THE PERILS OF THE MID-LEVEL EXECUTIVE
Today's business environment involves a complex web of contracts, multi-level corporate structures, amorphous accounts receivables and creative tax avoindance mechanisms. These complex practices may serve the purposes of expediency and pragmatism, but when relationships are strained at the corporate headquarters, they can also easily be construed by top level executives as fraud and tax evasion.
What starts out first as a threat of civil lawsuit quickly turns into a federal criminal indictment involving the United States Attorneys office and the Department of Justice. When money is coming in, complex practices appear creative and efficient, but when times are hard, claims are made that the structure is a fraudulent straw-man artifice. Or when mid-level sales, marketing or technology executives leave under strained conditions to join a rival company, threats are made that secrets have been stolen. Scapegoats are sought after and created.
This melieu has led the the creation of a new class of lawyer, the former United States Attorney hired by the prominent civil litigation firm who is responsible for guiding in-house counsel to conduct internal investigations, ferreting out potential scapegoats, "packaging" an actionable federal prosecution, and delivering the "package" to the United States Attorney's office.
All of this is done to gain an advantage in the civil proceedings. When an exec is facing a an impending federal criminal indictment, he or she must plead the 5th at the civil deposition. Documents cannot be produced, either. This leads to default judgments and the risk of significant financial losses.
What is an executive to do? When the threat of a civil suit arises involving potential allegations of deceit, artifice, fraud, misappropriation or theft, one must be proactive and hire the counterpart of the former U.S. Attorney, the current federal criminal defense attorney. One can seek to cut off any potential criminal liablity at the outset of rumors and whispers of the lawsuit. Just as the top level execs can package a prosecution, so too a defense attorney can package a defense.
Credibility is the currency of victory in court, civil or criminal, and top level execs don't get to the top unless they step on a few toes and more than a few heads. THE WORST thing an exec can do is to take a "wait and see" approach. Once the United States Attorney's office is involved there is no turning back. They are out for blood and bone. If deals are made in the civil suit, the US Attorney is not inclined to drop charges. The civil opponents and the civil firms have no power to ask the US Attorneys to "call of the dogs."
There is a similar misconception in the domestic violence cases. Domestic violence victims believe that they can call 911 to subdue their spouses, give a police report, but then tell the prosecutor that they don't want to "press charges." Well, there is no such procedure as "pressing charges," and prosecutors don't "drop charges" based on recommendations of accusers. The same is true in the federal white collar arena, the prospect of a civil settlement doesn't help one's standing in the criminal case.
To make matters worse the US Attorneys like these packaged prosecutions, because they are perceived to be easy to handle. They will threaten indictments to encourage the exec to hire defense counsel, and offer a quick and easy guilty plea bargain, involving between six months to a couple of years in prison. They will offer incentives, like agreeing not to prosecute family members and friends under a conspiracy theory. These are the hardest ball tactics one can imagine. Additionally, if the case starts looking weak, they call in the IRS to dredge up bank and accounting records, and they have the skill to construe almost any tax avoidance mechanism as a tax evasion.
The best solution to this potential personal catastrophe is to nip the problem in the bud. Before the civil action is even filed, when the stirrings of discontent are apparent, the new "due diligence" requires being mindful of potential criminal proceedings. What is good for the goose is good for the gander. Before one is bankrupted by exhorbitant civil litigation fees of half-million to several million dollars, why not hire a tough current federal criminal defense lawyer with his/her own team of investigators to uncover old enemies and expose the skeletons in the closet for half or one third of the cost? Such action may actually curtail the civil case. Before the opponents commit to positions is the time to strike.
Hiring a federal criminal defense attorney might seem extreme and distasteful to a polite and skilled business person, but the reality of the possiblities are extreme and harsh. Word to the wise... when the grumblings of a civil suit involving breach of trust or deceit are heard, take action and just presume you are facing an imminent federal criminal indictment. Do yourself a favor and go on the attack at the earliest opportunity, you may save yourself tremendous money and time not imprisoned.