In the Courts
Recent rulings of importance to you and your practice.
Multiple Jeopardy
A combination of factors has coalesced to spell trouble, or at least unwelcome complications, for federal prosecutors and aspiring cooperators and their counsel in the white-collar criminal arena. The factors include the political ambitions of state attorneys general (AGs), the broad overlap of state and federal financial-fraud crimes, the fully justified emphasis of federal prosecutors on pursuing nationwide financial-fraud offenses, and the persistence of the federal courts in refusing to limit the outmoded "dual sovereignty" doctrine that allows concurrent or consecutive federal and state prosecutions for the same offenses.
Statements During Settlement Negotiations As Evidence in a Criminal Trial
Your client, a corporate executive, is being investigated in connection with whether the stock of her employer was artificially inflated. The company is in a "full cooperation mode" with the SEC and the DOJ, and is negotiating the terms of a consent decree. You learn that the company's attorneys have met with DOJ and SEC attorneys and have admitted (as they felt was necessary to maintain credibility) to certain wrongdoing by various corporate employees. Can the company's statements during negotiations be used against your client, or are they protected by Rule 408 Fed. R. Evid.?
Cooperating with NYSE Member Reviews
The framework that prosecutors and regulators use to assess a corporation's response to corporate wrongdoing changed forever on June 16, 1999. That day, then-Deputy Attorney General Eric Holder announced DOJ's new principles for the prosecution of corporations. The so-called Holder Memorandum emphasized cooperation with prosecutors and the requirement that corporations make full and voluntary disclosure of wrongdoing if they hoped to avoid or mitigate prosecution. The twin themes of cooperation and disclosure have become the standards by which federal and state prosecutors and regulators now judge a corporation's response to instances of corporate misbehavior.
Make It Go Away!
Your client company is a target of a criminal investigation. You've read in the news about "Deferred Prosecution Agreements" and you even pulled out your old Business Crimes Bulletin for an early article on the topic ("Make It Go Away," March 2003). Can you get one for your client? What will it look like? What terms can you negotiate?
Recent Fallout from Corporate Cooperation
Ever since the indictment and demise of Arthur Andersen in 2002, the stakes for businesses under governmental scrutiny could not be higher. The pressure on companies to cooperate and reach agreement with government investigators is no longer simply a matter of "doing the right thing," but has become a practical necessity for survival. Issues being litigated in two high-profile cases right now -- one involving the Enron Task Force's prosecution of Messrs. Lay, Skilling and Causey, and the other involving an investigation by the Connecticut Attorney General's office into corporate governance issues at Mass Mutual -- are exposing severe pressure points, and potentially serious breaking points, in the current realm of corporate cooperation.
Hard Times for Whistleblowers
Headlines describing $500-plus million settlements with the Department of Justice (DOJ) in False Claims Act (FCA) cases initiated by whistleblowers -- often former employees of defense contractors, pharmaceutical companies, and others doing business with the government -- have encouraged many disgruntled employees to try it themselves. But they can have a hard time making their own case if the government declines to intervene. Although the 1986 FCA amendments generally made the private action more available, the courts' interpretation of the FCA has not been easy on whistleblowers who stand in court without the United States at their side. As judges weed out unworthy cases, two trends run against the legislative goal of encouraging more whistleblowers, and invite instead a tactical corporate response that undercuts the legislative goal.
