Government Investigations & White Collar Crime (J)



 

The Government Investigations & White Collar Crime Specialty Group has been activated in response to extensive interest exhibited by TAGLaw members, especially in the U.S. and particularly since the passage of the Sarbanes Oxley legislation (also known as SARBOX or SOX.)


Meet the Co-chairs - TAGLAW


Hines, Melanie Ann
Berger Singerman LLP
mhines@bergersingerman.com


Meet the Co-chairs - TIAG


Ray, Dan CPA/CFF, CFE
Hemming Morse, LLP
rayd@hemming.com


Government Investigations & White Collar Crime (J)


Authors: Jonathan Feld, Ferdose al-Taie & Jane Gerber

On January 19, 2019, federal Magistrate Judge Kandis Westmore of the Northern District of California denied the Government’s application for a search warrant that sought:

  1. “all digital devices” present at a California residence; (Order at 3), and
  2. “any individual present at the time of the search to press a finger (including thumb) or utilize other biometric features…for the purposes of unlocking the digital devices found in order to permit a search of the contents,” (Order at 1).

The request for the “use of biometrics” was stunning. Magistrate Judge Westmore denied the Government’s initial request, but invited the Government to submit a new search warrant. A day later when the Government submitted an amended application, it omitted the request to use biometrics. The court granted that amended application. Since the Government’s application named only two suspects in its affidavit, the Government’s request to compel any other individual present at the time of the execution of the search warrant to unlock their digital device(s) was too expansive.

Read more: Biometrics and Search Warrants: The Intersection of Your iPhone and the Fourth and Fifth Amendments


Authors: Jason Ross, Amelia Marquis, Jonathan Feld

In 2015, the Department of Justice (“DOJ”) announced a more aggressive stance requiring individual accountability in civil and criminal investigations of corporate misconduct. This policy change, set forth in a memorandum issued by Deputy Attorney General Sally Quillian Yates (the “Yates Memo”), announced that companies seeking cooperation credit were required (1) to undertake their own investigations, (2) to identify all culpable individuals, and (3) to produce material facts or employee statements related to the individuals’ involvement in the corporate violations. Now, the DOJ is lessening this burden and shifting back towards its pre-Yates Memo discretionary policy.

Read more: Bringing Back Discretion: DOJ Announces Revisions to Current Policy Concerning Corporate Misconduct


On June 21, 2018, the Supreme Court issued its opinion in the matter of Lucia v. SEC, 585 U.S. ___ (2018), which held that administrative law judges of the U.S. Securities and Exchange Commission (SEC) are considered Inferior Officers of the United States, therefore subject to the Appointments Clause (Article II, Sec. 2) of the U.S. Constitution. The Supreme Court ruled in favor of Mr. Lucia, 7-2, agreeing with his position that Administrative Law Judges (ALJs) are officers of the United States because they are effectively being given judicial power. Accordingly, administrative law judges must be appointed by the President or other delegated officer pursuant to the requirements of Inferior Officers, rather than hired as federal employees, which had been standard practice for ALJs. Lucia called into question cases pending before all of the SEC’s ALJs, all five of whom were hired as federal employees and none of whom served in their positions pursuant to Inferior Officer appointment requirements. Because of that, and in advance of the Lucia opinion being issued, on November 30, 2017, the SEC ratified the appointments of all five of its ALJS and stayed ALJ-pending cases until the Supreme Court ruled on Lucia.

Read more: Deadline Looms for Pending Cases in Front of Administrative Law Judges, per SEC Orders


Ferdose al-Taie, Dallas-based senior counsel in Dykema’s Commercial Litigation group, authored the article “Anonymous Whistleblowers Make Millions for Reporting Their Own Companies to Federal Regulators,” for FOCUS, the quarterly newsletter of the Association of Corporate Counsel (ACC) South Central Texas Chapter.

In the article, al-Taie shines a light on the ins and outs of Dodd-Frank Whistleblower awards and who is eligible for consideration. Throughout the article, she defines key terminology and addresses man frequently asked questions about whistleblowers and companies.

Read the entire article.

 


In Lagos v. United States, 584 U.S. ___ (2018), the Supreme Court issued a unanimous ruling that limits the ability of corporate victims of fraud to seek reimbursement of legal fees for internal investigations. The case began when GE Capital discovered that Sergio Lagos falsified numerous invoices for his company, which he used as collateral to obtain tens of millions of dollars in loans from GE Capital. After Lagos was convicted of fraud, GE Capital sought reimbursement under the Mandatory Victims Restitution Act of 1996 (the “MVRA”) for roughly $5 million in expenses, related to: (1) the company’s internal investigation of Lagos’ fraudulent conduct; and (2) the company’s participation in bankruptcy proceedings related to Lagos’ company.

Read more: U.S. Supreme Court Decides Fraud Perpetrator is Not Required to Reimburse Victim for Costs of...