- Pretend you’re an investment adviser for the second time and you’ll really, really go to jail
- Don’t claim Chinese furniture is Italian and post it on Craigslist — the Feds will find you, even in Alaska
- This money laundering defendant in the Eastern District of Washington allegedly posed as the victim’s brother over email
- A KeyBank employee in Tacoma allegedly kept customers’ deposits for himself
- One more time: you can’t sell bitcoin without a money transmitting license
- Lastly, Brian Moran was nominated last week as the new US Attorney for the Western District of Washington, drawing bipartisan support — how did this show fail?
Justin Okun is a senior corporate counsel with T-Mobile, where he handles regulatory and operational compliance. Justin was formerly a shareholder in Lane Powell’s Investigations, White Collar and Compliance practice group. Before joining Lane Powell, Justin spent over a decade in government service as an Assistant U.S. Attorney in Los Angeles, a DOJ trial attorney in Washington, DC, a supervisory attorney with the Department of the Navy, and a judge advocate in the Marine Corps, where he began his career. While Justin no longer exercises like a Marine, he still drinks beer like one, especially when he’s blogging.
- Local, artisanal, illegal
- Someone’s looking for a new job — the DAG continued his speaking tour this week, with remarks at an FCPA conference and keynote speech at the 7th Annual White Collar Crime Institute
- Follow Paul Manafort’s example and register as a foreign agent, especially if your client is the Pakistani government
- Volunteering doesn’t pay — the treasurer for a youth hockey league in Alaska pled guilty to writing checks to herself
- The good part of the end of the Iran deal — more work for lawyers as foreign subsidiaries of U.S. companies have six months to leave Iran
- Disgusting — Seattle man charged with selling food that was supposed to be destroyed or recycled into agricultural feed to discount grocery stores
- The Ninth Circuit said you don’t have to know you’re transporting ammo to be convicted of smuggling ammo
- Panasonic Avionics Corporation agreed to pay a $137.4 million penalty for falsifying its books and concealing payments to third-party sales agents
- VW’s board is thinking of going after its former CEO
- The UK’s data protection watchdog has ordered Cambridge Analytica to release information on US professor David Carroll
- Interesting interview from a a compliance chief regarding a “speak up culture”
- The ex-CEO of Alaska-based telecom company Quintillion Networks was accused of forging contracts to secure $250 million in investment
- The chief of Backpage.com has pled guilty to conspiracy and money laundering
- Three men were indicted as part of a bribery scheme to buy alcohol at deep discounts from Navy exchanges — good initiative, bad judgment
- Can’t ignore the obvious part 1: Michael Cohen
- Can’t ignore the obvious part 2: James Comey
- Can’t ignore the obvious part 3: Hungary
Chaplin later regretted this satirization
- A little federal grant fraud and money laundering up in Alaska
- Every employer really, really has to pay payroll and employment taxes, even in Washington
- Being a whistleblower can pay handsomely — $2.2 million from the SEC for this lucky winner
- The Treasury Department issued FAQs regarding implementation of the rule requiring financial institutions to identify the true owners of corporate bank accounts taking effect on May 11th
- Treasury also sanctioned several Russian oligarchs this week as well as a music promoter and prostitution ring leader
- And, lastly, the interesting tale of a lawyer, the judge he bribed, and $550 million in “the biggest Social Security fraud ever“
- Lots of pernicious activity in the PNW, beginning with sending a false distress message to the Coast Guard, a big no-no
- An interesting conspiracy to get around sanctions against Iran involving Chinese, Turkish, and Portuguese companies — the indictment was handed down in Washington, DC, but the plea will be in Seattle where the defendant was arrested and has remained in custody
- This case was transferred to Seattle from Florida — ransomware used to extort people into paying “fines” to phony law enforcement organizations
- I’m seeing a spinoff of WAGS — WWCCs
- Even listenin’ to Slippin’ couldn’t convince the judge not to give DMX some prison time
- Most disturbing of all this week: massive wine fraud in the Rhone Valley — life really does imitate The Simpsons…
Following our recent post on disclosures to the EPA, this week we’re going to look at disclosures to outside auditors, often in the context of internal investigations, and steps to take to limit any waiver of attorney work-product protection. Here we go . . .
Work-product protections are not automatically waived by disclosure to third parties. Rather, they are waived when such disclosures are to an adversary or increase the likelihood of disclosure to an adversary. As usual in the world of law, there is a split of authority over whether the disclosure of work-product to an independent auditor, such as a Big Four accounting firm, waives work-product protection.
Most courts have concluded that disclosures to outside auditors do not have the requisite adversarial relationship for waiver. See, e.g., SEC. v. Schroeder; In re JDS Uniphase Corp. Sec. Litig.; SEC v. Roberts; Merrill Lynch & Co. v. Allegheny Energy, Inc.
However, other courts have concluded that disclosures to outside auditors do amount to a waiver. See, e.g., Middlesex Ret. Sys. v. Quest Software, Inc.; Medinol, Ltd. v. Boston Scientific Corp.; Samuels v. Mitchell.
The only federal appellate court to have ruled on the question is the D.C. Circuit in United States v. Deloitte LLP, which concluded that work product protections are not waived by disclosure to independent auditors.
But relying on the “majority view” or one appellate court’s opinion is not a risk most people want to take. So to protect against the risk of waiving work-product protection, or if you’re in a minority jurisdiction, here are certain concrete steps that attorneys can take to help protect against waiver of the work-product doctrine:
- Ensure that disclosures made to the auditors are oral rather than written.
- Be aware that auditors’ notes concerning oral communications with counsel may be discoverable if there is a later determination that there has been a waiver.
- Request that the audit team confine their notes only to those facts that are essential to performing their audit function.
- Answer only those specific questions asked by the auditors.
- Do not volunteer to disclose work-product such as interview memoranda or any written report of the privileged investigation.
- Answer auditors’ questions by providing facts that have been gathered during the investigation, which are not privileged regardless of their form and thus would not constitute a waiver.
- Focus on the process underlying the investigation—the number of witnesses interviewed, length of those interviews, and the general thoroughness of the investigation—to assure auditors of the robust nature of the investigation or a client’s internal controls while minimizing the risk of waiving privilege.
- Discuss the auditors’ confidentiality obligations in advance of any oral report.
- If there is not already a confidentiality agreement in place, then one should be put in place.
- The confidentiality agreement should ensure that any information sent to the auditors is confidential and that the auditors will not further disclose that information.
- Specify that the confidential information is subject to work-product protection.
- Document the legal basis for the work-product protection when the work-product is transferred to the auditors.
- The agreement with the auditors should include a provision that if litigation arises and the auditor is subpoenaed,your in-house or outside counsel will review any auditor work papers that may contain privileged material before they are produced.
- Finally, ensure that other indicia of anticipated litigation, such as a litigation hold, are in place to strengthen the case that you both reasonably anticipate such a dispute and are taking steps to safeguard your information.
Finally, remember, even after all precautions have been taken, there is a limit to one’s control over events . . .
- Don’t mess with the Postal Service — mail thieves busted in Central Oregon
- Meanwhile, over in Eastern Washington, a grocery shop owner was allegedly engaging in food stamp fraud
- Here in Seattle, the owner of a chain of Mexican restaurants faces tax theft charges totaling $5.6 million
- In somewhat bigger news, the DOJ announced this morning that nine Iranians have been charged with conducting a massive cyber theft campaign
- Earlier this week the DOJ charged two Canadian brothers with running an “unlicensed money service business,” which laundered $250 million
- One of the conspirators in the massive foreclosure bid-rigging scheme in California was sentenced to 2 1/2 years in prison and ordered to pay a $1.4 million fine — somebody should’ve told all these guys there are rules …
Reza Olangian, the dual U.S.-Iran citizen arrested in Estonia in 2012 for trying to arrange the purchase of surface-to-air missiles with an undercover DEA agent, was sentenced to 25 years in prison.
- Some alleged passport fraud and identity theft out in Yakima
- And some alleged money laundering involving Iran up in Alaska
- “Massive” money laundering and drug network busted down in San Diego
- The former Navy intelligence chief caught up in the Fat Leonard scandal was found to have accepted extravagant meals, cigars and other illicit gifts but did not party with prostitutes
- Surprise! Check-the-box compliance programs are a waste of money — but the authors’ solution of “metrics” and “analytics” does not seem like the answer …
- A couple of local “co-schemers” were charged with credit card fraud — one allegedly favored QFC and Fred Meyer, the other was all about Bartell
- A Florida man was indicted in federal court in Boston for pretending to be an SEC employee and then demanding money from victim
- One of the two former aides to former Virgin Islands Delegate to Congress Stacey Plaskett who pleaded guilty to distributing explicit images and a video of Ms. Plaskett and her husband to stop her reelection was sentenced to a year in prison
- The mayor of Allentown, Pennsylvania resigned a week after being convicted on corruption charges
- The prime minister of Macedonia pleaded not guilty to taking a bribe when he was a local mayor in the southeast of the country five years ago
- And two former attorneys for Suge Knight were indicted for attempting to bribe potential witnesses in their former client’s upcoming murder trial