How In-House Counsel Should Respond to White-Collar Crimes Allegations

The Department of Justice (DOJ) is shifting FBI resources away from traditional white-collar crimes, but it is important to remember that local and state enforcement agencies will continue to investigate and prosecute these cases. That is why it is critical for in-house legal departments to be fully prepared to deal with situations in which their corporate employees have been accused of misconduct. These cases often involve conflicts of interest, confidentiality and information sharing, internal investigations, Upjohn warnings to employees, bribery and fraud, joint defense agreements, reputational damage, and other issues.

Let’s examine some of the top priorities in these cases.

Identify potential conflicts

When a corporate executive is accused of a crime, the legal department must first decide whether that person’s interests conflict with that of the company. Is the company supporting the executive by paying their legal fees and sharing information while also cooperating with investigators? Or is the company distancing itself, removing the executive and treating them as the wrongdoer?

If your company has already conducted an internal investigation and determined the executive was at fault, that decision will shape what you do next. As outlined below, your next steps depend on the answers to these key questions.

Before Elizabeth Holmes, founder and former CEO of blood testing company Theranos, was sentenced to 11 years in federal prison in 2022 for defrauding investors of hundreds of millions of dollars, the company did not appear to have an active role in her legal defense. Instead, Theranos focused on defending its technology.  The company’s decision not to actively defend Holmes indicated a lack of confidence in her innocence and defense strategy. It showed a desire to avoid harming the company’s potential legal strategy and to focus on minimizing reputational damage.

On the other hand, Sam Bankman-Fried, founder of the FTX cryptocurrency exchange and cryptocurrency trading firm Alameda Research, was sentenced to 25 years in federal prison for money laundering and defrauding investors and lenders of more than $1.7 billion. Many former FTX executives turned against Bankman-Fried and cooperated with the prosecution. His legal team claimed the FTX restructuring team acted as a “public mouthpiece for the government.”

Conduct internal investigations

When allegations of wrongdoing arise, initiating an internal investigation is often not just prudent, it may be legally required. Statutes such as the Anti-Kickback Enforcement Act of 1986, the Medicare Fraud Reporting Act, and federal banking regulations mandate internal reviews under certain circumstances. Beyond legal compliance, an internal investigation can help a company avoid civil penalties, reduce the risk of criminal charges, manage regulatory exposure, and maintain control of a situation before it spirals.

Publicly announcing an internal investigation can also serve strategic goals: it signals to regulators, investors, and employees (including potential whistleblowers) that the company is taking the issue seriously and acting in good faith.

Internal investigations typically focus on two areas: reviewing relevant documents and interviewing employees. If an investigation is already underway, determine the following:

• Who was interviewed and when
• What information was uncovered, and how
• What was said during the investigation
• Whether the interviewing attorney gave an Upjohn warning
• Whom the company’s counsel represents
• Whether any findings have been disclosed to the government

With this information in hand, your legal team can develop a strategy that includes voluntary disclosure of relevant, non-privileged facts to earn potential cooperation credit from the DOJ. This can help avoid criminal charges.

In parallel, work to design or strengthen a compliance program. A credible, well-implemented compliance plan can reduce the likelihood of the DOJ imposing a corporate monitor. This expensive and potentially disruptive outcome can extend far beyond the original scope of the investigation.

Finally, ensure company officers and employees are available for follow-up interviews as needed. Identify the root causes of the misconduct and implement corrective measures to reduce future risk and demonstrate a proactive, accountable approach to compliance.

Other Considerations

Early in the representation, assess whether the company’s insurance will cover the executive’s legal fees and under what circumstances that support might be withdrawn. Clarify potential conflicts and anticipate financial and strategic implications if the company chooses to sever ties.

If the company and the executive share aligned interests, consider proposing a joint defense agreement. This allows for coordinated strategy and the protected exchange of confidential information, even before any formal charges are filed.

In high-profile matters, media scrutiny can distort the narrative, harm reputations, and jeopardize the company’s reputation. Engage a public relations professional under counsel’s direction to ensure messaging supports legal objectives and mitigates reputational harm.

The DOJ’s focus may be shifting, but enforcement of white-collar crimes remains a priority. At the same time, new areas such as immigration-related offenses and transnational violations are gaining attention, and state and local prosecutors are increasingly stepping in where federal enforcement may pause. As this landscape evolves, early awareness and strategic action are critical. Legal departments should be prepared to respond swiftly and thoughtfully to protect their organization’s interests and reduce risk.