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Corporate Counsel Section Website › Newsletters › The Business Lawyer, July 2011 › FAQs Regarding Criminal Search Warrants

FAQs Regarding Criminal Search Warrants

Article Date: Monday, July 11, 2011

Written By: William Wagner

It is a general counsel’s worst nightmare-the 8:00 a.m. call from a plant manager saying there are 25 federal agents at the office with a search warrant seizing the company’s business records, taking employees aside to question them, and pulling samples from the plant’s holding tanks and wastewater discharge. Unlike financial fraud cases in which crimes are often investigated by agents trained in forensic accounting, environmental crimes are often investigated by agents with limited technical or scientific training. The agents may have no working knowledge of the science involved in the plant’s operations or the complex regulations and reporting requirements at issue. Instead, investigations arise based on the statements of a disgruntled employee, ex-employee, or competitor offering an insider’s tip that a violation occurred that threatens the public’s health. Investigating agents and prosecuting attorneys with token evidence of a possible crime may become caught up in the frenzy and seek a search warrant. This is especially true in Clean Water Act crimes, where prosecutors know the government’s burden of proof is the very low standard of negligence or the failure to exercise reasonable care. See 33 U.S.C. § 1319(c)(1).

For general counsel, the execution of a search warrant in an environmental enforcement case poses additional problems. It means hiring a criminal defense lawyer experienced in federal criminal investigations who may also need to learn the science behind the company’s operations and become educated on the environmental regulations and reporting requirements at issue. This work is necessary to enable the defense lawyer to prove to the government that no criminal conduct occurred or that warrants prosecution. Where samples have been taken, general counsel will also have to decide whether the company should take its own samples. On the one hand, the company will want to know what the government may have found. On the other hand, the company may have to disclose its results under the company’s regulatory reporting requirements. Unfortunately, search warrants are often followed by grand jury subpoenas requiring officers, employees, and staff to testify about the company’s operations and explain the documents seized. This is especially troublesome where the employees who have been asked to testify may not be the most qualified employees to testify about a particular subject or process, which may lead the investigators astray and prolong the investigation. Possible battle lines may also be drawn in parallel proceedings, including administrative and civil actions related to the same underlying conduct. Parallel proceedings offer additional layers of complexity in the handling of a criminal investigation in an environmental case but may open a door to insurance coverage to pay for the marshaling of evidence in defense of the administrative and civil actions.
Even at the end, when a prosecution is avoided, it can be very frustrating for general counsel to explain to senior management and the board of directors that the very public investigation ended on a whimper. Many investigations end after the defense lawyer conducts an internal investigation, meets with Assistant United States Attorneys and agents, and proves that either no violation occurred or that the conduct was protected by a permit shield or other valid defense or did not warrant criminal prosecution. General counsel is left with a hollow victory of having proved that no criminal conduct occurred, but at great expense and distraction to the company, its customers, and suppliers. For these reasons, businesses have to respond aggressively to the execution of a search warrant.

Because our clients’ businesses are often highly regulated and subject to various federal and state rules and regulations, our clients may find themselves subject to a search warrant for evidence in a criminal investigation of a third party or their own businesses. Below is list of frequently asked questions regarding criminal search warrants issued by federal courts and answers to those questions. These are questions commonly asked by management, in-house attorneys, and business lawyers who have not handled criminal defense matters. Procedures for responding to search warrants issued under state law may differ depending on the state.

What is a search warrant?
A search warrant is a court order authorizing law enforcement personnel to search designated persons, places, and things for specific evidence relating to a criminal investigation and to seize the evidence found. It is issued by a court when law enforcement provides a sworn allegation demonstrating probable cause of a crime. Search warrants are limited in scope as far as the places to be searched and the items to be seized. While some search warrants are broadly written, some are not. If the search warrant, for example, allows the inspection and seizure of “documents and records related to the recipient’s handling and management of its wastewater,” the agents executing the warrant would not be allowed to inspect and seize employee drug and alcohol testing records. It is important to read the entire search warrant and understand the permissible scope of the authorized search.
Should a regulated business adopt procedures in case a search warrant is served?

Yes. As an example, when special agents from the Federal Bureau of Investigation or the U.S. Environmental Protection Agency’s Criminal Enforcement Division execute a search warrant, they arrive armed and en masse, present the search warrant to the person at the front desk, and may have all the office or plant employees assembled in a conference or break room for the agents’ safety and to make sure no one deletes or destroys evidence. Employees may be scared or intimidated and will look for calm, direct guidance from management. A highly regulated business should have procedures in place to follow when a search warrant is executed against the business. The steps listed below can serve as a great foundation for your search warrant policy, although you may want to work with your lawyer to tailor it to your particular business needs.

What steps should the office manager or plant superintendent take when law enforcement personnel arrive to execute a search warrant?

1. Determine who is the lead agent conducting the search. Ask for the agent’s name, title, agency, phone number, and business card.

2. Obtain a copy of the search warrant and read it. Determine the scope of the search. What are the areas to be searched? What specific items are to be seized? Has the warrant been signed by a judge? Does it list the correct address?

3. Notify counsel. The office manager or plant supervisor should immediately contact in-house counsel or the company’s business lawyer and provide a copy of the search warrant. The business should retain a defense lawyer experienced in federal criminal investigations involving environmental crimes, if one has not been retained already. The defense lawyer will contact the Assistant U.S. Attorney (who obtained the warrant) to discuss the scope and goals of the search. The defense lawyer or company’s lawyer may be able to negotiate what gets seized, ensure that privileged materials remain segregated and properly marked, obtain copies of key documents and equipment (computers) necessary for the business to continue to operate, limit or document the search, and limit or document the agents’ interviews of employees.

4. Do not interfere with the search. The search warrant is a court order that must be obeyed. The lawfulness of the search and the admissibility of the items seized will be left for later legal proceedings. At the same time, there is no need to aid agents in their search. However, it is often more expedient to identify some key employees to explain where certain records are kept to avoid disruption and allow other employees to leave the area or be sent home.

5. Instruct the agents that they are not to interview employees. The agents arrive en masse not only to search and seize records but also to interview employees. Usually no fewer than two, and maybe three, agents will approach individual employees and begin to ask them questions in connection with the search and criminal investigation. Management should advise the lead agent that the company’s lawyer or defense lawyer represents the company and its employees and that they should not interview employees without counsel being present. If the agents refuse to delay the interviews, make a record noting the request. Whether the information obtained from these interviews is admissible will be the subject of later legal proceedings.

Sometimes the agents may argue that the lawyer cannot represent the company and its employees because there may be a conflict of interest in the lawyer’s representation. Because of the potential conflict of interest, there may be a need to retain separate lawyers for the employees. If the agents refuse to delay employee interviews, the company’s defense lawyer (or usually a team of lawyers) will nevertheless sit in on the interviews of employees. Having lawyers sit in on the interviews is not an attempt to impede the investigation but to make sure the questions and answers are properly recorded and to understand the scope of the investigation by the questions asked. Ideally, the defense lawyer will delay the interviews until after the business has conducted an internal investigation into the reason for the search. If the business suspects an impending investigation, it should retain a lawyer experienced in federal criminal investigations to represent the company and find counsel as necessary to represent the employees or specific targets of the investigation to preempt interviews without representation.

6. Advise employees that the agents may ask them questions. Because of potential conflicts of interest, employees may need their own counsel. Management may decide to provide the employees with counsel paid for by the company. In those instances, management will want to delay government interviews of employees. If the agents refuse to delay employee interviews, management should advise the employees that it is their choice to speak to the agents, that they are not required to do so, and that they may want to speak with a lawyer before answering any questions because their answers can be used against them. Experienced agents may, nevertheless, try to bait employees into answering questions without the employees knowing the full scope of the investigation or what other employees or third parties may have already told the agents. Such interviews are fraught with danger. The results of such interviews have occasionally led to perjury charges against the employee for lying to a federal agent conducting a criminal investigation, even in the absence of a criminal prosecution against the business or a third party.

7. Protect privileged information. If the agents attempt to seize privileged information (such as attorney-client communications or confidential business information consisting of trade secrets) that you believe is outside the scope of the warrant, notify the agent and your lawyer. Ask that privileged material be segregated and marked “privileged.” The agents may have a “taint team” or “privilege prosecutor” available to make sure access to confidential material is limited and appropriate safeguards are followed.

8. Ask for copies of key documents. As the agents seize documents, ask for copies of key documents needed to run the day-to-day operations of the business. If the agents refuse, record the request and response in detail.

9. Document the search. To the extent allowed, make a record of the search, the items seized, and the interviews of employees if they consent to be interviewed. The agents will take notes of their interviews and later prepare a summary of the questions asked and answers given. It is important to have defense lawyers sit in on the interviews because sometimes the summaries take answers out of context or simply do not track the answers given. The business may want to consider carefully whether it records the search and interviews by video or audio recordings. Recorded employee statements may have to be disclosed in a civil lawsuit brought by competitors, for example, unlike defense lawyer notes, which may be protected by the attorney work product privilege or other protections.

10. Obtain a copy of the agents’ inventory of seized items. Ask for a copy before the agents leave, but don’t sign anything verifying the contents or accuracy of the inventory.

What steps should the company take immediately after a search warrant is executed?
1. If you haven’t done so yet, retain a lawyer experienced in defending federal criminal investigations. Law enforcement could have requested the evidence seized by serving the business a grand jury subpoena. Instead, law enforcement believed both that there was urgency to gathering the evidence and that the evidence may have been destroyed or manipulated had advance notice been given. Often, execution of a search warrant is the first step in a criminal prosecution. Grand jury subpoenas for officers and employees usually follow, as do very broad grand jury subpoenas for additional documents. It is important to have experienced defense lawyers advising the business early in the process to begin catching up to the government’s investigation and working on defenses.

2. Advise employees that if they need counsel, the company and its lawyers will find counsel for them and possibly pay for separate counsel as appropriate. Owners of private companies often bristle at this suggestion until they realize the importance of having defense counsel working on the same page and subject to joint defense agreements.

3. Appoint an on-site primary contact person and backup contact person to address media inquiries and questions from customers, suppliers, and employees. Having a designated official to discuss issues ensures that a consistent and correct message is presented, which is less likely to be misconstrued by criminal investigators and prosecutors.

4. Ask employees not to discuss the search, the items seized, or the events with the press or other employees. You don’t want employees being accused of intimidating witnesses or colluding in response to the investigation. You also will want to admonish the employees that only designated officials may speak for the company.

5. Prepare a list of the items seized that you absolutely need to operate your business. Counsel can often negotiate with the U.S. Attorney’s Office or the agents to obtain copies of the materials seized. For example, agents often make mirror images of computer hard drives, leaving the computers. If the agents take the computers, defense counsel can often negotiate their return.

6. Conduct an internal investigation to determine the bases for the search and to limit or avoid a criminal prosecution of the company. Your defense lawyers will interview all relevant personnel individually to determine the goals of the search, the questions asked by the agents and answers given, what files and employees the agents were interested in, any statements made by the agents suggesting that other offices or companies were searched, and any statements about particular employees, officers, or company procedures. They will determine whether any personnel were contacted by agents before the search. Defense lawyers may also retain experts, such as an expert to conduct sampling and analysis of any items or discharges sampled by the agents, and experts in financial auditing and computer forensics. The defense lawyers may also be able to obtain a copy of the affidavit submitted in support of the search, unless it remains under seal by the court. The affidavit often sheds light on the scope of the criminal investigation.

7. Be prepared to release a short statement if contacted by the media. It is not unusual for news media to arrive on site at the same time that a search warrant is being executed. Management may want a short prepared statement to be released to the media, if asked, that simply confirms that a search took place and the business is cooperating in the investigation. A response of “no comment” will often be misconstrued as an admission of guilt.

What should we tell employees about their rights if they are contacted away from work by agents requesting interviews?
Agents often try to interview employees when and where they least expect it, such as at their home at 9:00 at night with family present or at their favorite restaurant, bar, or gym. Once an investigation has taken place or is suspected, employees need to know their rights and obligations.

Employees should be advised that they have the following rights:
• to ask to see the agents’ credentials and to ask for business cards so that the employee can remember their names and offices at a later date if necessary

• to ask the agents what the investigation is about and their status with regard to the investigation- is employee a target of the investigation or simply a witness? (Promises for leniency in exchange for cooperation are seldom binding on the prosecution.)

• to have a lawyer present during the interview

• to decline to be interviewed

• to be interviewed at a place and time convenient for the employee

• to stop an interview after it has begun

• to not be intimidated (as to themselves or others), especially by questions such as “If you didn’t do anything wrong, why not answer my question?”

• to tell anyone, including management or the company’s attorney, about the request to be interviewed or about the interview itself

Employees should also be advised that they have the following responsibilities if they consent to be interviewed:

• to tell the truth

• to decline to answer any question that seeks the disclosure of confidential or proprietary information or documents belonging to the company. If the employee is asked any question that seeks to breach the rules of confidentiality, the employee should decline to answer and immediately notify management, the company’s counsel, or the defense lawyer

• In closing, these are only summary responses to frequently asked questions about search warrants issued by federal courts. Management, in-house attorneys, and business lawyers who have not handled criminal defense matters should speak with a lawyer experienced in federal criminal investigations to discuss specific questions or a specific situation. n

Bill Wagner is a partner at Taft Stettinius & Hollister and focuses his practice on environmental law and complex business litigation. He regularly speaks and writes for industry groups, clients and continuing education. Reach him at wwagner@taftlaw.com or 317-713-3614.

This article originally appeared in The Environmental Litigator, Volume 22, Number 2, Winter 2011, as published by the American Bar Association and is reprinted here with permission.

Views and opinions expressed in articles published herein are the authors' only and are not to be attributed to this newsletter, the section, or the NCBA unless expressly stated. Authors are responsible for the accuracy of all citations and quotations.