Responding to Grand Jury: Subpoenas & Search Warrants

William R. Terpening v.1.0

•Not addressing civil subpoenas – many distinctions.•Different from subpoena to testify at trial.•Can be used for both testimony and documents.•Focus on documents: scenario corporate counsel willencounter most frequently.•Preparing a written subpoena response plan with inputfrom outside counsel and management now will minimizemistakes, expenses, and negative publicity later.

Intro: Purpose of the Subpoena Secure documents and physical evidence.  duces tecum.  “A subpoena may order the witness to produce any books, papers, documents, data, or other objects the subpoena designates.” Fed. R. Crim. P. 17(c)(1). Not only documents.  Handwriting and voice exemplars.  Hair samples. And secure testimony.  ad testificandum. Fed. R. Crim. P. 17(a). Broader than civil equivalent.  Can be served “at any place within the United States” – less option to quash for procedural/ venue problems.  Fed. R. Crim. P. 17(e)(1).

Some Differences from Civil Subpoenas. Fed. R. Crim. P. 17 vs. Fed. R. Civ. P. 45. Not totally unfettered, but permissibly broader.  Can require production of all witnesses and non- privileged evidence, as long as not unduly burdensome.  No probable cause showing necessary (compare with search warrants).  Presumption of regularity.  Once supported by court order, strong contempt aspect.  Obstruction consequences vs. contempt.  Civil v. criminal contempt.

More Differences from Civil Subpoenas  Relevance usually not as strong of a basis for refusing to comply – more leeway for investigation.  Reasonableness review highly deferential to government.  Fear of third party retaliation no basis for non-compliance.  Original documents.  Service and witness travel nationally, not just within or near issuing district.  Inability of civil courts to compel non-parties to travel to testify – 100 mile rule.  Travel limits for depositions.  No protections for trade secrets, etc., articulated in Fed. R. Civ. P. 45.

Your Initial Subpoena Review When you receive the subpoena, whether focused on documents or testimony, develop an action plan. Subpoena must include all essential compliance information:  Information about court name and proceeding.  Time and place witness is to appear or documents should be produced.  What the recipient is supposed to do.  See Fed. R. Crim. P. 17(a) and (c). If for documents, will have a detailed attachment similar to a civil set of document requests.

Note on: Subpoena AdTestificandum Initial questions unique to those subpoenas that seek testimony: Whose testimony is sought?  Employee?  Executive management? Need for separate representation?  Employee with conflict  Fact witness

Obligations of Targets & Subjects “Target” = person who is linked by substantial evidence to commission of crime and who, in prosecutor’s judgment, is a possible defendant. “Subject” = person whose conduct falls within investigation’s scope. Vs. “witness”. To avoid unfairness and confusion stemming from testimony of targets and subjects who do not know their status, DOJ has policies advising of Fifth Amendment rights/ requesting voluntary appearance.

Focus: DocumentsThe Subpoena Duces Tecum Initial review of subpoena to determine scope  Date range  Type of documents  Cost/feasibility of compliance  Deadline? Review for indications of allegations/potential crimes Determine whether grounds to challenge. Start considering whether compliance is better strategic option, even where challenge grounds exist.

Subpoena Duces Tecum Caution: penalties for improper response.  Avoid “game-playing” that is prevalent in some civil discovery. Contact experienced counsel Immediately suspend regular document destruction - even if consistent with document retention policies Memorialize all steps & decisions in written memorandum. Notify some employees / control group  Do not discuss the subpoena or any aspect of the investigation with all employees. Main point of presentation: you’ll be better off if you have prepared a response protocol before you ever receive the subpoena.

Your Subpoena Response Plan Keep on hand in case of emergencies and refresh periodically. Should contain:  A copy of the company’s document retention policy.  A contact list: key executives who need to know, go-to outside counsel, responsible IT person; custodian of records.  Draft of memo to go to responsible employees with instructions regarding preservation of electronic and hard copy documents.  A plan for ensuring that all versions of electronic documents, in particular, are secured.  A directory of where key general categories of documents are stored and likely to be located.

Initial Telephone Call Call prosecutor:  Discuss role of company, individuals.  Witness, subject, or target?  If for documents:  Discuss subpoena to ensure you understand requests, resolve any questions, and narrow or define scope as appropriate.  You know company and documents/subject matter better than requester, and may save both sides time and effort and create mutual goodwill/ relationship through this conversation. 

Initial Call (Cont’d.)  If the volume of documents requested is large, use call to negotiate deadline or rolling production, which you can later memorialize in writing. Offer to keep dialogue open and avoid adversarial approach.  Ability to address production and compliance issues on phone rather than more formally will save parties’ and court’s time and resources and avert unintended obstruction problems.  Assess where documents are to be produced and whether/ when an executive will need to testify. Usually can defer until after agent review. As general counsel, offer to accept future subpoenas and request by e-mail, informally. If you plan to retain experienced outside counsel, may wait for them for this call if time allows.

Motion to Quash- Rule 17(c)(2) Most Common Ground for Challenging:  Unreasonable or oppressive  Documents requested are privileged.  Mot. quash (for unreasonable or oppressive subpoenas) not technically correct approach, but often handled this way.  Fourth Amendment particularity requirement applies.  “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” 

Motion to Quash- Rule 17(c)(2)  Because of presumption of regularity, heavy burden on movant. Explore court modification as alternative. Don’t forget negotiated narrowing and privilege decisions.

Other common grounds for challenge. Other Limits:  Abuse of subpoena process  E.g., to conduct post-indictment discovery for trial witnesses & trial prep.  GJ subpoena not for obtaining civil proceeding evidence.  Not to harass or intimidate. E.g., obtain a plea (but compare how USAO uses target  letters).  Unreasonable time span.

Additional Challenge Grounds Statutory objections.  Prohibition on using information obtained during illegal electronic surveillance during grand jury proceeding.  Therefore, has been held that witness may object on basis that questions or requests are fruit of illegal electronic surveillance.  Drug treatment records from federal facilities.  No release for subpoena without patient consent.  Not to compel interviews.

Document Search, Review & ProductionProcess Retrieve & follow the plan you already prepared. Plan & supervise & document “process”  Keys:  What dox are produced?  What process was followed?  Designate a point person to be “custodian of records.”  Custodian should be prepared to testify about the steps taken to gather information for the subpoena

Document Search, Review & Production Which documents are “responsive?” WHO DECIDES (versus you or client)? Which responsive documents are privileged? WHO DECIDES (versus you or client)?  Create a decision log and a privilege log – class familiarity with these? “Bates-stamp” and keep copy of all that is produced.  Note, you generally will produce originals, unlike in civil litigation. Types of Privileges:  Attorney Client / Work Product  5th Amendment

Privileged Documents Avoid inadvertent waivers of attorney-client privilege.  Ensure cover letter for production has a “claw-back” stipulation.  Discuss specific close situations with prosecutor & negotiate for an e-mail confirming that production of specific types of documents will not constitute waiver. Certain disclosures can be viewed as corporate admissions that may negate need for gvt to independently work to prove elements.  Does the benefit of cooperation outweigh the risk of disclosure?

Attorney-Client PrivilegeProtects confidential communications between client seeking legal advice and his attorney.Can be waived: (i) By corporate management (ii) By disclosure outside of a privileged relationship. (a) Includes voluntary disclosure to third party. (b) Includes disclosure at the request of a government agency. (c) Includes inadvertent disclosures (where reasonable precautions to prevent were not taken).

Work Product DoctrineProtects documents prepared for trial or “in anticipation of litigation .”Can also be waived by voluntary disclosure.How is the work product doctrine different from attorney- client privilege?

Confidentiality In general, grand jury cloak of secrecy does not gag witnesses and parties producing documents. Exceptions:  Bank records & subpoenas to financial institutions.  Telephone records. In general, of course, companies will want to remain relatively silent for PR reasons and to avoid appearance of interfering with process. Simple statements regarding fact of compliance will suffice.

Expenses of Compliance Generally government need not reimburse for costs of complying with subpoena duces tecum. However, remember that showing of financial burden can be part of the reasonableness or burdensomeness analysis upon a motion to quash. A court may exercise its Rule 17(c) power and modify subpoena to make government bear costs of compliance. As well, some narrow statutory situations where costs borne by government.  Banks.

•As with subpoena response, plan now.•Particularly important because there is typically less lead timethan for subpoena response.•FBI and others may appear unexpectedly.•Our analysis focuses on federal procedure, not state procedure. • Substantially similar, but differences may exist.

Search Warrant Response  Increasing reliance on search warrants as a tool in business crimes – even for documents that a subpoena could cover.  Government’s key advantage:  SURPRISE & CONTROL  “Focus of government’s search = Not just documents but all “instrumentalities of crime”

Warrant versus Consent Recent trend: agents appear without warrant and request documents and consent waiver.  Pros:  Ability to work with agents to narrow and define scope.  Physical scope and subject matter scope.  Goodwill.  Agents quickly in and out.  Cons:  No need for government to make showings that are in place to protect you.  E.g., probable cause showing for magistrate.  Easier path to potentially incriminating documents.  Don’t consent without a private meeting with client to determine and advise about risks/ what gvt. is likely to find.

Search Warrants Background All searches and seizures are governed by the Fourth Amendment’s: 1) Prohibition against unreasonable searches and seizures; and 2) Requirement the warrants to conduct searches be supported by “probable cause.”

Search Warrant Background(Cont’d) “Probable Cause” = - “A fair probability that contraband or evidence of a crime will be found in a particular place.” - A “fluid concept” that is not easily translated into “a neat set of rules,” but rather turns on the “totality of the circumstances.” - See Illinois v. Gates, 462 U.S. 213, 238 (1983).

Obtaining the Search Warrant Process for Obtaining Warrant:  Rule 41 - Fed. R. Crim. P.  Federal law enforcement officer requests warrant from magistrate - usually with sworn affidavit that sets forth supporting grounds: magistrate must find probable cause.  Once the warrant is issued, the magistrate judge’s determination is reviewed only with “great deference.”  Not de novo: just whether there is substantial evidence to support decision – not “rubber stamp.”

Search Warrants Ground Rules  Search warrant can be completely based upon hearsay evidence.  Company does not even have to be a “Target” to be searched.  Search must occur within 14 days of the warrant being issued.  Warrant shall be served In the daytime, (6AM - 10PM) unless other times are specifically requested and authorized. Rule 41(a)(2)(B).

Franks Hearing Defendant has right to challenge veracity of sworn statement used by police to obtain search warrant To obtain, movant must show:  False statement or omission in aff.  And offending info essential to probable cause determination. **Knowing omission of information less likely to defeat probable cause than knowing inclusion, because not all exculpatory information needs to be included in an affidavit. Preserve your record – lodge objections and don’t consent to the search (even partial search)! Franks v. Delaware, 438 U.S. 154 (1978).

Search Warrants (cont’d.) Government has legal leverage during execution of search. Number of agents varies (2-50) No need for company or employees to display “cowboy” mentality: Be professional & courteous

Search Warrants (Cont’d) Best Advice: Advance planning & organized response Establish internal procedures & search response plan

Advance Planning: Overall Goals  Improve “crisis” management: 1) Demystify “searches” 2) Prepare company representatives  Protect legal interests of company and personnel  Respond appropriately & legally -- Not doing whatever the government requests  Convey “good corporate” image  Be prepared to respond to press.  Not “no comment”  Emphasize a few key points only.  More on this later

Overall Goals (Cont’d) Get the government what it is entitled to take or review as quickly as possible - -- and get the agents out. Minimize disruptive impact of search to ongoing business operations

Action Steps During Search  Request agents’ credentials & copy of the warrant (and supporting affidavit - if unsealed)  Provide agents with company memorandum re: search  Request meeting with agents to discuss ways to minimize disruption with ongoing operations (floor plans, organizational charts, etc.).

Company Search Memo  Company’s memorandum re: search should state that company: 1) Objects & does not consent to search; 2) BUT - Is willing to cooperate; 3) Is represented by counsel; 4) Requests opportunity to confer with counsel prior to search; and 5) Requests all inquiries during search be directed to company search coordinators, ideally counsel only - not employees.

Action Steps During Search Carefully review warrant for: 1) accuracy of information; 2) particularity of search limits; and 3) nature of alleged violations Typical “Defects:” 1) Name of company; 2) Facility address; 3) Beyond deadline.

Action Steps During Search  Pay close attention to scope of warrant -- i.e., “places to be searched and items to be seized.”  Limit search to those areas specifically designated in warrant.  Do not consent to or allow agents to exceed limits and conduct an “expanded” search.

Actions Steps During Search  Identify legally protected/privileged files ** If dispute arises - segregate & submit to magistrate “in camera.”  Accompany agents & carefully monitor and record all aspects of search.  (i.e., conduct, statements, questions, requests, attitude).  If agents Refuse to allow company to accompany them -- seek order from magistrate.

Search Warrant (Cont’d)  In general, a search warrant is NOT a license to conduct employee interviews  Rule 41(c) Limits a Search Warrant to: 1. evidence of a crime; 2. contraband, the fruits of crime, or things otherwise criminally possessed; 3. property designed for use, intended for use, or used in committing a crime; or 4. a person to be arrested.

Handling EmployeesDuring Search:  Alert employees that search is occurring (by e-mail or memo);  Instruct employees to direct all questions from agents to company’s search coordinator or legal counsel;  Provide employees with an overview of their rights (gov’t usually does not);  Avoid even appearance of obstruction;  Instruct employees to refer all media questions to designated individual.

Employee’s Rights DuringSearch: Employees are under no legal obligation to talk to the agents - their choice; Employees have a right to consult with an attorney; Company will provide counsel  (if applicable)

Employee’s Rights During Search(Cont’d) In many circumstances, employees should be sent home (after being advised of their rights) Where employees consent to be interviewed, try to be present during the interview and take detailed notes on both: 1) Questions asked; and 2) Answers given.

After the Smoke Clears:Information is powerGather all facts surrounding the allegations/investigationThe good, the bad, and the ugly

Post-Search: Info to Obtain  Request copy of search receipt / inventory (list of items taken). See Rule 41(f)(3).  Request copies of all items seized.  If Request is refused – file motion to get it.  Obtain copy of “return” filed with court.  Warrant & copy of inventory returned to magistrate. Rule 41(f)(4).

Post Search: Unlawful Search and Seizure If search was unlawful, option to file a motion for property’s return.  Filed in district where property seized.  Court required to receive factual evidence.  See Rule 41(g). Alternately, may move to suppress. Rules 41(h) and 12.  Precludes use of documents from search at trial if granted.

Post-Search: Debriefing Immediately and thoroughly debrief all employees who consented to interview (if you were not present) Important insight into basis for investigation & positions you to better anticipate allegations Summarize all interviews into written memoranda.

Post Search: Dealing With the Media  Only counsel should talk to media, with rare exceptions.  “No comment” usually plays as “we’re guilty!”  Since the search will attract media, prepare your brief remarks carefully. 1) Preliminary nature of investigation; 2) Company’s willingness to cooperate; 3) Company’s own efforts to investigate and gather reliable facts; and 4) Other positive/accurate aspects of company  Beyond this, the less said the better.  Minimize statements that press or authorities can later characterize as inconsistent with facts.

Post-Search: Call to Prosecutor Counsel Must Initiate Communication with Federal Prosecutor to gather additional information (i.e., nature of investigation; targets, etc.). Goal of call is to foster similar dialogue regarding similar issues to call in subpoena response context.

Post-Search: Internal Investigation?Most Important Task: Assess need to conduct privileged internal investigation: 1) Interviews 2) Document Review & Summary

Contact me for further information& materials.Will Terpening(704) 787-3091 (mobile)

Responding to Grand Jury: Subpoenas & Search Warrants

by Nexsen Pruet

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