Resolving Criminal Investigations Prior to Indictment

The authors present a hypothetical in which a corporation has been served with a federal grand jury subpoena seeking documents and emails relating to the possible submission of false claims to the Government.

As Arthur Andersen L.L.P. discovered, a conviction can be a corporate death sentence. However, since Andersen’s demise, the DOJ’s attitude toward criminal prosecutions of business organizations has changed. The Department is often willing to forego pursuing a conviction, provided certain conditions are met.

To avoid indictment, the company must persuade DOJ: (1) that it is innocent, or (2) that even if it is not innocent, a criminal prosecution would be unwise because of the consequences for innocent employees and shareholders, or because of other special circumstances, or (3) that it should be permitted to resolve the matter with a Non-Prosecution Agreement (NPA) or Deferred Prosecution Agreement (DPA) with the Department.

This pre-indictment exercise is like an informal trial in which the company bears the burden of persuasion, has no rights and DOJ attorneys serve as judge and jury. The company must cooperate with the government’s investigation, conduct its own investigation quickly, assess the facts realistically and maintain its credibility throughout the process. If wrongdoing occurred, the company must implement measures to prevent a recurrence.

The authors provide a summary of how to proceed. They advise quick action to determine whether a violation has occurred, and if it has, that the company conform to as many factors that disincline toward prosecution as possible.