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Association of Corporate Counsel Houston Chapter Meeting of June 8, 2010

Association of Corporate Counsel Houston Chapter Meeting of June 8, 2010. What to Do When the Feds Come Knocking In-House Responsibilities for Criminal Enforcement Matters James Hurd Kenneth Polite. Charging Considerations. LEGAL STANDARDS Treat Corporations Like Individuals

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Association of Corporate Counsel Houston Chapter Meeting of June 8, 2010

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  1. Association of Corporate CounselHouston ChapterMeeting of June 8, 2010 What to Do When the Feds Come Knocking In-House Responsibilities for Criminal Enforcement Matters James Hurd Kenneth Polite

  2. Charging Considerations LEGAL STANDARDS • Treat Corporations Like Individuals • Benefits of Corporate Prosecutions • Respondeat Superior • Vicarious Liability for Acts of Agents • Individual vs. Corporate Prosecutions

  3. Charging Considerations • Historical Background • Purposes of the Criminal Law • Punishment • Deterrence • Protection of the Public • Rehabilitation • Restitution

  4. The Opening Salvo Initial Notice of an Investigation • Search Warrant • Grand Jury Subpoena • Questioning Witnesses Early Involvement by Counsel is ESSENTIAL

  5. Initial Corporate Response Protection of Evidence • Suspend Document Destruction Policies • Litigation Hold Strategy • Other Considerations for Documents and Electronic Data

  6. Initial Corporate Response Protection of Employees • Notify Employees • Should Counsel be Provided to Employees?

  7. Initial Corporate Response Protection of Board of Directors and Management • Prompt Disclosure • Special Committees? • D & O Insurance Issues? • Internal Investigation?

  8. Search Warrant Response Discussion with Agents • Request a Copy of the Warrant • Advise that Employees are not Prepared to be Interviewed at the Time of Execution of the Warrant

  9. Search Warrant Response Advice to the Client • Do Not Interfere with Agents • Request Business Cards from the Agents • Request the Presence of Counsel at any Interviews

  10. Search Warrant Response Call the Prosecutor • Ascertain the Nature of the Investigation • Pledge Cooperation (if Authorized) • Negotiate Employee Interviews, if Requested by the Prosecutor

  11. Document Requests • Grand Jury Subpoena, Administrative Subpoena or Other • Can Scope of Subpoena be Limited? • Negotiate a Timeline for Production

  12. Coordinating the Defense Dealing with the Prosecutor: • Establish a Good Working Relationship • Credibility is Critical • Effective Communication

  13. Coordinating the Defense Counsel for Employees & Officers: • Must Coordinate with Other Defense Counsel • Joint Defense Agreements Oral vs. Written

  14. Parallel Proceedings Should Counsel Seek to Stay Pending Civil Litigation? • Discretion of the Court • Untenable Choices: • Whether to waive right against self-incrimination to avoid deprivation of property without due process, or • Risk making statements that could be used in a criminal prosecution

  15. Cooperation • A essential factor in a prosecutor’s exercise of discretion • Generally, one of nine factors considered by federal prosecutors in “Principles of Federal Prosecution of Business Organizations”

  16. Cooperation Forms of Cooperation • Waiver of the attorney-client privilege • No advance legal fees or indemnity to employees • Full and complete disclosure of facts (from internal investigation) • Records of interviews

  17. Refusal to Cooperate May Result In: • Aggressive investigation methods • Numerous grand jury subpoenas • Possible search warrants • Regulatory reprisals

  18. Plea Bargaining • Prosecutors seek the most serious, readily provable charges • Financial audits • Employee interviews • Corporate Plea in Exchange for Non-Prosecution of Individual Employees and Officers

  19. Special Considerations • Plea must be entered by a corporate representative • Requires a resolution of the board of directors • Debarment Considerations • Regulatory Consequences

  20. Deferred & Non-Prosecution Agreements • Alternatives to Prosecution • May Include Civil or Regulatory Enforcement • Two Important Considerations: • Timely Cooperation • Is It In The Public Interest? • Outside Monitors Often Required

  21. Other Considerations SentencingGuidelines • Has the company self-reported, cooperated and accepted responsibility? • Has the company tolerated criminal activity? • Are effective compliance and ethics programs in place? • Analysis of pecuniary gain to company or loss to victims

  22. Association of Corporate CounselHouston ChapterJune 8, 2010 Meeting James A. Hurd jahurd@liskow.com Kenneth Polite kpolite@liskow.com

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