The Perils of Immunity in the Era of Globalization

Of course, the dilemma of exposures from multiple sovereigns exists even within a single federal district, if the challenged conduct could arouse the interest of both the U.S. Attorney and the local district attorney. If the conduct truly is localized, and the prosecutors have earned the defense counsel's trust through their course of dealing, one might consider reliance on comity between prosecutors and the principle of not “piling on” for protection of the client. That has obvious risks.

The dual sovereign issue might also be dealt with by seeing if the prosecutors will agree to let the locals go first. The Petite Policy of the Department of Justice (DOJ) essentially mandates declination of a follow-on federal prosecution based on the same acts or transactions as those considered by the state unless substantial federal interests were not vindicated. U.S. Attorney's Manual (U.S.A.M.) at ' 9-2.031. Conversely, counsel should consider trying to have the feds go first if state law contains an expansive and reliable protection against double jeopardy. Safer yet, counsel could seek to have both sovereigns sign on to whatever protective agreement is being struck.

Non-Prosecution Deals

The complexity of negotiations and deal-making ratchets up when one factors in the risks of prosecutions in other federal districts, various states, and sovereigns abroad. Generally, investigations of large-scale fraud in health care, securities and financial transactions reach conduct in multiple districts and, often, more than one nation. Yet, more than a few AUSAs offer ' at least in the first instance ' only a letter agreement obliging the client to cooperate and promising non-prosecution, citing “office policy” against going further. But one district's non-prosecution promise is no guarantee that another district or sovereign won't take up the cudgel. In multiple-district cases, a written non-prosecution deal may only be as bullet-proof as the number of jurisdictions that sign on to it. Careful evaluation of exposures elsewhere is necessary.

Pocket or Informal Letter Immunity

Similarly, even if disposed to immunize a client, many AUSAs reflexively offer only “pocket” or “informal letter immunity,” which saves them the burden of getting permission from Washington to seek formal immunity and then obtaining a court order compelling testimony and granting use immunity. Compare 18 U.S.C. ” 6002-03 (formal immunity) with U.S.A.M. ' 9-23.100; DOJ Crim. Resource Manual at 719 (letter immunity).

Of course, use immunity by its own terms does not actually bar prosecution of the witness. See In Re Cisneros (Needle Fee Application), 454 F.3d 334 (D.C. Cir. 2006) (independent counsel notes that a person with informal use immunity does not “normally” become a subject of the investigation). However, as a practical matter, use immunity is usually good enough. As Webster Hubbell and Oliver North demonstrated, the government's burden of proving that all evidence supporting a subsequent prosecution is in no way derived from immunized testimony generally will shield the immunized witness from prosecution. Kastigar v. United States, 406 U.S. 441 (1972); see, e.g., United States v. Hubbell, 530 U.S. 27 (2000); United States v. North, 910 F.2d 843 (D.C. Cir. 1990).

But depending on the precise wording of the letter, informal immunity can leave gaping exposures. First, most U.S. Attorneys' “form letters” explicitly state that the immunity agreement binds only that particular U.S. Attorney's Office and not those of other districts. Moreover, the DOJ takes the position that testimony “given under informal immunity is not compelled ' but is ' pursuant to an agreement and thus voluntary. The principles of contract law apply in determining the scope of informal immunity.” DOJ Criminal Resource Manual at 719. Of course, defense counsel could seek to get DOJ in Washington or the relevant other federal districts to sign on to the immunity letter. But that endeavor has the downside of alerting other prosecutors to potentially indictable conduct.

Second, the DOJ, in its Criminal Resource Manual at 719, asserts that informal immunity is not binding upon the states, because the local prosecutor is “normally not a party to the agreement” and therefore not “contractually bound.” So, again, a client faces the Hobson's choice of negotiating to have local prosecutors sign on to the agreement but risking arousal of their interest in the process.

Third, unlike a formal immunity order which compels only testimony, an immunity letter may contain all kinds of additional cooperation-related conditions and government escape clauses. Depending on how the letter is drafted, violation of those conditions may void the immunity protection altogether.

Court-Ordered Immunity and Foreign Prosecution

The lowest risk solution to the dilemma of client protection in the face of multiple jurisdictional exposures would appear to be getting a formal immunity order. It is plain that formal immunity protects a federal witness against incrimination under state or federal law and, conversely, protects a state witness against incrimination under federal or state law. Murphy v. Waterfront Commission of New York Harbor, 378 U.S. 52 (1964). But, as recent cases reveal, even court-ordered immunity may leave a client exposed to a foreign prosecution. These days, that risk can be very real.

To obtain court-ordered immunity, a client must be able to claim in good faith a reasonable fear of U.S. or state ' not foreign ' prosecution in order to invoke the protection of the Fifth Amendment. Ohio v. Reiner, 532 U.S. 17 (2001). The Supreme Court has ruled that the Fifth Amendment privilege cannot be invoked for fear of incriminating oneself solely under foreign law or for fear of foreign prosecution. United States v. Balsys, 524 U.S. 666 (1998). In other words, the privilege applies only when either the sovereign seeking to compel the testimony is the same that would use that testimony against the witness or both the compelling and prosecuting sovereigns are bound by the Fifth Amendment.

However, even if immunity is granted, there is no guarantee that the “protected” information or testimony will not be turned over to foreign authorities for use in a foreign criminal prosecution against the domestically immunized client. Indeed, that happened just recently.

Defendant McKnight was convicted in California on federal charges of importing the drug Ecstasy. Before trial, in an effort to cooperate, McKnight had provided incriminating statements to the prosecutor under a “no direct use” limited-immunity agreement. The federal prosecutor then turned over the defendant's incriminating statement to the Tribunal de Grande Instance in France, which made direct use of it in convicting him in absentia for crimes relating to his international drug trafficking.

McKnight fought extradition on the ground that the U.S. prosecutors had breached their agreement. But the agreement did not contain any limitation on the government's ability to share McKnight's incriminating statements with France, and the Ninth Circuit upheld extradition, noting that the “unambiguous words of the agreement are the end of the story.” McKnight v. U.S. Marshal, 563 F.3d 890 (9th Cir. 2009).

Conclusion

Protecting the client in complex white-collar investigations now often requires gauging law enforcement interest in the client's conduct by various states, other districts, and foreign countries. Counsel must assess the risk of alerting those jurisdictions to that conduct and evaluate whether negotiating leverage exists to get expansive protections written into agreements with federal prosecutors. As the court in McKnight cautioned: “Future government witnesses are on notice that, if they wish to prevent federal prosecutors from sharing incriminating statements with other sovereigns (including, for example, the State governments), they must reduce that expectation to writing.”

Ronald H. Levine ([email protected]), a member of this newsletter's Board of Editors, works out of Philadelphia as a partner in the law firm of Post & Schell, P.C., heading its national White Collar Defense, Compliance and Risk Management Group. He was previously Chief of the Criminal Division of the U.S. Attorney's Office for the Eastern District of Pennsylvania.

Twenty years ago, a defense attorney might have sighed with relief to hear an Assistant U.S. Attorney (AUSA) say that a client was only a “witness,” or would not be prosecuted, or would be immunized in return for truthful cooperation in the government's investigation. These days, not so fast. In our digitized-globalized era, assurances from one jurisdiction may not insulate a client from prosecution across the country or even around the globe.

Examples abound of the ever-increasing collaboration between state, federal and foreign law enforcement authorities: parallel Foreign Corrupt Practices Act and bribery investigations here and abroad; U.S. prosecution of foreign nationals like Canadian media magnate Conrad Black for “honest services fraud” or of three British bankers in connection with the Enron meltdown; and the intensified investigations of U.S. businesses by European antitrust authorities, just to name a few. Protecting one's client has become a multi-dimensional chess game. Accordingly, if your client has leverage to bargain with prosecutors, take care to negotiate protection that matches the jurisdictional risk profile of the suspect conduct.

Multiple Sovereigns, Multiple Exposures

Of course, the dilemma of exposures from multiple sovereigns exists even within a single federal district, if the challenged conduct could arouse the interest of both the U.S. Attorney and the local district attorney. If the conduct truly is localized, and the prosecutors have earned the defense counsel's trust through their course of dealing, one might consider reliance on comity between prosecutors and the principle of not “piling on” for protection of the client. That has obvious risks.

The dual sovereign issue might also be dealt with by seeing if the prosecutors will agree to let the locals go first. The Petite Policy of the Department of Justice (DOJ) essentially mandates declination of a follow-on federal prosecution based on the same acts or transactions as those considered by the state unless substantial federal interests were not vindicated. U.S. Attorney's Manual (U.S.A.M.) at ' 9-2.031. Conversely, counsel should consider trying to have the feds go first if state law contains an expansive and reliable protection against double jeopardy. Safer yet, counsel could seek to have both sovereigns sign on to whatever protective agreement is being struck.

Non-Prosecution Deals

The complexity of negotiations and deal-making ratchets up when one factors in the risks of prosecutions in other federal districts, various states, and sovereigns abroad. Generally, investigations of large-scale fraud in health care, securities and financial transactions reach conduct in multiple districts and, often, more than one nation. Yet, more than a few AUSAs offer ' at least in the first instance ' only a letter agreement obliging the client to cooperate and promising non-prosecution, citing “office policy” against going further. But one district's non-prosecution promise is no guarantee that another district or sovereign won't take up the cudgel. In multiple-district cases, a written non-prosecution deal may only be as bullet-proof as the number of jurisdictions that sign on to it. Careful evaluation of exposures elsewhere is necessary.

Pocket or Informal Letter Immunity

Similarly, even if disposed to immunize a client, many AUSAs reflexively offer only “pocket” or “informal letter immunity,” which saves them the burden of getting permission from Washington to seek formal immunity and then obtaining a court order compelling testimony and granting use immunity. Compare 18 U.S.C. ” 6002-03 (formal immunity) with U.S.A.M. ' 9-23.100; DOJ Crim. Resource Manual at 719 (letter immunity).

Of course, use immunity by its own terms does not actually bar prosecution of the witness. See In Re Cisneros (Needle Fee Application), 454 F.3d 334 (D.C. Cir. 2006) (independent counsel notes that a person with informal use immunity does not “normally” become a subject of the investigation). However, as a practical matter, use immunity is usually good enough. As Webster Hubbell and Oliver North demonstrated, the government's burden of proving that all evidence supporting a subsequent prosecution is in no way derived from immunized testimony generally will shield the immunized witness from prosecution. Kastigar v. United States , 406 U.S. 441 (1972); see, e.g., United States v. Hubbell , 530 U.S. 27 (2000); United States v. North , 910 F.2d 843 (D.C. Cir. 1990).

But depending on the precise wording of the letter, informal immunity can leave gaping exposures. First, most U.S. Attorneys' “form letters” explicitly state that the immunity agreement binds only that particular U.S. Attorney's Office and not those of other districts. Moreover, the DOJ takes the position that testimony “given under informal immunity is not compelled ' but is ' pursuant to an agreement and thus voluntary. The principles of contract law apply in determining the scope of informal immunity.” DOJ Criminal Resource Manual at 719. Of course, defense counsel could seek to get DOJ in Washington or the relevant other federal districts to sign on to the immunity letter. But that endeavor has the downside of alerting other prosecutors to potentially indictable conduct.

Second, the DOJ, in its Criminal Resource Manual at 719, asserts that informal immunity is not binding upon the states, because the local prosecutor is “normally not a party to the agreement” and therefore not “contractually bound.” So, again, a client faces the Hobson's choice of negotiating to have local prosecutors sign on to the agreement but risking arousal of their interest in the process.

Third, unlike a formal immunity order which compels only testimony, an immunity letter may contain all kinds of additional cooperation-related conditions and government escape clauses. Depending on how the letter is drafted, violation of those conditions may void the immunity protection altogether.

Court-Ordered Immunity and Foreign Prosecution

The lowest risk solution to the dilemma of client protection in the face of multiple jurisdictional exposures would appear to be getting a formal immunity order. It is plain that formal immunity protects a federal witness against incrimination under state or federal law and, conversely, protects a state witness against incrimination under federal or state law. Murphy v. Waterfront Commission of New York Harbor , 378 U.S. 52 (1964). But, as recent cases reveal, even court-ordered immunity may leave a client exposed to a foreign prosecution. These days, that risk can be very real.

To obtain court-ordered immunity, a client must be able to claim in good faith a reasonable fear of U.S. or state ' not foreign ' prosecution in order to invoke the protection of the Fifth Amendment. Ohio v. Reiner , 532 U.S. 17 (2001). The Supreme Court has ruled that the Fifth Amendment privilege cannot be invoked for fear of incriminating oneself solely under foreign law or for fear of foreign prosecution. United States v. Balsys , 524 U.S. 666 (1998). In other words, the privilege applies only when either the sovereign seeking to compel the testimony is the same that would use that testimony against the witness or both the compelling and prosecuting sovereigns are bound by the Fifth Amendment.

However, even if immunity is granted, there is no guarantee that the “protected” information or testimony will not be turned over to foreign authorities for use in a foreign criminal prosecution against the domestically immunized client. Indeed, that happened just recently.

Defendant McKnight was convicted in California on federal charges of importing the drug Ecstasy. Before trial, in an effort to cooperate, McKnight had provided incriminating statements to the prosecutor under a “no direct use” limited-immunity agreement. The federal prosecutor then turned over the defendant's incriminating statement to the Tribunal de Grande Instance in France, which made direct use of it in convicting him in absentia for crimes relating to his international drug trafficking.

McKnight fought extradition on the ground that the U.S. prosecutors had breached their agreement. But the agreement did not contain any limitation on the government's ability to share McKnight's incriminating statements with France, and the Ninth Circuit upheld extradition, noting that the “unambiguous words of the agreement are the end of the story.” McKnight v. U.S. Marshal , 563 F.3d 890 (9th Cir. 2009).

Conclusion

Protecting the client in complex white-collar investigations now often requires gauging law enforcement interest in the client's conduct by various states, other districts, and foreign countries. Counsel must assess the risk of alerting those jurisdictions to that conduct and evaluate whether negotiating leverage exists to get expansive protections written into agreements with federal prosecutors. As the court in McKnight cautioned: “Future government witnesses are on notice that, if they wish to prevent federal prosecutors from sharing incriminating statements with other sovereigns (including, for example, the State governments), they must reduce that expectation to writing.”

Ronald H. Levine ([email protected]), a member of this newsletter's Board of Editors, works out of Philadelphia as a partner in the law firm of Post & Schell, P.C., heading its national White Collar Defense, Compliance and Risk Management Group. He was previously Chief of the Criminal Division of the U.S. Attorney's Office for the Eastern District of Pennsylvania.