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Government Pressure on Employers

By Robert W. Kent, Jr.
October 30, 2006

A white-collar criminal investigation, a business entity seeking to cooperate, and individual employees talking to the prosecutors ' all familiar scenarios to anyone experienced in federal criminal law. Recently, however, these elements combined to produce an unusual result: the suppression of the employees' statements to the government as involuntary under the Fifth Amendment. U.S. District Judge Lewis A. Kaplan issued this ruling in the KPMG tax shelter prosecution, finding that the prosecutors, through their pressure on KPMG, economically coerced the company's employees to speak with the government in violation of their privilege against self-incrimination. United States v. Stein, 440 F.Supp.2d 315 (S.D.N.Y. 2006).

Judge Kaplan rendered this opinion one month after he ruled in the same case that the government had violated the constitutional rights of the defendants by causing KPMG to limit its payment of attorney fees on behalf of its current and former employees. The court's coerced-statement opinion, based on rock-solid constitutional law, has significant implications for defense counsel. Once again, the government's overly aggressive interpretation of the Thompson Memo has come back to haunt it.

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