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Have a Plan Before the Feds Come Knocking

Guest blog post by Julie Brook, Esq., Legal Editor with the CEB blog

In light of the Penn State sex abuse scandal, many institutions are considering what they would do if a criminal investigation came to their doorstep. Don’t wait for that possibility; have a plan ready to put into effect if anything like the nightmare at Penn State should happen to your institution.

Having a clear, step-by-step plan to deal with a criminal investigation is essential for every institution — from companies to governmental entities to (obviously) schools.

Every plan should consider the following steps:

  • Ascertain what is known. What allegedly happened? Who is involved? Who in the institution knew about the alleged conduct? What do the law enforcement authorities know? With whom have law enforcement authorities spoken? Answer each of these questions as soon as possible.
  • Prevent the destruction of evidence. The institution should have a document retention policy that requires the preservation of evidence when an investigation is looming. Handle document preservation as a high priority, as sanctions can result from deliberate destruction of documents, as well as inadvertent mistakes in judgment.
  • Consider cleaning house. In the wake of a criminal investigation, the institution will be forced to confront the topic of “cleaning house,” or terminating the employment of any individuals found to have committed wrongdoing. Indeed, taking high-level personnel action is the foundation on which counsel will argue that the institution is cooperating fully with the government’s investigation. Prompt termination of wrongdoers also blunts the anticipated government argument that the institution has protected individual bad actors.
  • Conduct an internal investigation.  An internal investigation provides the institution with its own assessment of the nature and extent of any potential wrongdoing. Under some circumstances, such an investigation is not only prudent, it is mandated by statute. Investigative findings and communications should generally be kept confidential and disclosed to senior personnel with authority to act on a need-to-know basis. Catherine Salmen Wright of Dinsmore & Shohl LLP offers ten principles to guide you in conducting an effective internal investigation.
  • Consider whether to make a statement. Even a seemingly casual interview by federal agents can lead to criminal exposure for violation of 18 USC §1001 (making false statement to a federal officer). Counsel for individual officers or employees has a duty to advise these clients about potential criminal liability that could result from giving false or misleading statements to federal officers. Indeed, counsel has a duty to advise whether providing a statement to federal agents is in the client’s best interest at all. If a statement will be provided, prepare your client for a rigorous examination, which may include being confronted with documents you’ve never reviewed. You need to carefully consider the risks and benefits of such an interview before it’s undertaken.
  • Prepare for a grand jury subpoena. In many instances, the first indication of a criminal investigation will be a grand jury subpoena for documents and possibly testimony. You’ll need to immediately determine whether separate representation must be provided to the officer or employee in responding to the subpoena—white collar cases literally can be won or lost at this early stage of the proceedings. Whether a client is a target, subject, or witness in the grand jury proceeding is critical information that an experienced criminal defense attorney will attempt to glean from the prosecutor at an early stage.
  • Prepare for a parallel civil or administrative action. The outcome of a parallel civil or administrative proceeding may have a dramatic impact on the resolution of the criminal case. Individuals and corporations facing criminal charges often are confronted with intractable problems caused by parallel civil or administrative proceedings. Lawyers representing these parties in the criminal investigation must keep abreast of developments in the civil and administrative matters, and vice versa. For example, although a corporation does not have a Fifth Amendment privilege against self-incrimination, those individuals who allegedly acted on behalf of the corporation do. A waiver of the privilege in the civil litigation can jeopardize important rights in the criminal matter, while asserting the privilege in the civil litigation may substantially harm the client’s position in the civil proceedings.

We all hope this will never happen in our institution, but it’s always better to have a plan in place just in case it does. For more on initial responses to a criminal investigation, turn to CEB’s Counseling California Corporations.

This material is reproduced from Julie Brook’s blog entry, Should You Be in the Cloud? CEB Blog (January 9, 2012 http://blog.ceb.com/2012/01/09/have-a-plan-before-the-feds-come-knocking/). Copyright 2012 by the Regents of the University of California. Reproduced with permission of Continuing Education of the Bar - California. For information about CEB publications, telephone toll free 1-800-CEB-3444 or visit our Web site, CEB.com.

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