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Parallel Proceedings: The End of an Error?

By Jefferson M. Gray
July 30, 2008

Three years ago, two similarly minded district court decisions rocked federal regulatory agencies and the Department of Justice (DOJ) by rejecting longstanding assumptions about the proper conduct of simultaneous civil and criminal investigations, commonly known as 'parallel proceedings.' First, in United States v. Scrushy, 366 F. Supp.2d 1134, 1139 (N.D. Ala. 2005), the court said: 'To be parallel, by definition, the separate investigations should be like side-by-side train tracks that never intersect.' Accordingly, the court dismissed perjury charges arising out of the defendant's testimony in an SEC civil deposition because ' prior to the deposition ' SEC investigators had exchanged information with federal prosecutors, provided them expert assistance, and complied with certain of their requests.

Next, in United States v. Stringer, 408 F. Supp.2d 1083, 1087-88 (D. Or. 2006), another district court dismissed the entire indictment against three defendants in a corporate-fraud case because it found that factually and temporally overlapping investigations conducted by the SEC and the U.S. Attorney's Office in Oregon 'were not parallel proceedings.' The court reasoned that the prosecutors were 'actively involved in the SEC investigation' by meeting regularly with SEC personnel, receiving documents, requesting that depositions be taken in the district to establish venue for possible false statements charges, and advising the SEC investigators on the elements of criminal false statements charges. In the alternative, the Stringer court found that the indictment should be dismissed because the government had 'engaged in deceit and trickery to keep the criminal investigation concealed' when an SEC attorney instructed a court reporter not to mention the DOJ's involvement to defense attorneys and also side-stepped a direct response when one defense attorney asked whether there was a pending criminal investigation.

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