Under Investigation Part I

UNDER INVESTIGATION PART I: HOW IS THE GOVERNMENT INVESTIGATING ME OR MY BUSINESS?

In this Article which is Part I in the “Under Investigation” series, we will discuss some of the investigative tools which are available to the government in the course of a criminal (or civil) investigation targeting businesses operating in regulated industries such as health care, securities, banking, mining, transportation, logistics, insurance, aviation, and telecommunications.

Subpoenas and Other Things Demanding Documents and Appearances

The Government can send subpoenas to the financial institution where the company under investigation maintains business and/or personal accounts demanding that those institutions produce financial account information. They can send subpoenas to the company under investigation demanding production of documents or they can send the subpoena to a specific person demanding that she testify before a grand jury. Frequently though, the recipient of that subpoena can produce the requested documents by a specific date to avoid having to appear for testimony.

In anti-trust, consumer protection (banking), and health care fraud investigations, the Government can also send something called a civil investigative demand requiring a company or a person to produce documents, submit sworn answers to written questions, or in some cases, appear for testimony before a federal prosecutor.

In investigations related to violations of federal tax laws, the IRS frequently uses summonses demanding the production and/or appearance of the taxpayer. Sometimes those summonses will be issued by a special agent or “IRS-CI” and demand an appearance before that special agent to answer questions about specific tax years and/or tax returns. That is an unequivocal “tip off” that the investigation is criminal.

In investigations related to violations of federal securities laws, the SEC may send a subpoena to produce documents and/or appear for sworn testimony based on a formal order of investigation authorizing SEC enforcement attorneys to demand production of documents and testimony.

“Interviews”

Beyond these written demands for paper or people, the Government conducts “interviews” with employees, former employees, competitors, etc. Anyone approached by a government agent for an “interview” should politely decline the interview until they have had an opportunity to talk to an experienced government investigations attorney. Interviewers are trained, highly educated, and generally familiar with the particular industry they are investigating. Diving right into an interview without counsel – even if you have nothing to hide or have gained a reputation for being persuasive – is, at best, a very bad choice, and, at worst, the equivalent of gift-wrapping a roadmap to an indictment.

Informants

The Government can also embed an informant, whistle-blower, or “cooperator” at your business to unearth information they believe will corroborate their theory of what happened and who did what and when. The informant will likely be wired with audio and video recording equipment and has the ability to record what people are doing or saying in real time. The informant can also work for law enforcement at a distance by making controlled calls or emails or communicating via text message. All of these surreptitious investigative techniques are designed for one purpose: to gather more possible evidence of guilt.

The informant might also do things he should not do. He might go “rogue” and begin his own investigation and have a momentary identity crises believing that he is 007 on a top secret mission. Or, he might attempt to actively upload or download proprietary information from company servers without the company’s authorization or consent.

Data Mining

Data mining is a commonly used investigative tool in health care fraud investigations. Indeed, very recently, Attorney General Jeff Sessions announced that a new, specialized Opioid Fraud Unit would rely heavily on data mining to detect and prosecute fraud. Further, both specialized investigative units (SIUs) working for private health care plans and private government contractors known as Zone Program Integrity Contractors (ZPICs) responsible for auditing specific Medicare providers, depending on their geographic region, rely on and employ data mining to investigate health care fraud and abuse.

Search Warrants

The Government can also apply for and obtain search warrants which give government agents the authority to enter a business and search for documents, computers, hard drives, cell phones, thumb-drives, and any other electronic data or communications within the scope of the search warrant. Search warrants should be more of a last resort for the agency responsible for the investigation but they are increasingly common tools employed by law enforcement in investigations involving highly regulated industries and they are nerve-wrecking. It is important that employees know their rights prior to any search. Government agents are on the premises to conduct a search and to “interview” people. But, the warrant only authorizes a search, not a full blown interrogation. So while being cooperative might expedite a search. Cooperation should never include volunteering for an interview without an experienced government investigations lawyer at your side.

Given these seemingly unlimited resources, it is incumbent upon professionals and employees operating in regulated industries to consult with an experienced government investigations attorney when they are confronted with a government investigation.