Association of Corporate Counsel
Houston Chapter
Meeting of June 8, 2010
What to Do When the Feds
Come Knocking
In-House Responsibilities for Criminal
Enforcement Matters
James Hurd
Kenneth Polite
Charging Considerations
LEGAL STANDARDS





Treat Corporations Like Individuals
Benefits of Corporate Prosecutions
Respondeat Superior
Vicarious Liability for Acts of Agents
Individual vs. Corporate Prosecutions
Charging Considerations

Historical Background

Purposes of the Criminal Law
 Punishment
 Deterrence
 Protection
of the Public
 Rehabilitation
 Restitution
The Opening Salvo
Initial Notice of an Investigation
 Search Warrant
 Grand Jury Subpoena
 Questioning Witnesses
Early Involvement by Counsel is
ESSENTIAL
Initial Corporate Response
Protection of Evidence
 Suspend
Document Destruction
Policies
 Litigation Hold Strategy
 Other Considerations for
Documents and Electronic Data
Initial Corporate Response
Protection of Employees


Notify Employees
Should Counsel be Provided to
Employees?
Initial Corporate Response
Protection of Board of Directors
and Management
 Prompt
Disclosure
 Special Committees?
 D & O Insurance Issues?
 Internal Investigation?
Search Warrant Response
Discussion with Agents
 Request
a Copy of the Warrant
 Advise that Employees are not
Prepared to be Interviewed at the
Time of Execution of the Warrant
Search Warrant Response
Advice to the Client
 Do
Not Interfere with Agents
 Request Business Cards from the
Agents
 Request the Presence of Counsel at
any Interviews
Search Warrant Response
Call the Prosecutor
 Ascertain
the Nature of the
Investigation
 Pledge Cooperation (if Authorized)
 Negotiate Employee Interviews, if
Requested by the Prosecutor
Document Requests
 Grand
Jury Subpoena,
Administrative Subpoena or Other
 Can Scope of Subpoena be Limited?
 Negotiate a Timeline for Production
Coordinating the Defense
Dealing with the Prosecutor:



Establish a Good Working
Relationship
Credibility is Critical
Effective Communication
Coordinating the Defense
Counsel for Employees & Officers:


Must Coordinate with Other Defense
Counsel
Joint Defense Agreements
Oral vs. Written
Parallel Proceedings
Should Counsel Seek to Stay Pending
Civil Litigation?
•
•
Discretion of the Court
Untenable Choices:
•
•
Whether to waive right against selfincrimination to avoid deprivation of property
without due process, or
Risk making statements that could be used in
a criminal prosecution
Cooperation
A essential factor in a prosecutor’s
exercise of discretion
 Generally, one of nine factors
considered by federal prosecutors in

“Principles of Federal Prosecution of
Business Organizations”
Cooperation
Forms of Cooperation
1)
2)
3)
4)
Waiver of the attorney-client privilege
No advance legal fees or indemnity to
employees
Full and complete disclosure of facts
(from internal investigation)
Records of interviews
Refusal to Cooperate
May Result In:




Aggressive investigation methods
Numerous grand jury subpoenas
Possible search warrants
Regulatory reprisals
Plea Bargaining




Prosecutors seek the most serious, readily
provable charges
Financial audits
Employee interviews
Corporate Plea in Exchange for NonProsecution of Individual Employees and
Officers
Special Considerations




Plea must be entered by a corporate
representative
Requires a resolution of the board of
directors
Debarment Considerations
Regulatory Consequences
Deferred & Non-Prosecution
Agreements



Alternatives to Prosecution
May Include Civil or Regulatory
Enforcement
Two Important Considerations:
Timely Cooperation
 Is It In The Public Interest?


Outside Monitors Often Required
Other Considerations
Sentencing Guidelines
 Has
the company self-reported, cooperated
and accepted responsibility?
 Has the company tolerated criminal
activity?
 Are effective compliance and ethics
programs in place?
 Analysis of pecuniary gain to company or
loss to victims
Association of Corporate Counsel
Houston Chapter
June 8, 2010 Meeting
James A. Hurd
jahurd@liskow.com
Kenneth Polite
kpolite@liskow.com