Responding to Government Investigations

Responding to Government Investigations Robert N. Nicholson, Esq. Nicholson & Eastin, LLP The information contained herein is for general educational purposes only, and is not intended to be legal advice applicable to all circumstances.

Presentation Overview Types of Government Investigations and Inquiries Government Investigation Tools and Techniques Responding to Requests for Interviews Responding to Requests for Documents or Access to Premises Responding to Search Warrants Handling of Privileged Documents Avoiding Claims of Obstruction of Justice DOJ Compliance Guidance

Types of Government Investigations and Inquiries Administrative Civil Criminal

Administrative Action Brought by State or federal administrative agency to address violations of agency related laws or rules. Sanctions include: Fines and other civil monetary penalties; Debarment or exclusion; Loss of licensure; and Imposition of remedial action. Learn about your relevant agency.

Civil Actions Brought by appropriate State or federal agencies or departments to enforce legal requirements or punish violations. Sanctions and Actions include: Injunctions; and Civil penalties, disgorgement, and costs. Examples: False Claims Act; FCPA; FTC; SEC; Florida Deceptive and Unfair Trade Practices.

Criminal Actions Brought by State or federal prosecutorial departments. Sanctions include: Fines; Incarceration; Restitution; and Forfeiture.

Government Investigation Tools and Techniques Voluntary interviews Access requests to government agencies Surveillance Grand Jury Investigations Search Warrants Subpoenas

Responding for Requests for Interviews Principals (Owners and Upper Level Management) Immediately notify Your attorney upon receipt of any written or oral communications from any governmental agency, and/or representatives of regulatory and enforcement agencies You have NO obligation to speak voluntarily with a government agent and may refuse to do so

Responding for Requests for Interviews (Cont.) Principals (Owners and Upper Level Management) What should you do: Request the Agent s name, agency/affiliation, and phone number Inform Agent that you are represented by counsel and that you would like all contacts to be directed to counsel Advise the Agent that you will have your attorney contact him/her or the attorney assigned to the matter Avoid making any statements or comments about the government s allegations or the facts underlying the investigation, unless and until you can consult with your attorney Do not be belligerent or confrontational Maintain an agreeable demeanor

Responding for Requests for Interviews (Cont.) Principals (Owners and Upper Level Management) What should you do: Disseminate a memorandum to employees whom you believe may be contacted for an interview, informing those employees of their ability to speak with company counsel or private counsel before any actual interview NEVER advise an employee to refuse to speak to an agent regarding the investigation because this could be construed as obstruction of justice Make arrangements for employees who do choose to speak with agents to do so in a private, secure environment

Responding for Requests for Interviews Employees Employees may speak with an agent if they choose to do so, but have no legal obligation to speak voluntarily with an agent and may refuse an interview Employee s may consult with counsel (their own or the organization s counsel) before speaking to an agent

Responding for Requests for Interviews (Cont.) Employees Employees should be instructed if they are approached by an agent to: Maintain an agreeable demeanor Inform you (the employer) as soon as possible of the agent contact and, if possible, the name, affiliation and the address and phone number of the agent Consider having an attorney present at the interview and that you (the employer) will consider assuming the fees and costs incurred by the employee for their own counsel (who would be independent of corporate counsel). You may have a duty to provide counsel

Responding for Requests for Interviews (Cont.) Employees Employees should be instructed if they are approached by an agent to: Have a supervisor make arrangements for the employee to speak with an agent in a private, secure environment, should such an interview take place at the employer s premises Ask the employee to contact you (the employer) after the interview this is not illegal in any way even if the agents ask the employee not to discuss the interivew Advise the employee to answer all questions truthfully

Going Through Counsel Although the rules vary from state to state, in Florida once an agency is informed that the company is represented by counsel, investigators should not be directly contacting key personnel. Once an agency is aware that a person/employee is represented by counsel, they should make future contacts through counsel.

Responding to Requests for Documents or Access to Premises Oral Request to Managers or Owners to Inspect Records Without a Search Warrant or Subpoena

Oral Request to Managers or Owners to Inspect Records Without a Search Warrant or Subpoena What should you do: Request the official s name, agency/affiliation, phone number and address Do not respond to the request until speaking with your counsel (Caveat: some agencies can demand immediate access) Advise the agent that you will immediately contact your counsel Avoid being overly helpful in providing information to agents and limit your response to an agreement to promptly notify counsel of the record demand

Oral Request to Managers or Owners to Inspect Records Without a Search Warrant or Subpoena If you do choose to allow immediate access to records before consulting your attorney, you should at a minimum: Attempt to photocopy any documents prior to allowing them to be inspected by, or provided to, agents Consult your counsel as soon as possible Employees may produce copies of personal documents (not business records), although they are not obligated to do so

Protect Yourself In order to protect yourself, it is important to keep a detailed record of what records were provided. Copies is best. This avoids later disputes about what was or was not provided, and provides a record of the actual contents of the documents at the time of production. Put a lit hold in place and preserve relevant records.

Responding to Requests for Documents or Access to Premises Request to Inspect or Search the Premises

What should you do: Request to Inspect or Search the Premises Request the official s name, agency/affiliation, phone number and address Politely ask them the purpose and authority for the request Do not agree to the request until speaking with your counsel, but do not physically impede an inspection or search if they refuse to wait Advise the official that you will immediately contact your counsel and ask that they wait in the reception area until you can contact your counsel Do not agree to a request to consent or look around until you have discussed the request with counsel

Request to Inspect or Search the Premises Absent a search warrant, government officials are generally not allowed to insist upon inspection or physical search of a premises There are exceptions for certain licensed or regulated facilities depending upon which agency is making the request and depending upon the purpose of the inspection or site visit If an inspection or search takes place, approach it as though a search warrant is being executed, which is discussed more fully below

Responding to Requests for Documents or Access to Premises Subpoena Requests (duces tecum or ad testificandum)

Subpoena Requests Managers and Employees: Should be instructed to accept any subpoena with civility however, they should generally not engage in any substantive dialogue with the person or persons serving the subpoena Should immediately deliver the subpoena to their immediate supervisor Should refrain from making statements regarding any allegations, facts or documents sought by the subpoena

Subpoena Requests Corporate Owner or Key Manager: Be prepared to fully assume the costs of compliance with the subpoena(i.e. inspecting, assembling, photocopying, etc.) Have counsel review documents before responding to the subpoena (privilege, etc.) Identify any employees who may have information concerning the documents, their preparation, or their contents and inform counsel

Subpoena Requests The company s owner, Chief Operating Officer, or counsel should consider disseminating a memorandum to all employees as quickly as possible stating that: The company has received a subpoena requiring the production of certain documents and that the company intends to fully comply with the subpoena The company has retained counsel to assist with the response and all employees are urged to cooperate with counsel The company mandates that NO documents may be destroyed without the express approval of counsel (Litigation hold) If contacted by agents regarding the subpoenaed documents, employees should obtain the name and telephone number of the agent and refer the inquiry to you, their supervisor, or your attorney

Responding to Search Warrants A search warrant is a court order authorizing agents to search for particular evidence in a particular location and to seize that evidence Generally speaking, agents in possession of a signed search warrant are entitled to immediately search for, and seize, the documents and other items described in the warrant

Responding to Search Warrants (Cont.) What should you do: Request an opportunity to read the warrant and, if your business is the location described on the face of the warrant as the site to be searched, admit the agents to the premises Ask the agent executing the warrant his/her name and what agency he/she is with and attempt to obtain a business card Ask to call your attorney and do so PROMPTLY and have someone fax a copy of the warrant to your counsel (the agent is supposed to give you a copy of the warrant) Be cooperative with the agents, but do not agree to expand the search beyond the items specifically described in the warrant

Responding to Search Warrants (Cont.) What should you do: Maintain an agreeable demeanor and try to avoid confrontations If it is not apparent on the face of the warrant, ask for the name and phone number of the government attorney in charge of the investigation Ask whether the agent is willing to postpone the search until the close of business, with proper safeguards against destruction of evidence if the warrant is presented during the work day as well as request that the search finish before the next business day (although rarely agreed to)

Responding to Search Warrants (Cont.) What should you do: Ask to be allowed to obtain copies of documents that are seized, or a commitment that the agency will return copies of documents as soon as possible If permitted, accompany the agent to any location where documents or items requested in the warrant may be located Attempt to observe the specific areas being searched and, if possible, the items being scrutinized or seized Under no circumstances, attempt to impede an agent or officer from gaining access to a particular area

Responding to Search Warrants (Cont.) What should you do: Create a detailed list of documents seized, noting the location from which the documents were taken You should generally not offer information or answer any substantive questions posed by agents conducting the search Advise employees that they may speak to an agent if they choose, but are not obligated to do so It is recommended that non-essential employees be sent home during the execution of a search and only a core team stays on the premises when the search is being completed If you are asked to sign an affidavit of any kind, do not comment as to the validity of its contents and explain you are not authorized to sign any document prior to review by your counsel

Handling of Privileged Documents If you believe that any documents covered by the search warrant are protected by the attorneyclient privilege, tell that to the agent in charge These documents include communications to/from your attorney or documents prepared by or for your attorney

Handling of Privileged Documents (Cont.) What should you do: Identify the documents and their location and notify the agent that you believe the documents may be privileged and request that appropriate procedures be followed to protect the privilege Tell the agent that you object to the seizure of such privileged documents, but will agree to segregate and preserve them until your attorney can confer with the government attorney If the agent insists on their removal, request that they be kept under seal in a separate file until the court decides the issue Ask for a copy or list of the documents

Avoiding Claims of Obstruction of Justice Ensure there is an appropriate document preservation policy in place in the organization Have an established policy to ensure that management and legal counsel are timely informed of all formal government investigations Once you learn of or anticipate receipt of a subpoena or government investigation, take all appropriate steps to ensure the preservation of relevant documents, including at litigation hold All communications concerning the government investigation should be directed to counsel Follow the above advice regarding employee interviews.

Revised DOJ Guidance on Evaluation of Corporate Compliance Prgrams In March 2017, DOJ issued updated guidance on the factors DOJ uses to evaluate the effectiveness of corporate compliance programs. The document provides insight into the factors DOJ will use in deciding to charge a company. The identified topics include: Analysis and remediation of the underlying misconduct, including root cause analysis and remediation efforts

DOJ Guidance Senior and Middle Managements role in the conduct or in deterring the conduct. Compliance efforts, including on the Board of Directors Strength, resources, expertise and autonomy of compliance program Strength of audit and risk management efforts to detect and prevent misconduct Compliance training

DOJ Guidance Internal reporting and investigation program and efforts Incentives and disciplinary efforts Efforts to continuously improve compliance and audit efforts, policy and programs Monitoring and control of associated 3 rd parties M & A and due diligence regarding compliance