Vol. 73, No. 2, February 2000

When the FBI
Comes to the Door

If your civil client is contacted by a federal agent, will you know what to advise? This primer on criminal investigations is for civil lawyers who find their clients and practices suddenly immersed in a federal criminal case.

by David Cannon & Steven Biskupic

ot many civil clients are prepared for a knock on the door from federal agents.

When it happens, even in the most innocent of circumstances, the business owner or other professional may immediately telephone a lawyer - and often, that lawyer is not someone who practices in criminal law. In all likelihood, the attorney will be a civil practitioner who may have helped the client on a will, a real estate purchase, or a bankruptcy.

In such cases, the civil practitioners may find themselves searching their memory of criminal law courses to comprehend some of the terms that federal agents and prosecutors routinely use. Is a simple subpoena for records a cause for concern? What is the difference between a subject and a target? Do conflicts exist between representing the corporation and individual employees? And almost always: Is there a need to consult with a criminal attorney? The answers will vary with the context.

The following article is a primer on criminal investigations for civil lawyers who find their practices suddenly immersed in a federal criminal case.

The Routine Process of a Grand Jury

While the common public perception speaks of the impaneling of grand juries as an escalation of an investigation, the reality is quite different. Under the U.S. Constitution and federal rules, all federal felonies must be presented to a grand jury. ¹ The only exception arises if the accused waives the process; then a criminal Information is issued directly by the United States Attorney.²

The grand jury, which meets and considers evidence in secret, is the federal equivalent of a preliminary hearing.³ The grand jury, composed of between 16 and 23 persons, votes on whether probable cause exists to issue a public charge. Only 12 votes are needed, and the process is almost unilaterally controlled by the prosecutor. No defense counsel or judge is present. In 1992 the U.S. Supreme Court held that the prosecutor is not required to introduce evidence that suggests the defendant may be innocent.⁴ The one-sided nature of the proceedings leads cynics to claim that a grand jury would indict a ham sandwich if asked by the prosecution.

In white collar cases, however, the grand jury serves an added dimension as an investigative tool. Certain evidence-gathering procedures require the use of the grand jury. For example, under the Right to Financial Privacy Act, bank financial records can be obtained in an investigation only through the use of a grand jury subpoena.⁵ In addition, prosecutors confronted with certain practice areas of the law - such as environmental regulation - may use the lay background of the individual grand jurors to test public comprehension of the alleged wrongdoing.

Thus, even in the most preliminary stage of an investigation, grand jury subpoenas often are used. The appearance of the subpoenas does not mean that an investigation has become heightened or that the grand jury is ready to charge the recipient. All felony investigations start this way.

Witness - Subject - Target

In most white collar cases, the government attorneys will inform counsel of the client's status. The United States Attorneys Manual, used by all federal prosecutors, formalizes the classifications into three categories.⁶ A target is a person linked to an offense by substantial evidence and one the prosecutor is contemplating charging.⁷ A subject is a step removed; the person's conduct falls within the scope of the investigation, but the person is not considered a target.⁸ The last category is witness.⁹

The distinction between the categories, especially in a white collar case, may be fluid. For example, the bookkeeper who unknowingly records personal expenses for the owner as business deductions may end up as a witness in a tax fraud investigation. If the bookkeeper knows the books are being doctored, he has moved into the subject category. Finally, if the bookkeeper ran his own expenses through the business as well, the bookkeeper also may become a target.

Immunity

Invariably, the first thought of a noncriminal lawyer faced with FBI agents on the doorstep is: Does my client need immunity? Just as invariably, the immediate response of a prosecutor supervising the agents is: No. From both perspectives, the problem is the unknown. The lawyer does not want to unwittingly expose the client to questioning that may be used against the client; the prosecutor does not want to give immunity only to learn that the client was the most culpable of the targets, or worse, that prosecution of the most culpable has now been made impossible because of the immunity.

While keeping silent is the client's constitutional right, it may not be the best strategy in every situation. For example, the blanket refusal to answer all questions may draw increased scrutiny from agents wondering what is being hidden. Also, if other witnesses are cooperating, the client may find her credibility hurt simply by being the last one to tell her version of the events.

The most common compromise is informal immunity; that is, an agreement between the parties as to how the statements can be used. Formal immunity exists under federal law and is memorialized by judicial order.¹⁰ Informal immunity is nothing more than an agreement or contract between the parties.¹¹

As such, informal immunity (and its multiple variations) has come to be called by a variety of terms: letter immunity (since it often is memorialized solely in a letter signed by the parties); proffer agreements (because the information is considered a description through counsel of information the client would proffer under the immunity agreement); or king or queen for the day (since the words given by the client during that particular interview on that particular day will not be used against the client).

In practical terms, the informal immunity often boils down to this middle ground: The actual words of the witness will not be used against the witness; however, future prosecution remains a possibility. Most importantly, law enforcement may pursue leads that arise from the statement, including those that later may be used to prosecute the witness.

Multiple Representations

No clash between civil and criminal law seems as great as the issue of multiple representations. In civil practice, the idea that a lawyer can represent multiple similar interests is routine. Simultaneous representation of a corporation, chief shareholder, and employees would not necessarily set off alarms.

To the prosecutor, however, these interests appear to almost always conflict. Given varying degrees of involvement in suspect conduct, or even the same levels of culpability, there will always be an incentive for someone out of the group to strike a deal with prosecutors. A strategy of divide and conquer is not unusual.

Also in a criminal investigation, corporate and individual interests usually will differ since only the individual can be sentenced to jail, thus providing an incentive to the individual to have only the corporation face charges. On the other hand, it may serve the corporate interest to simply have an employee admit individual culpability since a corporate conviction may bar the business from certain future dealings, such as government contracts.¹² In addition, the government contract may require the business to cooperate in any investigation, even though it may serve the individual interest to assert his right to remain silent.¹³

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