Prison Professors

Companies primarily adopt compliance programs because they recognize the need to mitigate risk. Leaders want to get the end result of a safer workplace with less legal exposure. Merely adopting a compliance program, however, without comprehensive implementation, may not yield the return on investment that a leader wants.

On any given day, we can turn to the Department of Justice website to read press releases of criminal indictments for white collar crime. Many of the defendants in those cases began without any intention to break laws. Yet a lack of a clearly defined business model, or well-engineered compliance system, put those people into the cross hairs of a government investigation. High legal costs and criminal proceedings followed.

All businesses stand vulnerable to the dangers of a government investigation. For these reasons, leaders should take steps to minimize their exposure. That means they should put plans in place to show a commitment to transparency, compliance, and good corporate citizenship.

Our team at Compliance Mitigation has identified 10 reasons that compliance programs may fail in businesses:

1. A Failure to Appreciate Risk

Leader should begin with an honest assessment of the risks the company may face. To get the right answers, they may ask Socratic questions. Rather than starting from the perspective of the company leader, questions should come from the mindset of an investigator. Those people will be cynical. If company leaders do not anticipate such questions, they may fail to appreciate their exposure to risk.

Company leaders frequently strive to:

• Provide products or services to satisfy customer needs,
• Create jobs and paychecks for employees,
• Contribute to the building of stronger, more vibrant communities, and
• Earn an acceptable return on investment for shareholders.

A company may not have the luxury of hiring an entire team or department to contemplate risk exposure. Yet if they do not understand the risk, they may not see value in a compliance program. If leaders do not see how a compliance program can strengthen the overall health of the organization, they may undermine its effectiveness. Without a good compliance program, the company and its team leaders may face harsher scrutiny from regulators and investigators. For these reasons, proper training should highlight failures and the accompanying costs of a bad compliance program.

1. Lack of Leadership Buy-In

When it comes to compliance, leaders should recognize that the company's commitment to ethics starts at the top. If leaders do not embrace the principles of good conduct, team members will not take compliance seriously.

Compliance programs that send mixed or inconsistent messaging leave the company vulnerable to liability. That liability can include exposure to internal fraud, lawsuits from customers, investigations by government regulators or law enforcement.

Good training should profile examples of the fallout that has come from such failures in compliance.

1. A Paucity of Resources Devoted to Compliance:

Failing to devote financial resources to support compliance training exposes a company to more risk. If an investigation begins, and the company cannot show a deliberate, consistent investment in the pursuit of excellence, authorities will be less likely to see the business or its leaders as good actors. On the contrary, investigators may accuse the business and the responsible parties of operating from a state of "willful blindness," a term we heard a lot about while our team members were in prison.

Compliance training does not have to be a drain on the company's resources. In fact, when leaders design compliance programs to demonstrate a commitment to transparency, they may be simultaneously investing in corporate messaging. That better messaging can lead to better efficiencies, helping every team member get a full grasp of how the company operates and achieves excellence.

With such a commitment, every team member may work collaboratively, in accordance with corporate goals. When leaders view compliance as an essential part of the corporate mission, they devote the appropriate resources. Those resources may advance corporate success, while simultaneously mitigating risks.

1. Demoralizing Compliance Departments

When company leaders view compliance programs as being wasteful expenses, team members won't take the program seriously. Unfortunately, if anything should ever happen that brings the company to the attention of government investigators, leaders should expect to pay a heavy price.

Clearly, a company succeeds by devoting resources to sales teams, marketing teams, and operational teams that build thriving businesses. Yet leaders should model themselves after athletic coaches that require players to train on fundamentals. Coaches invest in defense and offense, not just offense. Likewise, business leaders should invest in defensive measures that will protect all team members.

If a government investigation begins, the value of an effective compliance program will become readily apparent. On the other hand, a demoralized or feeble compliance program will only hurt the organization. Government attorneys will use flawed policies as evidence of the company's devotion to willful blindness.

Indeed, the Harvard Business Review published an article describing how the Department of Justice tasks prosecutors "to determine whether a corporation's compliance programs is merely a 'paper program' or whether it was designed, implemented, reviewed, and revised, as appropriate, in an effective manner."

• https://hbr.org/2018/03/why-compliance-programs-fail

1. The Policies Lack Clear Instruction and do not Relate to the Business

A good compliance training program engages team members. If leaders do not supplement off-the-shelf compliance programs with additional instruction that teach or inspire team members, they miss an opportunity.

Neither boilerplate language, nor dense legal jargon, will help. An option would include supplementing training exercises with human case studies. Leaders may profile the story of a person convicted of a white-collar crime. Task participants with identifying what went wrong. Perhaps encourage them to come up with strategies that may have lessened the risk. Use the feedback as a resource to strengthen corporate processes and procedures. Another option would be to create cloud-based, on-demand video training that encourages the development of critical-thinking skills.

1. Misplaced Incentives

A company can doom a compliance program by failing to align compensation with good corporate behavior. If a company incentivizes people to get sales by any means necessary, they may simultaneously create a culture of non-compliance. Many people serve prison sentences for violating laws related to:

• Foreign Corrupt Practices Act
• Sherman Antitrust Laws
• Money Laundering
• Identity Theft
• Bribery
• Mail Fraud
• Wire Fraud
• Honest Services Fraud
• Securities Fraud

While in prison, many of those people complain that they only did what their companies wanted them to do. The employees lost, and in many cases, the companies lost as well—paying enormous financial penalties. Good compliance programs will incentivize excellence in every area, providing training that shows a commitment to good corporate citizenship.

1. Inadequate Communication and Training

Corporate leadership requires clear and consistent messaging that shows how leaders define excellence. Leaders that do not communicate the company's commitment to integrity give license for other people to violate rules. The training should show that the company places a high value on excellence—and placing a high value on excellence means training for excellence in communications, from the top down.

The communication channels should flow both ways. People at every level in the organization should have an opportunity to ask questions or express concerns. If an employee sees something wrong, the person should have some mechanism to speak up without fear of retaliation. Without that two-way communications and training, the company may weaken a compliance program.

1. Outsourced Noncompliance

A company cannot escape punishment from law enforcement, or escape liability from regulators, by outsourcing noncompliance. Both the Department of Justice and regulatory agencies have launched government investigations that punished entities for contracting with outside contractors or third parties that facilitate illegal behavior. Further, when leaders look for plausible deniability by using the "it's-not-my-fault" defense, they expose themselves to accusations of being willfully blind to illegal or corrupt behavior. Bad and inconsistent messaging threatens the entire the organization.

1. Failing to Monitor or Audit Compliance

If the company doesn't show a commitment to maintaining compliance, the team members will ignore the training. They may do what is necessary to pass an internal quiz on what they have learned. As soon as they leave the training session, however, many of those people go about business in a manner that shows a total disregard for what the compliance program ostensibly teaches.

In contrast, a company with a true commitment to compliance will show team members how the company's leadership invests heavily in corporate excellence. Besides ongoing training, they may show a commitment to monitoring by sponsoring a private "hotline" that encourages people to report noncompliance. They may conduct internal audits or perform phantom calls to see how people will respond. Then, the company may announce its findings regularly.

When team members understand that the business's leaders monitor and audit compliance, people will show more commitment to operating in harmony with what they've learned through compliance training.

1. Inconsistent Enforcement and Discipline

If a company is harsh on low-level employees, but it allows rainmakers or leaders to get away with noncompliance, the compliance program will fail as a resource to protect against government investigations. As the above-quoted Harvard Business Review article noted, prosecutors will deal harshly with companies that do not treat the compliance program as an integral part of the organization

To grant a non-prosecution agreement, prosecutors will assess the company's policies—including records the company keeps on disciplinary or corrective measures for noncompliance.

The following 20-page report that the Department of Justice published will help leaders grasp the "critical factors" prosecutors will use when assessing "the comprehensiveness of the compliance programs."

https://www.justice.gov/criminal-fraud/page/file/937501/download

That document shows a compliance program should provide a clear message that leadership will not tolerate misconduct. The program cannot succeed if prosecutors determine that policies do not apply to people in senior leadership positions. According to the document:

"The company's top leaders set the tone for the rest of the company. Prosecutors should examine the extent to which senior management have clearly articulated the company's ethical standards, conveyed and disseminated them in clear and unambiguous terms, and demonstrated rigorous adherence by example. Prosecutors should also examine how middle management, in turn, have reinforced those standards and encouraged employees to abide by them."

Companies primarily adopt compliance programs because they recognize the need to mitigate risk. Leaders want to get the end result of a safer workplace with less legal exposure. Merely adopting a compliance program, however, without comprehensive implementation, may not yield the return on investment that a leader wants.

On any given day, we can turn to the Department of Justice website to read press releases of criminal indictments for white collar crime. Many of the defendants in those cases began without any intention to break laws. Yet a lack of a clearly defined business model, or well-engineered compliance system, put those people into the cross hairs of a government investigation. High legal costs and criminal proceedings followed.

All businesses stand vulnerable to the dangers of a government investigation. For these reasons, leaders should take steps to minimize their exposure. That means they should put plans in place to show a commitment to transparency, compliance, and good corporate citizenship.

Our team at Compliance Mitigation has identified 10 reasons that compliance programs may fail in businesses:

1. A Failure to Appreciate Risk

Leader should begin with an honest assessment of the risks the company may face. To get the right answers, they may ask Socratic questions. Rather than starting from the perspective of the company leader, questions should come from the mindset of an investigator. Those people will be cynical. If company leaders do not anticipate such questions, they may fail to appreciate their exposure to risk.

Company leaders frequently strive to:

• Provide products or services to satisfy customer needs,
• Create jobs and paychecks for employees,
• Contribute to the building of stronger, more vibrant communities, and
• Earn an acceptable return on investment for shareholders.

A company may not have the luxury of hiring an entire team or department to contemplate risk exposure. Yet if they do not understand the risk, they may not see value in a compliance program. If leaders do not see how a compliance program can strengthen the overall health of the organization, they may undermine its effectiveness. Without a good compliance program, the company and its team leaders may face harsher scrutiny from regulators and investigators. For these reasons, proper training should highlight failures and the accompanying costs of a bad compliance program.

1. Lack of Leadership Buy-In

When it comes to compliance, leaders should recognize that the company’s commitment to ethics starts at the top. If leaders do not embrace the principles of good conduct, team members will not take compliance seriously.

Compliance programs that send mixed or inconsistent messaging leave the company vulnerable to liability. That liability can include exposure to internal fraud, lawsuits from customers, investigations by government regulators or law enforcement.

Good training should profile examples of the fallout that has come from such failures in compliance.

1. A Paucity of Resources Devoted to Compliance:

Failing to devote financial resources to support compliance training exposes a company to more risk. If an investigation begins, and the company cannot show a deliberate, consistent investment in the pursuit of excellence, authorities will be less likely to see the business or its leaders as good actors. On the contrary, investigators may accuse the business and the responsible parties of operating from a state of “willful blindness,” a term we heard a lot about while our team members were in prison.

Compliance training does not have to be a drain on the company’s resources. In fact, when leaders design compliance programs to demonstrate a commitment to transparency, they may be simultaneously investing in corporate messaging. That better messaging can lead to better efficiencies, helping every team member get a full grasp of how the company operates and achieves excellence.

With such a commitment, every team member may work collaboratively, in accordance with corporate goals. When leaders view compliance as an essential part of the corporate mission, they devote the appropriate resources. Those resources may advance corporate success, while simultaneously mitigating risks.

1. Demoralizing Compliance Departments

When company leaders view compliance programs as being wasteful expenses, team members won’t take the program seriously. Unfortunately, if anything should ever happen that brings the company to the attention of government investigators, leaders should expect to pay a heavy price.

Clearly, a company succeeds by devoting resources to sales teams, marketing teams, and operational teams that build thriving businesses. Yet leaders should model themselves after athletic coaches that require players to train on fundamentals. Coaches invest in defense and offense, not just offense. Likewise, business leaders should invest in defensive measures that will protect all team members.

If a government investigation begins, the value of an effective compliance program will become readily apparent. On the other hand, a demoralized or feeble compliance program will only hurt the organization. Government attorneys will use flawed policies as evidence of the company’s devotion to willful blindness.

Indeed, the Harvard Business Review published an article describing how the Department of Justice tasks prosecutors “to determine whether a corporation’s compliance programs is merely a ‘paper program’ or whether it was designed, implemented, reviewed, and revised, as appropriate, in an effective manner.”

• https://hbr.org/2018/03/why-compliance-programs-fail

1. The Policies Lack Clear Instruction and do not Relate to the Business

A good compliance training program engages team members. If leaders do not supplement off-the-shelf compliance programs with additional instruction that teach or inspire team members, they miss an opportunity.

Neither boilerplate language, nor dense legal jargon, will help. An option would include supplementing training exercises with human case studies. Leaders may profile the story of a person convicted of a white-collar crime. Task participants with identifying what went wrong. Perhaps encourage them to come up with strategies that may have lessened the risk. Use the feedback as a resource to strengthen corporate processes and procedures. Another option would be to create cloud-based, on-demand video training that encourages the development of critical-thinking skills.

1. Misplaced Incentives

A company can doom a compliance program by failing to align compensation with good corporate behavior. If a company incentivizes people to get sales by any means necessary, they may simultaneously create a culture of non-compliance. Many people serve prison sentences for violating laws related to:

• Foreign Corrupt Practices Act
• Sherman Antitrust Laws
• Money Laundering
• Identity Theft
• Bribery
• Mail Fraud
• Wire Fraud
• Honest Services Fraud
• Securities Fraud

While in prison, many of those people complain that they only did what their companies wanted them to do. The employees lost, and in many cases, the companies lost as well—paying enormous financial penalties. Good compliance programs will incentivize excellence in every area, providing training that shows a commitment to good corporate citizenship.

1. Inadequate Communication and Training

Corporate leadership requires clear and consistent messaging that shows how leaders define excellence. Leaders that do not communicate the company’s commitment to integrity give license for other people to violate rules. The training should show that the company places a high value on excellence—and placing a high value on excellence means training for excellence in communications, from the top down.

The communication channels should flow both ways. People at every level in the organization should have an opportunity to ask questions or express concerns. If an employee sees something wrong, the person should have some mechanism to speak up without fear of retaliation. Without that two-way communications and training, the company may weaken a compliance program.

1. Outsourced Noncompliance

A company cannot escape punishment from law enforcement, or escape liability from regulators, by outsourcing noncompliance. Both the Department of Justice and regulatory agencies have launched government investigations that punished entities for contracting with outside contractors or third parties that facilitate illegal behavior. Further, when leaders look for plausible deniability by using the “it’s-not-my-fault” defense, they expose themselves to accusations of being willfully blind to illegal or corrupt behavior. Bad and inconsistent messaging threatens the entire the organization.

1. Failing to Monitor or Audit Compliance

If the company doesn’t show a commitment to maintaining compliance, the team members will ignore the training. They may do what is necessary to pass an internal quiz on what they have learned. As soon as they leave the training session, however, many of those people go about business in a manner that shows a total disregard for what the compliance program ostensibly teaches.

In contrast, a company with a true commitment to compliance will show team members how the company’s leadership invests heavily in corporate excellence. Besides ongoing training, they may show a commitment to monitoring by sponsoring a private “hotline” that encourages people to report noncompliance. They may conduct internal audits or perform phantom calls to see how people will respond. Then, the company may announce its findings regularly.

When team members understand that the business’s leaders monitor and audit compliance, people will show more commitment to operating in harmony with what they’ve learned through compliance training.

1. Inconsistent Enforcement and Discipline

If a company is harsh on low-level employees, but it allows rainmakers or leaders to get away with noncompliance, the compliance program will fail as a resource to protect against government investigations. As the above-quoted Harvard Business Review article noted, prosecutors will deal harshly with companies that do not treat the compliance program as an integral part of the organization

To grant a non-prosecution agreement, prosecutors will assess the company’s policies—including records the company keeps on disciplinary or corrective measures for noncompliance.

The following 20-page report that the Department of Justice published will help leaders grasp the “critical factors” prosecutors will use when assessing “the comprehensiveness of the compliance programs.”

https://www.justice.gov/criminal-fraud/page/file/937501/download

That document shows a compliance program should provide a clear message that leadership will not tolerate misconduct. The program cannot succeed if prosecutors determine that policies do not apply to people in senior leadership positions. According to the document:

“The company’s top leaders set the tone for the rest of the company. Prosecutors should examine the extent to which senior management have clearly articulated the company’s ethical standards, conveyed and disseminated them in clear and unambiguous terms, and demonstrated rigorous adherence by example. Prosecutors should also examine how middle management, in turn, have reinforced those standards and encouraged employees to abide by them.”

Visit us at ComplianceMitigation.com

As described in earlier modules, government investigators do not act without having a specific intention. If they ask questions or subpoena documents, they likely already have invested thousands of hours and they believe they can build a case. When they start talking with people in a company, they want to gather more evidence. Their investigations will be in an advanced stage, but the witnesses may not know anything about the nature of the inquiry. Some investigators will try to intimidate or trap witnesses.

When initially approached, people that work for companies may get nervous. They may:

• Believe they didn't do anything wrong and act belligerently,
• Deny that they didn't do anything wrong and make statements that can hurt them,
• Accuse others within the organization in an effort to minimize culpability,
• Cooperate fully without knowing or understanding whether they are exposing themselves to legal complications.

If the company does not help team members understand the nature of an inquiry, those team members may get themselves and the company into deeper troubles. Remember that the investigators want to prevail. Victory for them means some type of sanction, injunction, disgorgement, finding, or conviction. Investigators do not earn promotions by letting companies or individuals off the hook. On the contrary, their careers advance when their investigations lead to penalties. They may try to appear friendly, saying they only want the truth.

Yet people should always remember the wisdom of President Reagan, who warned of nine words that an American never wants to hear:

• I'm with the government and I'm here to help.

How Investigators Start:

The investigative team starts gathering evidence in a number of different ways. The investigators may identify an employee, a group of employees, or other potential witnesses. If the investigators believe the prospective witnesses will help them build a case against the target, they will conduct an interview—either with or without someone to transcribe the exchange. Since the investigators would have to give any transcriptions of the interview to the opposing parties during the "discovery" phase, they may elect not to take notes or recordings of any kind. Business leaders may or may not know that the government has begun an investigation.

Other times, the government agents may want to show force. In those situations, the agents make a surprise visit, often loud, with an overwhelming display of firepower. Scores of people wearing dark windbreakers with large yellow letters (FBI, SEC, FTC, IRS, FDA, etc.) may show up to conduct a search.

Regardless of whether the government agents use subtle or strong-arm tactics, they always give a sign that more invasive activity will take place, putting a company and its employees in significant legal jeopardy.

The investigative tactics that the government agents use may dictate the appropriate response for people within the company. Our team at Compliance Mitigation offers insight that leaders may consider if they learn of:

• Informal employee interviews,
• Execution of a search warrant, or
• Grand jury subpoenas, or depositions.

Regardless of what approach the government investigators take toward a company or its employees, people should try to determine whether the agents consider the people or the company as:

• A witness to the investigation,
• A possible subject of the investigation, or
• A target of the investigation.

If a person can determine the government's posture toward the company from the beginning, that person can better assess the potential liability.

Our team at Compliance Mitigation encourages leaders of businesses to get competent legal advice—we are not lawyers and we do not offer legal advice. All of the information we provide comes from our experience of having gone through government investigations and having interviewed thousands of people that have gone through government investigations. We offer insight that business leaders may consider to protect themselves against being dragged into government investigations.

Experience convinces every member of our team that, despite sound business policies and internal audits, investigations can come unexpectedly. With thousands of regulations, people may operate a business that violates laws or regulations; ignorance of those laws or regulations, however, will not immunize them against an investigation.

On the other hand, regular training that shows a good-faith effort to comply with applicable statutes and regulations may limit a company's exposure. With our nation's commitment to big government and mass incarceration, we believe every business is vulnerable. Our team offers general guidelines, and real-life experience of what happens to people who get caught up in a government investigation.

Part 1: Informal Interviews

Sometimes, agents will show up at a person's home, or approach a potential witness at some other non-threatening location. The agents may or may not advise the employee that the person has the right to decline to answer any questions. Also, the agents may inform the person that anything the person says could possibly be used against the person later. As a result, people who are not prepared to respond to a government investigator may consent to the interview, not knowing that he or she has the option to refuse.

If a government investigator approaches any citizen, the person may feel nervous. After all, if the investigator believes the person lied, the investigator may initiate criminal charges for lying to an officer. Further, that conversation could lead to enormous legal costs in the event that the government subpoenas the person for a deposition later. People who lack preparation or knowledge may not recall details when responding to questions; government investigators can twist words, or later use a person's words to malign, or cast doubt on the person's character.

A company should take proactive measures to prepare people for the possibility of a government investigation. It should also provide general training about a person's rights in the event that a government agent asks for an interview. That training should include instructions, or options, that an employee may consider if approached by an agent. Some guidelines on training may include what a person should do if:

1. Employee informs company that a government investigator wanted to speak with him or her:

If an employee lets the company know that a government investigator made contact, the company may want to hire an attorney for the employee. The attorney may speak with the prospective witness to talk about rights the person may have. A prospective witness may decline to speak with the investigator, or the witness may choose to have an attorney present. The company's lawyer may try to intervene and ask if the questions pertain to the company; if so, the company's lawyer may ask for an opportunity to attend the interview with the witness.

1. The witness speaks with the government, but the company doesn't know until after the interview:

If the company learns about the interview after the witness spoke with investigators, a lawyer should attempt to speak with the employee. Neither the company's lawyer, nor anyone else, should make the person feel as if speaking with the government violated anything at all. By speaking with the employee, the lawyer should attempt to learn the substance of what the government wanted to know.

Although the lawyer may advise the employee of his or right to counsel, no one should retaliate against the person in any way. Any type of retaliation or judgment could work against the company, potentially eliciting accusations of violating whistleblower statutes or obstruction of justice charges.

1. The company should prepare employees whom the government may target for interviews.

The best time to prepare for a government investigation would be before the government investigation begins. In other words, our team at Compliance Mitigation encourages leaders to train for best practices, consistent with the compliance manual. That training should include guidance for people to consider in the event that government investigators target them.

1. The company should help all employees understand their rights to counsel, and their rights to refuse to speak with investigators.
2. Training should include real-life stories of people who have been dragged into government investigations, showing the disruption those investigations can cause.
3. The company should never advise employees to hide, deceive, or mislead a government investigator; they should also train on the penalties that can follow for a person if the investigators accuse the person of lying.
4. Although government agents may use their authority to intimidate people into talking, a person has the right to refrain from saying anything to a government investigator.
5. If a person talks with a government investigator, and the investigator accuses the person of lying, the government may charge the person with a federal crime that could result in a five-year prison term.
6. A person has the right to have counsel present if he or she talks with a government investigator.
7. If a person hires a lawyer, that lawyer will represent the person and not the company. The conversations a person has with the lawyer of record will remain between the client and the lawyer—unless the person authorizes the lawyer to share the information with others.

Part 2: How to Respond if Authorities Execute a Search Warrant

Although investigators may interview witnesses in private, trying to keep their inquiries under wraps, sometimes they choose a more intrusive approach to let the company, the company's leaders, the media, and other businesses know that the company has become the target of a government investigation. Together with a law enforcement agency, like the FBI or the local sheriff's department or police department, a cadre of officers may burst into the business. In those instances, the officers yell for everyone in the office to step away from the computers and stop what they're doing.

When law enforcement officers execute a search warrant, they may be loud and intimidating. The people working in the office will likely not know what constitutional protections exist. For this reason, the company should train people on important steps they can take to protect themselves. Potential training topics include:

1. Rules that Govern Search Warrants

If investigators have gone to the trouble of getting a search warrant, it's safe to assume that they intend to bring charges that will disrupt the company and the lives of many people that work in the company. The warrant differs from getting a subpoena, which authorizes the investigators to obtain documents or recordings voluntarily. To obtain a search warrant, the investigator must persuade a judge that the government has probable cause to believe that evidence of a crime exists in the location. The target of the warrant will not know that the investigator is communicating with the judge. As such, the target cannot work to defend against the argument that the investigator will make to the judge.

To show probable cause, the investigator may rely upon evidence gathered through an affidavit, recited under oath, that shows the reason(s) the government believes the target has participated in a crime. The warrant must define places to be searched, the people the investigators want to search, and the types of things the investigators wants to seize.

According to Rule 41 of the Federal Rules of Criminal Procedure, once a judge issues the warrant, the investigators have ten days to serve the warrant. In most cases, the officers show up between 6:00 am and 10:00 pm. The agents must provide the company with a copy of the warrant, and also with an inventory list of everything they've seized.

• During training, the company should explain how such warrants may result in officers taking personal cell phones or devices that contain personal information, including emails and text messages. All of this information can lead to the expansion of government investigations.

Investigators exercise search warrants when they want to catch a company and its team by surprise. A company can mitigate this disruption through appropriate training and preparation at various stages of the investigation—including, before, during, and after. Our team at Compliance Mitigation provides that specialized training.

1. What Happens During a Search?

Good training may protect the company against the shock and awe of a team of government agents executing a search warrant. Expect those agents to be loud and act aggressively as they try to show absolute control over the scene. The agents will likely gather the employees together and relegate them to a specific area of the business. These tactics can shake people into fear and induce some to cooperate in ways that go far beyond the scope of the search, which can expand the investigation.

Company leaders should prepare employees for what happens in a search, and how people may want to respond. If a search takes place, a company representative should ask to see a copy of the search warrant and also the identifying credentials of the people searching. It may make sense for the company to assign a "warrant team" to represent the company in the event of a surprise search warrant. People on the warrant team may have higher levels of training, so they can keep people calm and potentially limit the intrusiveness of the government investigation. The designated leader of the warrant team may want to take the following measures in the event of a surprise search warrant:

1. Contact the company's designated attorney and corporate leader—which means the team leader should have the appropriate people's contact information.
2. Request that the agents postpone the search until counsel arrives.
3. Request identification from the people on the search team.
4. Review the warrant and, if available, the affidavit the investigators used to persuade a judge to issue the search warrant.
5. Ask the agents not to begin the search until after they have provided the warrant; although the agents will resist, the request may preserve rights to challenge procedures during later proceedings. A thorough review of the search warrant and possible affidavit may help the leader request that the agents confine their search to the precise scope authorized by the warrant.
6. Proper training may help the leader recognize defects in the warrant, such as a failure to describe the premises to be searched, or what the agents may seize, or the lack of a signature by an appropriate judge.
7. The leader may ask the agents for an opportunity to confer with counsel prior to the start of the search to determine whether the warrant has any defects. If the leader finds defects in the warrant, the leader should point the defects out to the agents and object to the search. Although the agents will likely continue, the objection may preserve the company's rights. The team leader should go on record to say that the company objects to the search.
8. The team leader should have some level of training on the Fourth Amendment of the Constitution, and how Courts have ruled that warrants must describe places to be searched and things that agents can seize. The team leader should have training that will empower the leader to understand what the agents can and cannot do.
9. The team leader should request the agents to provide an inventory list of everything they've seized.
10. If the agents come with a surprise search warrant, the team leader should advise all employees of their rights. Remind people that they have a right to counsel, and if they choose, they may remain silent. Perhaps the leader could direct employees to a link of a cloud-based statement of rights that they may access through smart phones.
11. The leader should strive to protect privileged information that should belong to the company and its law firm.
12. The leader should strive to monitor the search and record the agents' activities. A good leader may take thorough notes. By memorializing the areas where the agents searched and the materials the agents seized, the leader may provide information that can assist counsel later. Include date and time and any other observation that may be helpful to memorialize the search. If the agents object to video cameras, the team leader should ask the agents to state objections formally to counsel.
13. The company may have the right to record the search by any means, so long as recording does not interfere with the agents' duties. There isn't any reason why unobtrusive videotaping, audio taping, or photography would interfere with a search. But since the agents are so intimidating, an untrained workforce may not think to record.
14. Team leaders should not put themselves at risk of being arrested by the law enforcement officers for obstructing the search.
15. Team leaders should request that the agents make copies of any electronically stored materials, rather than removing computer hard-drives, or other computers from the office. The team leader must know how to get backup materials. If possible, the leader should attempt to coordinate with the agents so that the results do not completely obliterate the business's ability to operate. The company's attorney should provide specific language the leader may use to preserve all of the company's rights.
16. After the search, the team leader should provide a full report to the company's attorney.

1. Training Topics the Company Should Include:
2. Help all team members understand that, although unlikely, all businesses are subject to government investigations.
3. Help all team members understand a search warrant and what they should know if authorities execute a search warrant.
4. Show a cloud-based system that provides reminders of what people should do in a search warrant and let the people know how they can access the information on a smart phone.
5. Identify the warrant team and provide specialized training for team leaders.
6. Show how to monitor agents and record notes.
7. Show that although the company intends to cooperate with the investigation, the team leaders want to preserve rights for people and for the company.
8. Emphasize that employees should not impede the search, conceal or destroy documents.
9. Explain appropriate laws, including obstruction of justice and making false statements.
10. Train employees on the rights regarding government interviews.
11. Create a "Policy and Procedures" for team leaders to know how they should respond to search warrants, including:
    • Information and instructions on contacting counsel and company leaders, with contact numbers.
    • Request the agents wait until counsel arrives before conducting the search—understanding that the agents do not have an obligation to wait.
    • Ask the agents for identification.
    • Ask for a copy of the warrant.
    • Send an image of the warrant to the company's attorney.
    • Expressly state that although the company will cooperate, it does not consent to the search.
    • Direct all employees to the document that explains their rights with regard to being interviewed.
    • Review the warrant and attempt to negotiate terms of the search.
    • Do not remove, discard, or hide any objects that might be subject of the search warrant.
    • Carefully monitor any search.
    • Ask the agents to permit you to photocopy any original document that the agents seize.
    • Get a receipt for any files or property the agents seize.
    • Do not conduct any meetings with employees without an attorney present.

1. Part 3: Subpoenas, Grand Jury Investigations, and Depositions

Although a government search is immediate and catches people by surprise, investigators can rely upon other tactics to gather evidence against a company and its leaders. On the surface, subpoenas may seem less intrusive, because agents aren't coming in with loud fanfare. But subpoenas, grand jury investigations, and depositions can be extremely invasive and broad.

The agents may not need probable cause to convene a grand jury or to issue a subpoena. The requests may be extremely broad, asking for information that is difficult to produce—like records going back several years, or all email and text exchanges, or bank records and tax records.

Although witnesses will have substantial advance notice to comply with requests for the production of documents or testimony, such requests come with enormous liability. Failure to comply can result in charges for obstruction of justice. For this reason, the company and the employees should consult with counsel if they ever receive a subpoena. Further, the company should provide basic training to help all team members understand the process and implications.

Conclusion:

The best time to protect a company would be before a government investigation begins. For this reason, the company should engineer a compliance and training program that identifies all corporate policies, processes, and procedures, pertaining to every aspect of the company. The company should have excellent, cloud-based record-keeping systems in place, and potentially a Customer Relationship Management software system that maps out the entire company journey, including:

• A staff hierarchy with clear job descriptions, responsibilities, qualifications.
• A staff training system that articulates the corporate culture.
• A process map that shows how the company operates.
• The customer acquisition strategy, including all advertisements and lead-generation systems.
• The scripts or training that sales teams use.
• Templates for all invoices and contracts.
• Effective financial records that document every transaction.
• Warranties, representations, and company communications with customers.

Transparency can protect an honest company and its leaders from the enormous cost of a government investigation. With good training, the company can also protect itself in the event that something goes wrong, which could bring unwanted attention from government investigators.

Visit us at ComplianceMitigation.com

As described in earlier modules, government investigators do not act without having a specific intention. If they ask questions or subpoena documents, they likely already have invested thousands of hours and they believe they can build a case. When they start talking with people in a company, they want to gather more evidence. Their investigations will be in an advanced stage, but the witnesses may not know anything about the nature of the inquiry. Some investigators will try to intimidate or trap witnesses.

When initially approached, people that work for companies may get nervous. They may:

• Believe they didn’t do anything wrong and act belligerently,
• Deny that they didn’t do anything wrong and make statements that can hurt them,
• Accuse others within the organization in an effort to minimize culpability,
• Cooperate fully without knowing or understanding whether they are exposing themselves to legal complications.

If the company does not help team members understand the nature of an inquiry, those team members may get themselves and the company into deeper troubles. Remember that the investigators want to prevail. Victory for them means some type of sanction, injunction, disgorgement, finding, or conviction. Investigators do not earn promotions by letting companies or individuals off the hook. On the contrary, their careers advance when their investigations lead to penalties. They may try to appear friendly, saying they only want the truth.

Yet people should always remember the wisdom of President Reagan, who warned of nine words that an American never wants to hear:

• I’m with the government and I’m here to help.

How Investigators Start:

The investigative team starts gathering evidence in a number of different ways. The investigators may identify an employee, a group of employees, or other potential witnesses. If the investigators believe the prospective witnesses will help them build a case against the target, they will conduct an interview—either with or without someone to transcribe the exchange. Since the investigators would have to give any transcriptions of the interview to the opposing parties during the “discovery” phase, they may elect not to take notes or recordings of any kind. Business leaders may or may not know that the government has begun an investigation.

Other times, the government agents may want to show force. In those situations, the agents make a surprise visit, often loud, with an overwhelming display of firepower. Scores of people wearing dark windbreakers with large yellow letters (FBI, SEC, FTC, IRS, FDA, etc.) may show up to conduct a search.

Regardless of whether the government agents use subtle or strong-arm tactics, they always give a sign that more invasive activity will take place, putting a company and its employees in significant legal jeopardy.

The investigative tactics that the government agents use may dictate the appropriate response for people within the company. Our team at Compliance Mitigation offers insight that leaders may consider if they learn of:

• Informal employee interviews,
• Execution of a search warrant, or
• Grand jury subpoenas, or depositions.

Regardless of what approach the government investigators take toward a company or its employees, people should try to determine whether the agents consider the people or the company as:

• A witness to the investigation,
• A possible subject of the investigation, or
• A target of the investigation.

If a person can determine the government’s posture toward the company from the beginning, that person can better assess the potential liability.

Our team at Compliance Mitigation encourages leaders of businesses to get competent legal advice—we are not lawyers and we do not offer legal advice. All of the information we provide comes from our experience of having gone through government investigations and having interviewed thousands of people that have gone through government investigations. We offer insight that business leaders may consider to protect themselves against being dragged into government investigations.

Experience convinces every member of our team that, despite sound business policies and internal audits, investigations can come unexpectedly. With thousands of regulations, people may operate a business that violates laws or regulations; ignorance of those laws or regulations, however, will not immunize them against an investigation.

On the other hand, regular training that shows a good-faith effort to comply with applicable statutes and regulations may limit a company’s exposure. With our nation’s commitment to big government and mass incarceration, we believe every business is vulnerable. Our team offers general guidelines, and real-life experience of what happens to people who get caught up in a government investigation.

Part 1: Informal Interviews

Sometimes, agents will show up at a person’s home, or approach a potential witness at some other non-threatening location. The agents may or may not advise the employee that the person has the right to decline to answer any questions. Also, the agents may inform the person that anything the person says could possibly be used against the person later. As a result, people who are not prepared to respond to a government investigator may consent to the interview, not knowing that he or she has the option to refuse.

If a government investigator approaches any citizen, the person may feel nervous. After all, if the investigator believes the person lied, the investigator may initiate criminal charges for lying to an officer. Further, that conversation could lead to enormous legal costs in the event that the government subpoenas the person for a deposition later. People who lack preparation or knowledge may not recall details when responding to questions; government investigators can twist words, or later use a person’s words to malign, or cast doubt on the person’s character.

A company should take proactive measures to prepare people for the possibility of a government investigation.  It should also provide general training about a person’s rights in the event that a government agent asks for an interview.  That training should include instructions, or options, that an employee may consider if approached by an agent. Some guidelines on training may include what a person should do if:

1. Employee informs company that a government investigator wanted to speak with him or her:

If an employee lets the company know that a government investigator made contact, the company may want to hire an attorney for the employee. The attorney may speak with the prospective witness to talk about rights the person may have. A prospective witness may decline to speak with the investigator, or the witness may choose to have an attorney present. The company’s lawyer may try to intervene and ask if the questions pertain to the company; if so, the company’s lawyer may ask for an opportunity to attend the interview with the witness.

1. The witness speaks with the government, but the company doesn’t know until after the interview:

If the company learns about the interview after the witness spoke with investigators, a lawyer should attempt to speak with the employee. Neither the company’s lawyer, nor anyone else, should make the person feel as if speaking with the government violated anything at all. By speaking with the employee, the lawyer should attempt to learn the substance of what the government wanted to know.

Although the lawyer may advise the employee of his or right to counsel, no one should retaliate against the person in any way. Any type of retaliation or judgment could work against the company, potentially eliciting accusations of violating whistleblower statutes or obstruction of justice charges.

1. The company should prepare employees whom the government may target for interviews.

The best time to prepare for a government investigation would be before the government investigation begins. In other words, our team at Compliance Mitigation encourages leaders to train for best practices, consistent with the compliance manual. That training should include guidance for people to consider in the event that government investigators target them.

1. The company should help all employees understand their rights to counsel, and their rights to refuse to speak with investigators.
2. Training should include real-life stories of people who have been dragged into government investigations, showing the disruption those investigations can cause.
3. The company should never advise employees to hide, deceive, or mislead a government investigator; they should also train on the penalties that can follow for a person if the investigators accuse the person of lying.
4. Although government agents may use their authority to intimidate people into talking, a person has the right to refrain from saying anything to a government investigator.
5. If a person talks with a government investigator, and the investigator accuses the person of lying, the government may charge the person with a federal crime that could result in a five-year prison term.
6. A person has the right to have counsel present if he or she talks with a government investigator.
7. If a person hires a lawyer, that lawyer will represent the person and not the company. The conversations a person has with the lawyer of record will remain between the client and the lawyer—unless the person authorizes the lawyer to share the information with others.

Part 2: How to Respond if Authorities Execute a Search Warrant

Although investigators may interview witnesses in private, trying to keep their inquiries under wraps, sometimes they choose a more intrusive approach to let the company, the company’s leaders, the media, and other businesses know that the company has become the target of a government investigation. Together with a law enforcement agency, like the FBI or the local sheriff’s department or police department, a cadre of officers may burst into the business. In those instances, the officers yell for everyone in the office to step away from the computers and stop what they’re doing.

When law enforcement officers execute a search warrant, they may be loud and intimidating. The people working in the office will likely not know what constitutional protections exist. For this reason, the company should train people on important steps they can take to protect themselves. Potential training topics include:

1. Rules that Govern Search Warrants

If investigators have gone to the trouble of getting a search warrant, it’s safe to assume that they intend to bring charges that will disrupt the company and the lives of many people that work in the company. The warrant differs from getting a subpoena, which authorizes the investigators to obtain documents or recordings voluntarily. To obtain a search warrant, the investigator must persuade a judge that the government has probable cause to believe that evidence of a crime exists in the location. The target of the warrant will not know that the investigator is communicating with the judge. As such, the target cannot work to defend against the argument that the investigator will make to the judge.

To show probable cause, the investigator may rely upon evidence gathered through an affidavit, recited under oath, that shows the reason(s) the government believes the target has participated in a crime. The warrant must define places to be searched, the people the investigators want to search, and the types of things the investigators wants to seize.

According to Rule 41 of the Federal Rules of Criminal Procedure, once a judge issues the warrant, the investigators have ten days to serve the warrant. In most cases, the officers show up between 6:00 am and 10:00 pm. The agents must provide the company with a copy of the warrant, and also with an inventory list of everything they’ve seized.

• During training, the company should explain how such warrants may result in officers taking personal cell phones or devices that contain personal information, including emails and text messages. All of this information can lead to the expansion of government investigations.

Investigators exercise search warrants when they want to catch a company and its team by surprise. A company can mitigate this disruption through appropriate training and preparation at various stages of the investigation—including, before, during, and after. Our team at Compliance Mitigation provides that specialized training.

1. What Happens During a Search?

Good training may protect the company against the shock and awe of a team of government agents executing a search warrant. Expect those agents to be loud and act aggressively as they try to show absolute control over the scene. The agents will likely gather the employees together and relegate them to a specific area of the business. These tactics can shake people into fear and induce some to cooperate in ways that go far beyond the scope of the search, which can expand the investigation.

Company leaders should prepare employees for what happens in a search, and how people may want to respond. If a search takes place, a company representative should ask to see a copy of the search warrant and also the identifying credentials of the people searching. It may make sense for the company to assign a “warrant team” to represent the company in the event of a surprise search warrant. People on the warrant team may have higher levels of training, so they can keep people calm and potentially limit the intrusiveness of the government investigation. The designated leader of the warrant team may want to take the following measures in the event of a surprise search warrant:

1. Contact the company’s designated attorney and corporate leader—which means the team leader should have the appropriate people’s contact information.
2. Request that the agents postpone the search until counsel arrives.
3. Request identification from the people on the search team.
4. Review the warrant and, if available, the affidavit the investigators used to persuade a judge to issue the search warrant.
5. Ask the agents not to begin the search until after they have provided the warrant; although the agents will resist, the request may preserve rights to challenge procedures during later proceedings. A thorough review of the search warrant and possible affidavit may help the leader request that the agents confine their search to the precise scope authorized by the warrant.
6. Proper training may help the leader recognize defects in the warrant, such as a failure to describe the premises to be searched, or what the agents may seize, or the lack of a signature by an appropriate judge.
7. The leader may ask the agents for an opportunity to confer with counsel prior to the start of the search to determine whether the warrant has any defects. If the leader finds defects in the warrant, the leader should point the defects out to the agents and object to the search. Although the agents will likely continue, the objection may preserve the company’s rights. The team leader should go on record to say that the company objects to the search.
8. The team leader should have some level of training on the Fourth Amendment of the Constitution, and how Courts have ruled that warrants must describe places to be searched and things that agents can seize. The team leader should have training that will empower the leader to understand what the agents can and cannot do.
9. The team leader should request the agents to provide an inventory list of everything they’ve seized.
10. If the agents come with a surprise search warrant, the team leader should advise all employees of their rights. Remind people that they have a right to counsel, and if they choose, they may remain silent. Perhaps the leader could direct employees to a link of a cloud-based statement of rights that they may access through smart phones.
11. The leader should strive to protect privileged information that should belong to the company and its law firm.
12. The leader should strive to monitor the search and record the agents’ activities. A good leader may take thorough notes. By memorializing the areas where the agents searched and the materials the agents seized, the leader may provide information that can assist counsel later. Include date and time and any other observation that may be helpful to memorialize the search. If the agents object to video cameras, the team leader should ask the agents to state objections formally to counsel.
13. The company may have the right to record the search by any means, so long as recording does not interfere with the agents’ duties. There isn’t any reason why unobtrusive videotaping, audio taping, or photography would interfere with a search. But since the agents are so intimidating, an untrained workforce may not think to record.
14. Team leaders should not put themselves at risk of being arrested by the law enforcement officers for obstructing the search.
15. Team leaders should request that the agents make copies of any electronically stored materials, rather than removing computer hard-drives, or other computers from the office. The team leader must know how to get backup materials. If possible, the leader should attempt to coordinate with the agents so that the results do not completely obliterate the business’s ability to operate. The company’s attorney should provide specific language the leader may use to preserve all of the company’s rights.
16. After the search, the team leader should provide a full report to the company’s attorney.

1. Training Topics the Company Should Include:
2. Help all team members understand that, although unlikely, all businesses are subject to government investigations.
3. Help all team members understand a search warrant and what they should know if authorities execute a search warrant.
4. Show a cloud-based system that provides reminders of what people should do in a search warrant and let the people know how they can access the information on a smart phone.
5. Identify the warrant team and provide specialized training for team leaders.
6. Show how to monitor agents and record notes.
7. Show that although the company intends to cooperate with the investigation, the team leaders want to preserve rights for people and for the company.
8. Emphasize that employees should not impede the search, conceal or destroy documents.
9. Explain appropriate laws, including obstruction of justice and making false statements.
10. Train employees on the rights regarding government interviews.
11. Create a “Policy and Procedures” for team leaders to know how they should respond to search warrants, including:
    • Information and instructions on contacting counsel and company leaders, with contact numbers.
    • Request the agents wait until counsel arrives before conducting the search—understanding that the agents do not have an obligation to wait.
    • Ask the agents for identification.
    • Ask for a copy of the warrant.
    • Send an image of the warrant to the company’s attorney.
    • Expressly state that although the company will cooperate, it does not consent to the search.
    • Direct all employees to the document that explains their rights with regard to being interviewed.
    • Review the warrant and attempt to negotiate terms of the search.
    • Do not remove, discard, or hide any objects that might be subject of the search warrant.
    • Carefully monitor any search.
    • Ask the agents to permit you to photocopy any original document that the agents seize.
    • Get a receipt for any files or property the agents seize.
    • Do not conduct any meetings with employees without an attorney present.

1. Part 3: Subpoenas, Grand Jury Investigations, and Depositions

Although a government search is immediate and catches people by surprise, investigators can rely upon other tactics to gather evidence against a company and its leaders. On the surface, subpoenas may seem less intrusive, because agents aren’t coming in with loud fanfare. But subpoenas, grand jury investigations, and depositions can be extremely invasive and broad.

The agents may not need probable cause to convene a grand jury or to issue a subpoena. The requests may be extremely broad, asking for information that is difficult to produce—like records going back several years, or all email and text exchanges, or bank records and tax records.

Although witnesses will have substantial advance notice to comply with requests for the production of documents or testimony, such requests come with enormous liability. Failure to comply can result in charges for obstruction of justice. For this reason, the company and the employees should consult with counsel if they ever receive a subpoena. Further, the company should provide basic training to help all team members understand the process and implications.

Conclusion:

The best time to protect a company would be before a government investigation begins. For this reason, the company should engineer a compliance and training program that identifies all corporate policies, processes, and procedures, pertaining to every aspect of the company. The company should have excellent, cloud-based record-keeping systems in place, and potentially a Customer Relationship Management software system that maps out the entire company journey, including:

• A staff hierarchy with clear job descriptions, responsibilities, qualifications.
• A staff training system that articulates the corporate culture.
• A process map that shows how the company operates.
• The customer acquisition strategy, including all advertisements and lead-generation systems.
• The scripts or training that sales teams use.
• Templates for all invoices and contracts.
• Effective financial records that document every transaction.
• Warranties, representations, and company communications with customers.

Transparency can protect an honest company and its leaders from the enormous cost of a government investigation. With good training, the company can also protect itself in the event that something goes wrong, which could bring unwanted attention from government investigators.