John Roberts and Elena Kagan
John Roberts and Elena Kagan

You’re relieved. After a long investigation concerning some troubling conduct throughout the Pacific Northwest that may have led to the United States being defrauded by one of its contractors, you’ve brought this stressful period to a close. You’ve entered a Non-Prosecution Agreement with the U.S. Attorney’s Office for the Western District of Washington. Perhaps the agreement even includes a civil settlement as well, resolving several parallel investigations.

But not two weeks later, an Assistant U.S. Attorney (“AUSA”) for the District of Oregon informs you that you’re the target of a criminal probe concerning the exact same conduct. How is this possible? As unfair as it seems, it has long been the position of federal agencies and DOJ components that other DOJ components are not bound by an agreement unless the agreement provides as much.

Consider the case of Prime Partners, a Swiss asset management firm accused of aiding U.S. taxpayers in New York and elsewhere of evading their federal income taxes. In August, the U.S. Attorney’s Office for the Southern District of New York entered a Non-Prosecution Agreement with Prime Partners in exchange for extraordinary cooperation with the Office’s investigation and the firm’s institution of substantial changes to its practices. The agreement states:

It is further understood that this Agreement does not bind any other federal, state, or local prosecuting authorities other than this Office and the [DOJ] Tax Division. If requested by Prime Partners, this Office and the Tax Division will, however, bring the cooperation of Prime Partners to the attention of such other prosecuting offices or regulatory agencies.

Parties caught up in such a situation should consider a few things:

  • Beware of the kind of limiting language in the Prime Partners agreement, which is common in government settlements.
  • Insist on language in any plea or other settlement agreement that to the effect that it binds other federal agencies, or at least all other components of the Department of Justice.
  • If you find yourself caught up in the kind of bind I describe at the beginning, consider an appellate challenge.

Continue Reading *Absolutely Startling*: Settlements With the Government

Department of JusticeHypothetical Bad News. You or your company has been served with a civil investigative demand requiring you to produce documents and answer questions from the government. The Department of Justice (DOJ) is investigating you for suspected violations of the False Claims Act, or perhaps for participating in a price-fixing conspiracy in violation of the antitrust laws. The investigation could drag on for years and—if you’re found liable—you may be on the hook for millions of dollars.

Hypothetical Worse News. Government agents have also inspected your premises pursuant to a search warrant, and you learn that associates of yours have been subpoenaed to testify before a grand jury. You are the target—or at least the subject—of a criminal investigation. For a company, a criminal conviction and associated fines could be devastating. For an individual, it could result in the loss of your liberty.

To provide a more concrete example, there have been dozens of administrative and criminal proceedings over the last few years that grew out of a massive public corruption scandal involving the bribing of dozens of Navy officials in exchange for participating in or turning a blind eye to baseless bills from an overseas defense contractor. Many participants have been criminally prosecuted, but the criminal investigation (which remains ongoing) has also coincided with administrative enforcement actions that resulted in the debarment of numerous contractors, permanently preventing them from doing business with the government.

More and more, government officials and agencies bring to bear all of the enforcement tools—civil, criminal, and administrative—in parallel investigations and proceedings to put a stop to unlawful conduct.  If you’re the target of parallel investigations, you and your lawyer will need to be mindful about the different discovery tools available to the government, the risks of compromising your rights in one investigation through your response to another, and the need for a global settlement with the government.

All of that could fill a treatise, so I won’t try to cover it here.  Instead, I’ll cover:

  • A brief overview of the DOJ’s approach to parallel investigations and proceedings (they’re favored).
  • Your chances of halting either a civil or administrative proceeding pending resolution of the criminal case (spoiler alert: not great).
  • The importance of thinking strategically at every stage of your response—not just about the individual request or process you’re responding to—but also about how it affects the other investigations (it’s really important).

Continue Reading A Quick Look at Parallel Proceedings