Unexpected Visitors
The startling law enforcement actions taken against the world-renowned Gibson Guitar Corp. over the past two years should provide clear warning for every American company—without notice, your company suddenly can become the target of a federal search warrant executed by armed federal agents with authority to seize property, documents, computer equipment, and more, while also attempting to conduct un-counseled interviews of key company employees. In view of the significant risks that such actions could pose for a company and its employees, companies should develop a comprehensive guidance policy for contact with law enforcement officials as an element of their overall risk management and corporate compliance programs.
Gibson Guitar may seem an implausible focus of federal law enforcement interest, but, in November 2009 and again in August 2011, law enforcement agents with the U.S. Fish and Wildlife Service executed federal search warrants on Gibson Guitar factories and the premises of several of its suppliers in Nashville. On both occasions, the agents seized physical and documentary evidence, along with shipments of exotic wood that allegedly had been imported in violation of the Lacey Act, an endangered species law that was amended in 2008 to include plants as well as animals. Following the execution of the search warrants, the U.S. Attorney's Office for the Middle District of Tennessee filed two civil actions seeking forfeiture of the seized pallets of exotic wood. Recently, however, based in part upon its review of the seized documentary evidence, the government escalated its enforcement response and has sought to stay the civil forfeiture actions pending conclusion of a related criminal investigation of Lacey Act offenses involving the same shipments of wood.
Preparation Is Key
Although a robust corporate compliance program is a critical component of an overall risk management strategy, it cannot guarantee that the company will not someday become a target of law enforcement interest. As with any other risk scenario, the keys to successful management of an encounter with criminal investigators are advance planning and training. For this reason, a tailored guidance document should be developed for each component of the company's business operations to provide clear direction to senior managers regarding their potential interaction with law enforcement authorities, to ensure swift notification of senior corporate officials and prompt consultation with legal counsel, and to minimize potential collateral damage from the encounter.
The development of a guidance document for such encounters requires a careful balancing of the overall corporate compliance program with the significant legal rights and privileges of the company and its employees that are implicated when criminal investigations are initiated. One complicating factor is that the interests of the company and those of its individual employees may not always be entirely congruent in these situations. Failure to strike the correct balance between cooperation and the protection of legal rights and privileges can quickly multiply the potential criminal exposure of both the company and its employees.
Because guidance for this type of risk will necessarily involve legal advice, distribution of the guidance document should be restricted to key management personnel, and targeted training should be conducted periodically with those managers to ensure they are conversant with the plan and are prepared to execute it reliably, in the event that law enforcement authorities knock on the door. More generalized training for non-supervisory employees also may be advisable.
Essential Elements of Criminal Investigation Guidance Document
The specifics of a company's guidance document for handling these encounters will depend on a range of variables, including the character of the company's business operations and its organizational structure, the role of the company's General Counsel and the resources available to in-house counsel, the degree of media interest that likely would be generated, and the nature of the regulatory agencies that have an oversight role with respect to the company's financial and/or business operations. Although the details will necessarily vary, the following are fundamental elements that should be incorporated into any guidance document on this topic:
- The company's general policy is to cooperate with criminal investigations, but the company's legal counsel must be notified of any investigation and consulted prior to any business office or facility voluntarily agreeing to a search or the interview of company employees on company property.
- As a general rule, criminal investigators are not allowed to
enter a business office or a facility, unless: (1) they
have a search warrant or an arrest warrant; or (2) you grant them
permission.
- The exceptions to this general rule are: (1) if the investigators are in "hot pursuit" of someone they reasonably believe committed a crime; (2) if the investigators reasonably believe a crime is being committed, they may enter the premises solely for the purpose of stopping the criminal conduct; and (3) to prevent the destruction of evidence.
- An employee is not obligated to speak with criminal investigators, though an employee may speak with the investigators if he or she desires. An employee has the right to consult with legal counsel and to have counsel present, in the event the employee decides to speak with the investigators.
- This guidance document concerns interaction with criminal
investigators and does not apply to contact with the federal,
state, or local regulators who may routinely inspect corporate
records or a facility in connection with non-criminal,
administrative matters.
- What To Do: If a criminal investigator enters an
office or a facility, or asks permission to do so, the following
steps should be taken:
- Immediately notify a supervisor or senior management official.
- Ask the investigators who they are and request to see identification. Obtain business cards, if possible.
- Ask the investigators why they are there.
- If the investigators indicate that they are there for a criminal investigation, ask them whether they have a search warrant or an arrest warrant.
- If the investigators have a warrant, ask to see a copy and review it carefully.
- If the investigators have a search warrant, the office or facility manager should assign an employee to accompany each investigator or group of investigators and monitor their conduct. The investigating agents may well prohibit this but, if they do not, the assigned employee should take detailed notes of the agents' activities without offering assistance or volunteering information.
- If the investigators take samples of any materials, a company representative should request that they provide split samples to the company.
- To the extent possible, provide real-time information regarding the progress of the search to senior corporate officials and/or to counsel.
- At the end of the search, obtain from the investigators a copy
of the search warrant and an itemized receipt for all of the pieces
of evidence seized.
- If the criminal investigators do not have an arrest warrant or
search warrant, explain to them that the company's policy is to
be cooperative with investigators, but that the policy is, in the
event of a criminal inquiry, to contact legal counsel
before agreeing to a search. Advise the
investigators that you will need to contact legal counsel and
corporate management before permitting the premises to be
searched.
- What Not To Do: The following actions are
strictly prohibited:
- Do not tell any employee that they may not speak with the investigators, or otherwise render any employee unavailable to the investigators. Although employees may be advised that they need not speak with the criminal investigators and have the right to consult with counsel, they also should be advised that they may speak with the investigators if they desire.
- Do not attempt to interfere with or obstruct the investigators in any way, even if they decide to conduct a search or arrest someone without a warrant or without your permission.
- Do not attempt to alter, conceal, or destroy any documents, electronic data, or other physical evidence.
Conclusion
Fire drills of course do not prevent fires, and no amount of advance planning can ensure that your company will not be visited by criminal investigators. In view of this risk, no company should be in the position of attempting to decide how to respond to criminal investigators after they knock on the company's door. The development of a clear corporate guidance document to address these issues and periodic training for key management personnel can help to limit the negative fallout from unexpected visitors and position your company to respond effectively to the initiation of a criminal investigation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
