Criminal Defense Lawyers

Parallel Prosecutions: Fighting Civil and Criminal Bribery Cases

Parallel Prosecutions: Fighting Civil and Criminal Bribery Cases

When a company or individual is accused of bribery, they often face parallel civil and criminal prosecutions. This means that both the Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) may pursue cases against them at the same time. While the goals of civil and criminal bribery laws are similar—to deter and punish bribery—the procedures, burdens of proof, and potential penalties are very different. Understanding how these parallel cases work is crucial for any company or person facing bribery allegations.

Let’s break down the key differences between civil and criminal bribery prosecutions, and how defendants can navigate fighting both types of cases at once.

The Basics of Anti-Bribery Laws

In the U.S., the main anti-bribery laws are the Foreign Corrupt Practices Act (FCPA) and various state commercial bribery statutes. The FCPA prohibits bribing foreign officials to gain a business advantage. It can be enforced through civil and criminal actions. Commercial bribery laws in states like New York and California prohibit bribing private parties in business transactions.

On the civil side, the SEC enforces the FCPA and can bring civil suits seeking injunctions and monetary penalties. In criminal cases, the DOJ prosecutes FCPA violations criminally, and violators can face prison time, massive fines, and oversight by monitors. The DOJ also works with the FBI to investigate bribery allegations.

How Parallel Proceedings Arise

Often, the SEC and DOJ will learn about potential FCPA violations at the same time, through corporate self-disclosure, whistleblowers, or their own investigations. The agencies frequently collaborate, but the DOJ cannot simply take civil evidence gathered by the SEC and use it directly in a criminal case. However, information can be shared between civil and criminal authorities through various methods, as long as attorneys working on each side “stay in their lanes.”

Defendants may receive inquiries, subpoenas, or Wells Notices from the SEC, indicating a civil investigation is underway. Later, they may get a target letter from the DOJ, signaling potential criminal prosecution. The agencies may contact companies simultaneously, or one agency may refer the case to the other if the conduct seems egregious.

Fighting parallel bribery cases poses many challenges for defendants. Responding to both agencies’ information requests can be extremely burdensome. And facts uncovered in the civil case could potentially be used against them criminally. Defendants need to be extremely cautious in their responses and assert their rights carefully.

Key Differences Between Civil and Criminal Bribery Cases

Below are some of the main differences between civil and criminal FCPA cases:

• Burden of Proof: In civil cases, the SEC only needs to show a violation is more likely than not, while criminal prosecutors must prove guilt beyond a reasonable doubt.
• Consequences: Civil cases generally result in injunctions and monetary fines, while criminal convictions carry possible prison time, larger fines, and reputational damage.
• Discovery: Civil discovery is much broader than what is allowed in criminal matters. Defendants can assert 5th Amendment rights more robustly in criminal cases.
• Resolutions: The SEC has discretion to settle cases and often resolves them through consent decrees. Criminal prosecutors can negotiate plea deals or deferred prosecution agreements.

These differences mean the strategies for responding to the SEC and DOJ will vary. Defense counsel must understand these nuances thoroughly when advising clients facing parallel bribery cases.

Responding to Parallel Investigations

Handling parallel civil and criminal FCPA investigations requires strategic thinking and coordination. Here are some tips for defendants:

• Get experienced counsel: Retain lawyers with specific expertise in multi-agency bribery investigations. Make sure they can coordinate responses across both matters.
• Conduct internal investigation: Perform a thorough internal investigation to understand the full scope of any misconduct. Identify key documents, witnesses, and issues.
• Limit document production: Try to limit civil discovery production to what is required by law. Be very cautious about providing privileged or work product documents.
• Assert 5th Amendment: In depositions and SEC interviews, employees should assert their 5th Amendment rights and avoid providing oral testimony that could be used criminally.
• Be consistent: Make sure all employees or witnesses stick to the same story. Inconsistencies could undermine credibility.
• Explore early resolution: Enter settlement talks with the SEC and DOJ prosecutors to resolve the matters globally, if possible.

Following these tips can help defendants navigate parallel bribery cases deftly. But the most important thing is working with experienced counsel to develop an integrated strategy across both matters.

Using Internal Investigations in Parallel Cases

Conducting an internal investigation is usually one of the first steps companies take when they learn of potential FCPA violations. The investigation report and findings can be useful in dealing with both the SEC and DOJ. But defendants need to be very careful about what information they share across the parallel matters.

The SEC will likely request a copy of the full investigation report, while criminal prosecutors may seek only factual summaries. Companies should try to limit what they provide to each agency. Reports should not contain speculative attorney work product or legal analysis. Defendants should also consider:

• Using separate investigative teams for civil and criminal matters
• Silencing witnesses before SEC testimony to avoid waivers
• Disclosing only key facts, not full interview notes or transcripts
• Seeking confidential treatment of any documents provided

While internal investigations serve important purposes, their findings can also bolster the government’s case. Defendants need to ensure they don’t hand over sensitive information that could be used against them.

Resolving Parallel Bribery Cases

Ideally, companies can negotiate a global settlement that resolves both the SEC and DOJ cases at once. This allows them to avoid the time, expense, and uncertainty of fighting on two fronts. Resolving FCPA matters often involves:

• Consent decrees – Agreements to settle SEC charges without admitting guilt
• Plea deals – Agreeing to plead guilty to DOJ charges in exchange for lighter sentencing
• DPAs/NPAs – Deferring or declining prosecution through an agreement

Settlements typically involve paying civil penalties, agreeing to compliance monitoring, cooperating with government investigations, and publicly admitting certain agreed facts. Companies may balk at admissions, but the DOJ and SEC usually insist on them.

Global settlements allow defendants to move past FCPA violations and get back to business. But the penalties and oversight required can be extensive. Resolving parallel bribery cases requires experienced counsel negotiating firmly but pragmatically with both agencies. Settlement terms must be crafted carefully to serve the client’s interests.

Avoiding Pitfalls in Parallel Proceedings

Navigating parallel civil and criminal FCPA cases is tricky. Defendants should be aware of potential pitfalls like:

• Making inconsistent statements to the SEC and DOJ
• Providing privileged information that waives rights
• Failing to properly assert and preserve 5th Amendment rights
• Not coordinating document production across both matters
• Settling hastily without understanding potential criminal exposure

Even subtle differences in statements or disclosures can tank a defendant’s credibility in parallel proceedings. Counsel must vigilantly avoid missteps that could have dire consequences in either matter.

Takeaways

Here are some key takeaways about parallel SEC and DOJ FCPA cases:

• Collaboration between civil and criminal bribery authorities continues to increase
• Defendants should proactively conduct internal investigations when bribery issues arise
• Responses to agencies must be coordinated by counsel across both matters
• Asserting 5th Amendment rights and limiting disclosures is critical
• Global resolutions allow defendants to avoid prolonged parallel fights

While daunting, parallel bribery prosecutions can be managed through experienced counsel, smart strategizing, and careful coordination. Companies should move swiftly to understand their potential exposure and explore all options for efficiently resolving these complex cases.