 140 Hardware... 140 Considerations When Seizing Digital Evidence... 142 Defining the Parameters of the Expert s Search... 145 Reviewing the Evidence... 146 Review Questions... 147 V. INTERVIEWING WITNESSES Interview Mechanics... 149 Video... 149 Choosing a Venue for the Interview... 149 Establishing Proxemic Control over the Interview... 150 Video... 150 Taking Notes... 150 Do Not Interview More Than One Person... 152 Do Not Promise Confidentiality... 152 Handle Negotiation Attempts... 153 Do Not Discuss the Source of Allegations... 153 Common Problems Arising During the Interview... 153 Types of Questions... 156 Video... 157 Introductory Questions... 157 Video... 158 Informational Questions... 160 Video... 161 Video... 161 Closing Questions... 163 iii
V. INTERVIEWING WITNESSES (CONT.) Assessment Questions... 165 Video... 166 Admission-Seeking Questions... 174 Video... 174 Video... 176 Video... 185 Video... 191 Review Questions... 192 VI. LEGAL CONSIDERATIONS IN INTERVIEWS Employees Duty to Cooperate... 195 Employees Rights During the Investigation... 196 Employees Constitutional Rights... 196 Employees Contractual Rights... 204 Employees Statutory Rights... 204 Common Law Employee Rights and Protections... 207 Presence of Corporate Attorney During Witness Interviews... 214 Preserving the Confidentiality of the Investigation... 215 The Attorney-Client Privilege... 216 Attorney Work-Product Doctrine... 221 The Self-Evaluation Privilege... 224 Avoiding Liability for Obstruction of Justice and Witness Tampering... 226 Confidentiality Requests... 227 Witness Tampering... 227 Obstruction of Justice... 228 Spoliation of Evidence... 229 Perjury and Subornation of Perjury... 229 Misprision of a Felony... 230 Recording the Results of an Interview... 231 Protect the Company s Interests in Confidentiality... 231 Factual Work Product Versus Opinion Work Product... 231 Identify the Record as Work Product... 232 Identify the Record as an Attorney-Client Communication... 232 Identify the Self-Evaluation Purpose of the Interview... 233 Identify and Treat the Record as Confidential... 234 Review Questions... 235 VII. WRITING REPORTS Introduction... 239 Characteristics of a Good Report... 239 Accuracy... 239 Clarity... 239 Impartiality and Relevance... 240 Timeliness... 240 iv
VII. WRITING REPORTS (CONT.) Video... 240 Legal Considerations for Written Reports... 240 Libel... 240 Privacy... 241 Privileges... 242 Disclosing the Report to Government Personnel or Other Third Parties... 244 Review Questions... 246 VIII. DISCHARGING EMPLOYEES Introduction... 249 The Public Policy Exception... 249 Breach of Contract... 250 Types of Contracts... 251 Statutory Violations... 254 Common Law Causes of Action... 255 Defamation... 255 Intentional Infliction of Emotional Distress... 255 Public Disclosure of Private Facts... 256 False Imprisonment... 257 Whistleblower Statutes... 257 Other Considerations... 257 Prosecuting Employees... 257 Video... 258 Why Prosecute an Offending Employee?... 258 Recovery of Losses in Criminal Cases... 258 Aiding the Company s Civil Remedies and Litigation... 260 Malicious Prosecution... 261 Review Questions... 262 IX. CONCLUSION... 265 X. PRACTICAL PROBLEMS Practical Problem 1... 268 Practical Problem 2... 269 Practical Problem 3... 270 Practical Problem 4... 272 Practical Problem 5... 273 Practical Problem 6... 275 Practical Problem 7... 277 Practical Problem 8... 278 XI. APPENDIX: VIDEO TRANSCRIPTS... 279 v
XII. SOLUTIONS TO REVIEW QUESTIONS I. Preparing for an Investigation... 297 II. Collecting Documentary Evidence... 303 III. Workplace Searches... 307 IV. Analyzing and Organizing Evidence... 313 V. Interviewing Witnesses... 317 VI. Legal Considerations in Interviews... 323 VII. Writing Reports... 329 VIII. Discharging Employees... 333 XIII. SOLUTIONS TO PRACTICAL PROBLEMS Practical Problem 1... 337 Practical Problem 2... 339 Practical Problem 3... 341 Practical Problem 4... 345 Practical Problem 5... 346 Practical Problem 6... 349 Practical Problem 7... 351 Practical Problem 8... 353 XIV. FINAL EXAMINATION... E-1 XV. INDEX... I-1 vi