Whether it's financial fraud, tax cheating or environmental endangerment, federal prosecutors are hot on the trail of business crime. "An astonishing number of business execs now face jail or indictment," says Wall Street Journal columnist Holman W. Jenkins Jr.
It's not necessary for a solid waste company or its officers to have committed Enron-sized crimes and misdemeanors to draw attention from the nearby U.S. Attorney. And with a greater chance of a federal criminal inquiry, it's important to understand the differences between criminal and civil encounters.
For starters, the local federal prosecutor can be a powerful adversary. He easily can convince a grand jury to issue a subpoena for a company's books and records. The U.S. Attorney also can ask a regulatory agency — for example, the Securities and Exchange Commission, the Internal Revenue Service or the Environmental Protection Agency — for assistance in an outside investigation of a company's business practices or an internal probe of operations. In short, most businesses simply cannot compete with organizational, financial and human resources available to the federal government.
If a company comes under scrutiny, find out where the situation stands. Prosecutors categorize individuals and businesses in three ways: witnesses, subjects and targets. A defense attorney will try to determine how the government perceives the person or business in question, and will develop a defense strategy based on the classification, which can change — for the better or the worse — on a daily or weekly basis. If an individual or company is deemed a witness and does not want to be subjected to any deeper involvement, legal counsel may advise full cooperation and compliance with the government's demands. If a person or business already is a subject or target, it is on its way to being criminally charged and should be prepared for overt hostility on the government's part.
Grand jury subpoenas are not the same as routine document requests in civil litigation. Some civil litigators take pride in dissecting sentences and finding contorted meanings to limit the nature and number of materials turned over, or to avoid furnishing any documents at all. But playing hypertechnical word games is a sure way to antagonize the prosecutor. Of course, it's often appropriate for a defense lawyer to negotiate, tactically and tactfully, the scope of materials to be produced under a subpoena. Prosecutors generally do not view these tactics as obstructive. For example, a lawyer will identify and segregate all "privileged" material.
It's also important to log and copy all material produced. If the government loses a document, proper recordkeeping can establish that the items were not withheld.
Individuals and companies that are subjects or targets sometimes try to squelch an investigation or case by appealing to a senator or member of Congress, or by asking the Justice Department headquarters to overrule a local prosecutor. The former tactic — political influence — almost always is ineffective, while the latter — review by "Main Justice" — may work in a tiny number of high-profile cases, but, even then, only with dead-on timing and presentation.
If a criminal investigation attracts the media's attention, particularly where it appears that prosecutors and civil plaintiffs use newspaper and television coverage to press their case against the accused outside the courthouse, it's important for a lawyer to defend his client with information that the media can use to balance its stories. "No comment" usually is counterproductive.
Credibility remains a key factor in corporate criminal cases. Successful criminal lawyers must be trustworthy. A prosecutor may be inclined to believe a defense lawyer about a change in a client's operating practices and about the company's redoubled efforts on, say, environmental compliance if the statements can be corroborated by actual and measurable deeds and performance. Equally, if not more so, a client that fully cooperates during an investigation gives itself a shot at leniency. A track record of good corporate citizenship and a commitment to compliance can pay-off.
Federal prosecutors say that investigations often begin as civil inquiries but escalate into criminal matters, usually as the result of ineptitude, indifference or arrogance — on the part of the client or the defense lawyer.