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Can Civil Investigative Demands and Subpoenas Result in Criminal Charges?

While the news has widely reported on the Department of Justice (DOJ) increasing firearms prosecutions, the news has largely ignored DOJ’s new positions on corporate prosecutions and the increased use of Civil Investigative Demands (CIDs) and subpoenas by other federal and state agencies to bring fraud related law suits and criminal prosecutions. Although agencies like the Federal Trade Commission, federal and state Inspector General Offices, and state Attorneys General generally lack criminal enforcement authority, these agencies have sections devoted to referring cases to federal and state prosecutors. When dealing with CIDs or subpoenas, it is imperative to use a lawyer with criminal experience. The consequences of not doing so may result in significant financial penalties and jail.

In June 2017, Attorney General Jeff Sessions announced that DOJ would no longer direct “third-party settlement payments to non-governmental entities that were not harmed by a defendant’s conduct.” In May 2018, Deputy Attorney General Rod Rosenstein said DOJ would “discourage disproportionate enforcement of laws by multiple authorities,” which he analogized to “piling on” an already tackled player in football. Despite DOJ’s position, other federal agencies did not dismantle their criminal referral sections or stop using their civil enforcement authorities to direct third-party settlement payments to non-governmental entities that were not harmed by a defendant’s conduct. Often the federal civil agencies do this in conjunction with state Attorneys General. If unable to reach a settlement, the civil and administrative process used to collect information from targets can lead to referrals to DOJ for criminal charges. Federal and state agencies include those charged with investigating fraud, waste, and abuse.

Generally federal and state agencies investigating white-collar crimes can use different tools, like issuing CIDs, taking sworn testimony, or serving subpoenas. CIDs are generally issued to the targets of investigations and require the target to answer, under oath, certain questions and produce an array of documents. Demands to take sworn testimony have certain deposition-like qualities. Some statutes only permit the federal and state agency representative to ask questions, and do not permit the target’s attorney to ask questions. In these sworn testimonials, the government attorneys have decided what happened and are trying to lock the target into statements in the event further litigation occurs. Administrative subpoenas are usually issued to collect additional information that the agency believes is necessary to build a case.

Whenever receiving any of these, a skilled defense attorney can use the opportunity to:

  1. Determine who is the target of the investigation;
  2. Determine the scope of the investigation;
  3. Determine whether any objections to the process are appropriate;
  4. Determine what must be done to comply with the process;
  5. Determine who should respond to the process;
  6. Determine how to respond to the process without exposing the recipient to unnecessary potential liability; and
  7. Determine an aggressive defense investigation strategy.

Most people who receive these types of process immediately use a trusted civil lawyer, who can often be invaluable if the civil lawyer knows the business well. However, civil lawyers who understand civil fraud cases but lack experience in criminal fraud cases can lead the recipient into unnecessary peril. Others use in-house or outside accountants, who can be valuable but often lack the criminal defense attorney experience to ensure the recipient’s liberty.

It is imperative to retain counsel experienced in criminal and civil fraud investigations to navigate the perils you face when you receive federal or state CIDs, notices of taking depositions, or subpoenas. If you believe you are under federal or state investigation, or if you are an attorney with a client under federal or state investigation, contact the Law Offices of Horwitz & Citro, P.A. immediately. Call (407) 901-5852 to request a free initial consultation with an experienced criminal defense lawyer.

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