This article originally appeared on Scarinci Hollenbeck’s blog.
Top executives can sometimes be held criminally responsible for their company’s misdeeds and the role they may have played in the corporate misconduct. Former Volkswagen CEO Martin Winterkorn is facing criminal charges, including conspiring to defraud customers, commit wire fraud, and violations of the Clean Air Act, in connection with his role in the automaker’s emissions scandal. The CEO of a Washington-based staffing company was recently arrested for an alleged H-1B visa fraud scheme.
DOJ focuses on individual wrongdoers
Under the Trump Administration, the Department of Justice (DOJ) has taken a more lenient approach when imposing penalties on corporations for white-collar crimes. While the DOJ has not abandoned its enforcement efforts, it more frequently declines to prosecute companies that voluntarily disclose misconduct, fully cooperate with agency’s investigation, promptly seek to remediate the issue and disgorge any ill-gotten gains.
At the same time, the DOJ has reconfirmed its focus on individual accountability and continues to hold executives responsible for corporate criminal conduct. As set forth in the DOJ Justice Manual used by prosecutors:
Prosecution of a corporation is not a substitute for the prosecution of criminally culpable individuals within or without the corporation. Because a corporation can act only through individuals, imposition of individual criminal liability may provide the strongest deterrent against future corporate wrongdoing. Provable individual culpability should be pursued, particularly if it relates to high-level corporate officers, even in the face of an offer of a corporate guilty plea or some other disposition of the charges against the corporation, including a deferred prosecution or non-prosecution agreement, or a civil resolution. In other words, regardless of the ultimate corporate disposition, a separate evaluation must be made with respect to potentially liable individuals.
Of course, not every DOJ investigation will result in criminal charges. Prosecutors may also exercise their discretion with respect the pursuing charges against an individual. Factors that may be considered include the sufficiency of the evidence; the likelihood of success at trial; the probable deterrent, rehabilitative, and other consequences of conviction; and the adequacy of noncriminal approaches.
It is also important to note that prosecutors may elect to pursue individual prosecutions even if the corporate investigation results in a deferred prosecution agreement, non-prosecution agreement, or a civil resolution. Regardless of the ultimate corporate disposition, the DOJ will make a separate evaluation with respect to potentially liable individuals.
What corporate executives should do if facing criminal charges
Most business professionals do not expect local police or federal investigators to come walking through the door. However, when dealing with white-collar crimes, it is easy for corporate executives and other employees to get swept up in the investigation. Should you find yourself in this situation, it is essential to understand your rights.
Most importantly, you have a right to counsel. The first step you should always take is to ask to call your lawyer. It is important to understand that if you call your company’s in-house counsel what you say may not be protected by attorney-client privilege, as the attorney represents the company and not its individual employees. To best protect your rights, you should always retain your own criminal attorney, particularly one who is experienced in white-collar criminal matters.
While the federal investigators may continue to pressure you to talk, invoking your right to counsel cannot be later used against you. Politely declining the request to interview is not the same as remaining completely silent, which can be later used against you. You don’t have to (and shouldn’t) provide any explanation. Simply ask for the officials’ business cards and tell them your attorney will be in touch.
Risks of talking to investigators without counsel
Even if you are sure that you did nothing wrong, it is never wise to talk to investigators without consulting with counsel. Title 18, United States Code, Section 1001 criminalizes making false statements to investigators. Specifically, it is a federal a crime to:
- Knowingly and willfully;
- Make any materially false, fictitious or fraudulent statement or
- In any matter within the jurisdiction of the executive, legislative or judicial branch of the United States.
The false statements statute applies even if your lie is oral and not under oath. It also applies if your statements end up having no impact on the investigation. During interviews, investigators often have more information than you may expect and will “play dumb” to lull you in a false sense of security. Simply denying knowledge about illegal conduct can be construed as a violation of Section 1001.
The good news is that most white-collar cases don’t begin with an arrest. Rather, you will likely know (or at least suspect) that you are the target on an investigation prior to ever facing criminal charges. Investigators will typically make contact via a request for an interview, grand jury subpoena, or execution of a search warrant. In some cases, it is advantageous to speak with investigators. However, it is imperative to do so only after consulting with experienced criminal defense counsel.
Chair of the Scarinci Hollenbeck’s Litigation Group, Robert Levy’s practice includes jury and non-jury trial preparation and trials with emphasis upon complex civil and criminal matters including labor and employment defense, commercial and corporate litigation, criminal litigation and civil rights litigation.