FIFA Indictments, Corporate Compliance, Alfred Kinsey and Robert Lee

Shaving too close.

Shaving too close.

Law360’s Zachary Zagger has a nice piece on the FIFA prosecution and quotes, among others, Jack Sharman:

“Given this many defendants and the fact that there is going to be at least some who are going to cooperate, it would not surprise me if there wasn’t a second wave of charges or people coming out of the woodwork, people you have not heard of yet,” said Jackson R. Sharman III, a white collar criminal defense attorney with Lightfoot Franklin & White LLC.

“If it is going to survive, it is going to have to have a more rigorous compliance structure than some of the items that have come across thus far,” Sharman said suggesting that it may need to create something like a corporate board of directors or an inspector general-type official to address compliance issues directly.

Here is a link to the full article:  3 Things To Watch Out For In The FIFA Corruption Case

Compliance drill.

Compliance drill.

We have spoken with the Wall Street Journal previously about the FIFA case: FIFA Indictments and the Notion of Global Compliance:

Jackson Sharman, a white collar specialist at Lightfoot, Franklin & White LLC, says that the case shows that the notion of a swelling, global compliance culture may be exaggerated. Attorneys and compliance professionals often make the mistake of believing their concerns about bribery are representative of the organizations where they work, he said. “It’s dangerous to assume that a legal regime is being internalized by everybody, because clearly it’s not,” Mr. Sharman said. “Assuming that others think the same way as you think can be fatal.”

Setting others aside, it can also be fatal to your enterprise if you fail to understand how you going about thinking through compliance questions.

Robert Edward Lee

Robert Edward Lee

Much has been made recently of Confederate images and names.  On the compliance front, I invoked Robert E. Lee last year in a post about McKinsey, General Lee and the Culture of Compliance:

Except perhaps for “paradigm” and “silo,” the word “culture” is one of the most abused in the vocabulary of compliance, ethics and consultants.  (I once heard a consultant say that he needed “a high hover over the silos.”  I thought it an ironic mash-up about drones and agriculture; it was not).  Yet, “culture” has a meaning in the broader world; in commerce; and in compliance.  “Culture” represents a gear-shift in compliance and ethics, and can be smooth or bone-rattling.

 

Not Robert Edward Lee.

Not Robert Edward Lee.

(For the careless reader, note that the title refers to McKinsey, the consulting firm, not to Alfred Kinsey, the sex researcher).

 

 

Global or domestic, “compliance” comes in three flavors — criminal, civil and regulatory.  Sometimes, you get a mouthful of all three at once.

Why is that?  And, what to do about it?

A few thoughts here:

 


Title IX, University Discipline, Sexual Assault and Parallel Proceedings

A short — 140 seconds — note on the thickets of Title IX, sexual assault, university discipline and parallel procedures:

University Discipline, Sexual Assault and Parallel Proceedings from LFW on Vimeo.

It's the new campus thing.

It’s the new campus thing.

Here’s a longer written piece: Dear Colleagues All: University Discipline, Sexual Assault and The Department of Education

And, should anyone doubt the human costs involved in the mishandling of such investigations, one only need to recall disgraced prosecutor Mike Nifong and the Duke lacrosse case, as highlighted by Ed Bradley and 60 Minutes:


Dear Colleagues All: University Discipline, Sexual Assault and The Department of Education

It's the new campus thing.

It’s the new campus thing.

Title IX. Crime. Sexual assault. University disciplinary procedures. Civil litigation. Enormous amounts of money. The Fifth Amendment.

And that’s all before you hire a lawyer.

This is a perilous time for university disciplinary systems and those who administer them, especially with regard to claims of sexual assault.  A college or university can find itself in the midst of – indeed, at the helm of – a set of quasi-criminal parallel proceedings that can make the school liable to student complainants, student respondents and federal enforcement authorities.

How does this happen, and what are the factors to keep in mind to minimize that exposure?

Disciplinary systems and educational missions have been uncomfortable fellow travelers going back at least to Tom Brown’s Schooldays:

As the concept of in loco parentis came in and out and back into fashion, the nature of university disciplinary systems changed accordingly.

What remained unchanged, however, are the two broad areas that most collegiate disciplinary systems address:  “conduct” and “ethics” (or sometimes “honor”).  The latter involves cheating, plagiarism and the like.   The former involves infractions of nonacademic policies – drinking, destruction of property, and violations of civil or criminal law.

Not so many pranks today.

Not so many pranks today.

Not surprisingly, most universities have proven themselves more adept at dealing with “academic” infractions then with “conduct” issues.  With the advent of coeducation and then a more culturally diverse (and potentially more fractious) student, faculty and staff composition, the proficiency gap between academic-related discipline and conduct-related discipline, in many instances, grew more pronounced.

Back in 2011, the federal Department of Education’s Office of Civil Rights issued a “Dear Colleague” letter on the subject of campus sexual assault and how, under Title IX, OCR expects colleges and universities to handle claims of sexual assault. More recently, a White House summit on campus sexual assault; a number of high-profile lawsuits and OCR investigations; and new congressional legislative interest have all conspired to mean that colleges and universities ignore the “Dear Colleague” situation to their peril.

So, my Lightfoot law partner William King (who runs our NCAA practice); summer associate Caitlin Looney; and I (the white-collar guy) prepared a memo.  (Truthfully, Caitlin wrote it.  All we did was read it and change the date):

On Wednesday, July 30, 2014, a bipartisan group of eight senators introduced legislation aimed at curbing on-campus rape. “The Campus Safety and Accountability Act” would require colleges to assign campus “Confidential Advisors” to act as a resource to victims of sexual assault. The Act would also require a uniform process for disciplinary proceedings and require colleges to coordinate investigations with law enforcement. Penalties for noncompliance could include up to 1% of their total operating budget and a $150,000 fine per violation. The Act would also include annual surveys of students, the results of which would be posted online for the benefit of parents and prospective students. The proposed Act represents the latest development in a flurry of governmental involvement in recent years on issue of sexual assault in schools.

Here is the entire paper: University Disciplinary Procedures and the Dear Colleague Letter on Sexual Assault.

The Senate solution.

The Senate solution.

The Campus Safety and Accountability Act, the bill proposed in the Senate, relies in part on a Scarlet Letter approach driven by disclosure of sexual assault (as self-reported by students, rather than administrators or law enforcement), and hefty fines for non-disclosure.  As reported by the New York Times:

Every college would be required to participate in the survey and publish results online, and the penalty for colleges that don’t report sexual assault crimes, as required by the Clery Act, would increase to $150,000 from $35,000 per violation.

The new bill proposes fines of up to 1 percent of a college’s operating budget. If Harvard were found responsible, for example, the university would be on the line for $42 million — a sizable fine, but one that would probably not hurt the university’s students. [Harvard’s trustees might differ, but that is another issue. – Ed.]

Colleges would be required to supply confidential advisers to victims and train counselors. Athletic departments would not be allowed to handle sexual assault complaints. Colleges would need to coordinate a uniform plan with local law enforcement agencies. And the bill would provide federal funding to create and distribute an inexpensive, anonymous annual survey that asks all undergraduate students about experiences with sexual violence. Parents and students would be able to see the data, which may influence their decisions when applying to college.

Whether deserved or not in any particular circumstance, college athletic departments are a particular focus, as noted here.

Awaiting the parallel proceedings.

Awaiting the parallel proceedings.

Unlike the disciplinary process for a cheating scandal, a university’s investigation, adjudication and resolution of a sexual assault case is a classic parallel-proceedings scenario.  At any moment there may be simultaneously ongoing (1) an administrative proceeding (run by the university); (2) a criminal investigation (run by external law enforcement, sometimes in concert with internal university security and sometimes not); and (3) potential civil lawsuits by either the accuser or the respondent.

Even in the “normal” scenario, parallel proceedings raise thorny issues. In the university disciplinary context, however, they raise at least two special issues, issues often troubling and sometimes disastrous.

First, there is a fourth parallel overlay – the Department of Education’s OCR – that is not present in the usual parallel proceedings situation. The threatened loss of Title IX funds is a near-nuclear scenario for many institutions. (The closest but still imperfect parallel in the business world would be a federal indictment of a company).  A Title IX investigation is unpleasant but survivable. The actual loss of Title IX funding may not be.

Second, the due process and Fifth Amendment implications for the student respondent/defendant are exacerbated in ways that are foreign to customary practice and procedure.

Why is this so?

Put yourself in the chair of a defense lawyer whose new client is a student.  A complaint has been launched in the university disciplinary system against your client, alleging rape or other serious sexual assault.  Consistent with the “Dear Colleague” letter, the university process unfolds swiftly, and your client will soon be offered an opportunity to “tell his side of the story” to a panel of university administrators and faculty.  The local police investigators have requested an interview of your client. You have received an email from a lawyer representing the alleged victim who demands that your client preserve all electronic information on his phone such as photos and texts.

Just a few questions.

Just a few questions.

At this stage, the defense lawyer may not know much, but she or he knows two things.

First, the lawyer knows that the client is not talking to anybody until counsel is quite certain of the legal landscape generally and, in particular, the client’s status in the criminal investigation.

Second, the lawyer may try a “real world” fix: for Fifth Amendment reasons, stay the civil proceedings pending resolution of the criminal investigation and potential prosecution.  Taking the “Dear Colleague” letter at face value, however, and given the prevailing sentiment in this area, a Title IX-compliant university will not be staying much of anything. Although a very short pause in the disciplinary proceedings – on the order of days – is clearly permissible for law enforcement to conduct basic investigative tasks, the kind of stays we in the external world — months and months — is unlikely.  Or, as OCR says:

Police investigations may be useful for fact-gathering; but because the standards for criminal investigations are different, police investigations or reports are not determinative of whether sexual harassment or violence violates Title IX. Conduct may constitute unlawful sexual harassment under Title IX even if the police do not have sufficient evidence of a criminal violation. In addition, a criminal investigation into allegations of sexual violence does not relieve the school of its duty under Title IX to resolve complaints promptly and equitably.

A school should notify a complainant of the right to file a criminal complaint, and should not dissuade a victim from doing so either during or after the school’s internal Title IX investigation. For instance, if a complainant wants to file a police report, the school should not tell the complainant that it is working toward a solution and instruct, or ask, the complainant to wait to file the report.

Schools should not wait for the conclusion of a criminal investigation or criminal proceeding to begin their own Title IX investigation and, if needed, must take immediate steps to protect the student in the educational setting. For example, a school should not delay conducting its own investigation or taking steps to protect the complainant because it wants to see whether the alleged perpetrator will be found guilty of a crime. Any agreement or Memorandum of Understanding (MOU) with a local police department must allow the school to meet its Title IX obligation to resolve complaints promptly and equitably. Although a school may need to delay temporarily the fact-finding portion of a Title IX investigation while the police are gathering evidence, once notified that the police department has completed its gathering of evidence (not the ultimate outcome of the investigation or the filing of any charges), the school must promptly resume and complete its fact-finding for the Title IX investigation.

Thus, the respondent/defendant is in a crucible.  Does he fight the charge in the university’s disciplinary proceeding, or decline to participate in the proceeding so as to avoid statements that the government could use, fairly or unfairly, in a criminal prosecution?

Each situation is different, but rock breaks scissors, and prison trumps college.  The respondent/defendant may sue the university on due process grounds, as a Duke student recently did with success, but that is a temporary solution:

Some students who have been expelled or suspended pursuant to a university policy on sexual assault are suing those schools, claiming their rights to a fair hearing were violated. Schools currently involved in litigation with students under these circumstances include: Vassar College, the University of Michigan, Duke University, Occidental College, Columbia University, Xavier University, Swarthmore College, and Delaware State University, among others. Most of these claims have centered on the argument that the hearing processes under new, more stringent standards are unfair. Some of the accused have claimed that the discipline system is now skewed against them because of their male gender and should likewise be considered a violation of Title IX. The likely success of these lawsuits for the accused remains undetermined, but there has been at least one instance in which a judge intervened to keep a school from expelling a student using its internal procedure.

On May 29, 2014, a judge in North Carolina put the expulsion of a Duke University student on hold. Duke determined the student, Lewis McLeod, had committed a sexual assault and should be expelled before spring finals during his senior year of college.Judge W. Osmond Smith III ruled that McLeod would likely suffer irreparable harm if expelled. His ruling blocked Duke from expelling McLeod pending a final determination on the merits.

OCR is not a party to these lawsuits, but the “Dear Colleague” letter makes its position clear, were it required to take one:

Public and state-supported schools must provide due process to the alleged perpetrator. However, schools should ensure that steps taken to accord due process rights to the alleged perpetrator do not restrict or unnecessarily delay the Title IX protections for the complainant.

Quite a burden.

Quite a burden.

With regard to due process (and evidence presented in the process), another vexing issue for universities is the question of the appropriate “burden of proof” to apply in campus sexual-assault cases.  Historically, most schools seemed to use a standard that was lower than the “beyond a reasonable doubt” requirement that criminal prosecutors must meet but something greater than the “preponderance of the evidence” standard customary in civil lawsuits.  It is unclear (at least to me) what the complete constitutional and evidentiary consequences are of making findings that are both civil and criminal using only a civil standard.

It is not unclear to OCR, however:

[I]n order for a school’s grievance procedures to be consistent with Title IX standards, the school must use a preponderance of the evidence standard (i.e., it is more likely than not that sexual harassment or violence occurred). The “clear and convincing” standard (i.e., it is highly probable or reasonably certain that the sexual harassment or violence occurred), currently used by some schools, is a higher standard of proof. Grievance procedures that use this higher standard are inconsistent with the standard of proof established for violations of the civil rights laws, and are thus not equitable under Title IX. Therefore, preponderance of the evidence is the appropriate standard for investigating allegations of sexual harassment or violence.

OCR roots this principle not in Title IX but in the caselaw developed in civil race-discrimination cases under Title VII of the Civil Rights Act of 1964.  The statutory foundations of this approach merit further thought, but it is noteworthy that while sexual assault and racial discrimination are both odious and unlawful, only the former is a crime (except for instances of federal deprivation-of-civil-rights situations).

The Crimson offense (or defense?)

The Crimson offense (or defense?)

In any event, the shift to the preponderance-of-the-evidence standard is occurring rapidly, as at Harvard:

The new policy, unveiled Wednesday, dramatically changes how cases of sexual assault are handled at Harvard. The new Office of Sexual and Gender Based Dispute Resolution will employ professional investigators and essentially remove investigative responsibility from individual disciplinary boards across schools. Based on the facts provided by the central office, those disciplinary boards will work with University Title IX Officer Mia Karvonides to issue sanctions.

The “preponderance of the evidence” standard that the office will employ is seen by many as a lower burden of proof than the “sufficiently persuaded” standard currently used by the College’s Administrative Board. The preponderance of the evidence standard, favored by the U.S. Department of Education’s Office for Civil Rights, is generally understood to require more than 50 percent certainty to determine guilt.

Absent from the new policy is an affirmative consent requirement, under which partners must affirmatively communicate their willingness to participate in sexual activity. Activists on Harvard’s campus, such as those involved with the group Our Harvard Can Do Better, and across the country have lobbied for such a clause.

(The Crimson article attaches a copy of the new Harvard policy).

Damn committee reports.

Damn committee reports.

So, what are the takeaways for university administrators and others charged with development an oversight of university disciplinary systems, especially with regard to claims of sexual assault?

OCR-ready.

OCR-ready.

Bulk up on the skill.  You cannot delegate away “Dear Colleague” responsibility; nor can you simply add it as another part of the job description in Legal or Compliance; nor can you have your “Dear Colleague” program run by someone who is not sensitive to the legal, administrative and — bluntly — political issues that swirl around this effort.

Cut down on the windowdressing.  Some companies have magnificent paper compliance programs and codes of business ethics, policies that set lofty standards which, if not undergirded by the actual work, only make the situation worse in the midst of a compliance failure or white-collar criminal investigation.  (This is the “don’t write a check your body can’t cash” problem).  The university setting is no different.  Plus, colleges are thick with committees, panels, town halls, manifestos and missions.  Don’t write a policy without thinking through the process, and how defensible it is.  And do not confuse compliance with ethics.

Focus on high-visibility groups. Athletic teams and fraternities, fairly or unfairly, bear the brunt of criticism for undesirable campus conduct.  On the other hand, those groups are important to university life; have strong alumni support; are in many cases revenue generators (in the case of the athletic department, at least); and can be on–campus bellwethers.  Whatever your policy direction and compliance program, if you have these constituencies with you, the job will be much easier.

How to get sued.

How to get sued.

Don’t Nifong respondents.  We mentioned the Duke lawsuit above.  A prime example of how not to handle university disciplinary procedures was Duke’s process, actions and inactions during the false rape claims lodged against several of its lacrosse players against the backdrop of the misconduct of the now-disbarred criminal prosecutor, Mike Nifong.  (We have written about the Duke lacrosse case here. The definitive work on the case remains Taylor and Johnson’s Until Proven Innocent).

A university’s best defense in the “Dear Colleague” era is a combination of sound preparation; an honest approach in plain English; and a firm devotion to the integrity of process for the benefit of its students without regard to externalities (an unethical and unfit prosecutor, for example) or internal pressures (such as small groups of virulent ideologues).

 

 

 


For Corporate Counsel || Stalking Horses, Pitchfork Crowds, Narrow Neckties, Mr. Rogers’s Slippers and Indicted Employees: 6 Steps To Dodge Being Deweyed

" . . . brave, clean and reverent.  And, cooperative in the civil investigation."

” . . . brave, clean and reverent. And, cooperative in the civil investigation.”

You may (or may not) recall the Boy Scout Law:

“A Scout is trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, friendly, brave, clean and reverent.”

Your corporate employees, officers and colleagues may exhibit all, some or none of those characteristics.  Even if one masters all the peculiars of the Boy Scout Law, however, strict adherence is no shield against indictment in the situation where one moves from “witness” to “target” for reasons outside the control of the “Scout.”

So: herewith 6 lessons to heed if you wish to avoid ending up like a young man named Zachary Warren.

 

Mother's Day.

Mother’s Day.

It is unusual for the government to indict leaders of a major law firm, as the Manhattan District Attorney’s office indicted three of the leaders of the now very-defunct Dewey & LeBoeuf.  What has caused the most discussion, controversy and even introspection is the indictment of a fourth defendant, one Zachary Warren, a 29 year-old “client relations manager”  — apparently, a glorified internal bill collector with a distinguished resume, both before and after Dewey.

What can inside counsel, or those who advise them, learn from the path that led these four men — but young Mr. Warren, in particular — to being charged and perp-walked?  More remains to be told of this tale: as in all such white-collar sagas, there are likely at least two sides to every side.  I do not know Mr. Warren, nor do I have any special insight into what he, the investigating agents and the prosecutors were or might have been thinking.

Nevertheless, I can at least provide six lessons on how to minimize the likelihood that you — inside corporate counsel, risk manager or chief compliance officer — will have to explain to the boss or the board how your own Mr. or Ms. Warren got himself in a criminal fix.

Some background is unavoidable.  The best places to start are an article by James B. Stewart in the New York Times (A Dragnet at Dewey & LeBoeuf Snares a Minnow); an Atlantic article by Stewart (In Dewey’s Wreckage, Indictments); and a post by David Lat at Above The Law (What Dewey Know About Zachary Warren, Defendant No. 4 In The Criminal Case?).  Read the articles in full, but here are some relevant portions:

From James B. Stewart in the Times:

“You’ve been indicted,” an assistant Manhattan district attorney, Peirce Moser, told Zachary Warren, a 29-year-old magna cum laude graduate of Georgetown Law School with a prestigious clerkship on the Federal Court of Appeals for the Sixth Circuit in Memphis.

“Can you say that again?” a stunned Mr. Warren asked when he received the call two weeks ago Friday.

Almost as surprised as Mr. Warren himself were Mr. Warren’s cellmates before his arraignment a week ago — the top managers of Dewey & LeBoeuf, the global law firm that imploded in 2012. Although some of them had trouble remembering who Mr. Warren was, the indictment claims that all four were co-conspirators in a major accounting fraud. The firm’s chairman, executive director and chief financial officer, ages 60, 57 and 55, had long known that they were the subjects of a criminal investigation. All had prominent criminal lawyers, while Mr. Warren had hired a lawyer only after the phone call that Friday.

Alone among the defendants, Mr. Warren was charged in two separate indictments, one accusing him of a “scheme to defraud” and falsifying business records and the other charging him with six felony counts of having “made and caused” false entries in books and records. Mr. Warren pleaded not guilty and was released on $200,000 bail. His once-bright future has now been threatened.

How did a 29-year-old with an impeccable record, someone who had never even taken an accounting course, end up as an accused mastermind of what the Manhattan district attorney, Cyrus Vance Jr., called “a massive effort to cook the books” of the once-giant law firm? And how did he get there without realizing he should hire a lawyer?

From Mr. Lat:

I fall somewhere in between the extremes of “naive youngster ambushed by the DA’s office” and “arrogant lawyer full of hubris.” Here’s my theory as to why Zachary Warren didn’t bring a lawyer with him to the interview: he didn’t see himself as one of “those people,” i.e., a potential criminal defendant.

And now for the 6 lessons.

And now for the 6 lessons.

Lesson Number 1: Recognize that the danger is not innocence or naivete on the one hand, nor guilt or arrogance on the other, but rather the conviction that “I” am not one of them.

What’s the tag line of the blog you’re reading?  Don’t read us because you’re a criminal.  Read us because, some time or other, someone may think you are.  In his Above The Law post, Mr. Lat alludes to the problem, which is perhaps the most common trait among people charged with white-collar offenses.  No employee, colleague, officer or director thinks that he or she is a criminal.  Ready to do what you have to do for your family and future?  Absolutely.  Willing to throw an elbow?  When needed, sure.  Holding your nose through something unethical?  Well, there was that one time, back in 1990.

But something criminal?  Nope.  No way.  Criminals are people who break the law.  They steal stuff and hurt people.

The Government point-of view (via New Line Cinema).

The Government point-of view (via New Line Cinema).

The task that arises from lesson number 1 is to convince those you are guiding that their assessment of their culpability (or lack of culpability) is irrelevant to how agents, investigators, prosecutors, regulators and politicians will view their culpability.  Indeed, some of the facts that your employee trumpets as an emblem of innocence may, in the government’s eyes — or “Eye,” if you’re a Lord of the Rings fan — be just as likely a badge of fraud.

Lesson Number 2: The civil case is always a stalking horse for the criminal case.

Not very sporting.

Not very sporting.

Of course, “always” is not “always,” but it is often enough to make it reliable.  If a person believes he or she is part of a civil inquiry only, he or she will conclude — wrongly — that the exposure is limited.  An employee or officer being interviewed by law enforcement or prosecutors should assume that there is a shadow criminal investigation and that he or she is at least a “subject” of that investigation.

We'd like a word.

We’d like a word.

Lesson Number 3: The company’s civil case and the individual officer or employee’s criminal case are on two different planets because of the current pitchfork mentality about putting “somebody” in jail. 

Corporations are not natural persons and cannot be imprisoned.  When very bad things happen, the natural impulse is to determine (or shift) blame.  The fruit of that impulse is to hope someone goes to jail — even where the civil and criminal standards are different; where “knowledge” and “intent” must be discerned differently; and where the rules of evidence and Constitutional principles apply to individuals in ways that differ from the manner in which they apply to corporate entities.  Judges are not immune from such sentiments, as where a federal judge publicly urges the Department of Justice to prosecute individuals:

U.S. District Judge William H. Pauley approved the auto maker’s settlement with prosecutors Thursday, saying it “painted a reprehensible picture of corporate misconduct.” But he added that ultimately individuals are responsible for corporate misconduct and urged the Manhattan U.S. attorney’s office, which conducted the investigation into Toyota, to continue its probe.

“I sincerely hope that this is not the end but rather the beginning to seek to hold those individuals responsible for making these decisions accountable,” Judge Pauley said during a roughly 20-minute hearing in Manhattan federal court.

When asked if prosecutors would pursue individuals during a news conference Wednesday, Manhattan U.S. Attorney Preet Bharara said he wasn’t “foreclosing anything” but believed the settlement is the “final resolution” of the case.

“[T]he rules of evidence sometimes do not allow you to use certain kinds of evidence and certain documents against individuals, although they might be admissible against the company itself,” said Mr. Bharara. “And so although there is an admission that there were individuals who engaged in conduct which provides for a basis to bring a case against the company, they are not charged here.”

The comments add to a growing chorus from judges who have criticized prosecutors for settling claims of wrongdoing with companies while not bringing charges against executives or others who actually made the decisions.

 

Lesson Number 4: Government agents and investigators lie to you.  They deceive you all the time; it is ethical for them to do so; and there is little you can do about it.

Many employees think that, in general, law-enforcement agents do not lie (or, at least, that law-enforcement agents do like lie to people like them).

Not so forbidden, actually.

Not so forbidden, actually.

Surprisingly large numbers of otherwise savvy, well-educated people profess shock and dismay when they find out that an agent has misled them, told them an untruth or left out an important fact that might have changed their answer to a question.

However heartfelt, such dismay is misplaced.  Much of what we expect law-enforcement to do — especially with regard to undercover operations, searches-and-seizures and interrogations — is premised on not being forthcoming.  Like any other witness, an FBI agent or a sheriff’s deputy must testify truthfully in court proceedings, and is subject to perjury and other sanctions if he or she fails to do so.  By the time we reach that stage of an investigation and prosecution, however, our employee or colleague has already spoken with the agents out of a desire to cooperate; from fear of being perceived as not cooperating; or from embarrassment at being associated with particular events, even by implication.

This compulsion to speak leads us to the next lesson: avoid the Efrem Zimbalist, Jr. Syndrome.

Lesson Number 5: Teach your employees and colleagues to avoid the Efrem Zimbalist, Jr. Syndrome.

Getting carded, back when there was no casual Friday.

Getting carded, back when there was no casual Friday.

I’ve spoken before on why businesspeople talk to agents without having their lawyer or the company lawyer present.  I call it the “Efrem Zimbalist, Jr. Syndrome,” named after the star of the old television series The FBI.  Watch this 140-second video on the Efrem Zimbalist, Jr. Syndrome, then keep reading.

(An aside: I’ve written before on the relationship between crime and narrow neckties: Criminals In Ties: Contract Law and Reservoir Dogs)

 

 

 

Lesson Number 6: Tell the truth in response to questions you understand, and demand a new question if you don’t understand the old one, but don’t put on Fred Rogers’s slippers.

If your employee or colleague decides to cooperate in an investigation, they need to meditate on the old chestnut “in for a penny, in for a pound.”  Lying is the quickest path to indictment.  In complicated, expensive, protracted business-crime or regulatory investigations, false-statement or obstruction charges are easier and cheaper to prove that the underlying, substantive conduct.  And, judges and juries jump to conclusions about liars and document-shredders.

Foot powder and an immunity letter.

Foot powder and an immunity letter.

On the other hand, answering “truthfully” does not mean answering “cuddly.”  Assume that the agent knows the answer (or has a decent guess about the answer, or has a preconceived notion about the answer) to every question that he or she poses.  Further, assume that each question, and therefore each answer, is at best a “neutral” event from the perspective of the person being questioned.

Good luck.

 

 

 

 

 

 

 


Breaking Bad, All the Time: White Collar Crime for Business Lawyers

 

Trial Dot Com

The Network of Trial Law Firms is an excellent CLE vehicle.  Here’s a Sharman White Collar Panel Video of a Network panel about white-collar issues for civil lawyers — me, Jackie Arango of Akerman Senterfit (Miami), Joel Neckers of Wheeler Trigg (Denver) and Gerry Leone of Noxon Peabody (Boston).  Here’s the blurb from the Network program:

No one thinks of themselves, their employees or their company as “criminals.” On the other hand, Walter White was once just a chemistry teacher. The lines between what are business-crime problems and what are traditional corporate civil issues — compliance, due diligence, regulatory recordkeeping and permitting, whistleblowers, confidentiality, privilege and indemnification — have become blurred. Listen to an experienced panel highlight the most important events and insights from 2013 and what to expect in 2014.

Video camera

I know, I know.  The video is a bit long to just sit and watch unless you’ve previously gone to the “Cocktails” archive of this blog, but I find the most curious point to arrive at minute 25:22, where I play for the crowd a 140-second video of myself talking about search warrants.  A video within video.  They loved it.


White-collar news stories via White Collar Crime Prof Blog

Good roundup of white-collar news stories from Ellen Podgor and White Collar Crime Prof Blog:

Mark Hamblett & Sara Randazzo, The AmLaw Daily, Ex-Kirkland Partner Sentenced to One Year For Tax  Fraud

George J. Terwilliger III, National Law Journal, Walking a Tightrope in White-Collar Investigations

AP, Las Vegas Sun, Ex-Akamai exec barred for 5 years in SEC case; Bob Van Voris, Bloomberg, Ex-Akamai Executive Settles SEC Suit Over Rajaratnam Tips

Nate Raymond, Reuters, Baltimore Sun, U.S. prosecutor cautions against white-collar sentencing revamp

Jennifer Koons, Main Justice, Former Enron Prosecutor Tapped to Head Criminal Division

Zachery Fagenson, Reuters, Ex-Bolivian anti-corruption official denied bail in Miami extortion case