What Is "Derivative Use" in a Proffer Agreement??

Derivative use is when investigators use statements covered by a proffer agreement to uncover new leads. This is different from using the statement itself as evidence, which the agreement usually prohibits. If the agreement allows, prosecutors can use evidence they found through leads uncovered via the protected statements.

This is the opposite of “derivative-use immunity.” In Kastigar v. United States, 406 U.S. 441 (1972), the Supreme Court approved “use-and-derivative-use immunity” under the Fifth Amendment. True derivative-use immunity bars the prosecution from using any evidence traceable to a defendant’s immunized testimony unless prosecutors can prove the evidence came from an independent source.

While true derivative-use immunity is common in Grand Jury settings, it is not common in voluntary federal proffers. In these cases, the opposite is usually true: the agreement will authorize derivative use. This gives the government the ability to follow leads it uncovers through the defendant’s protected statements.

When we negotiate proffer agreements on behalf of our clients, we work to limit the scope of the authorized derivative use, if possible, and we include clear provisions that require prosecutors to keep meticulous records of their leads in order to clearly separate protected information from prosecution-eligible information.

However, when a defendant voluntarily proffers, the government has significant leverage to demand derivative use authorization. This is one of the biggest risks of proffering. But, if a defendant is thinking about volunteering, it is imperative that the defendant’s counsel work with the prosecutors to make the proffer agreement as favorable as possible before the proffered statements are delivered.

What Immunity Does a Federal Proffer Agreement Actually Provide?

A federal proffer agreement can provide one of three types of immunity protections:

• Use immunity protects the defendant’s proffer statements themselves, i.e., from direct use in the prosecution’s case-in-chief, but, strictly speaking, it does not protect against the use of evidence subsequently developed from those statements.
• Derivative use immunity protects both the defendant’s proffer statements and any evidence that the defendant helps the government uncover during the proffer session (and subsequently).
• Transactional immunity bars prosecution for any crime specified by the agreement, regardless of the evidence.

Neither use immunity nor derivative use immunity protects against evidence later uncovered by the government through means that are totally independent of the defendant’s proffer statements.

For example, under both use immunity and derivative use immunity, if prosecutors develop evidence through leads uncovered during the proffer session, they can use that evidence if:

• If they have use immunity, the prosecutors can use the evidence if the agreement expressly authorizes derivative use.
• If they have derivative use immunity, the prosecutors can use the evidence if the evidence was developed through an independent source.

Neither use immunity nor derivative use immunity is a form of “immunity from prosecution”; each bars only the evidentiary use of the protected statements and their fruits, while transactional immunity is what bars prosecution itself.

1. Formal Immunity under 18 U.S.C. §§ 6002-6005

The United States federal statute that formally addresses immunity protections is 18 U.S.C. §§ 6002-6005. Formal immunity under these provisions requires the court’s approval, and the statute itself has various protections and requirements that must be strictly followed by prosecutors.

2. Contractual Protections under a Federal Proffer Agreement

Contractual protections are covered by the letter of the proffer agreement itself, not by 18 U.S.C. §§ 6002-6005. Contractual protections are only available when the defendant voluntarily proffers, and the defendant’s proffer session is governed by a written proffer agreement. The proffer agreement may grant the defendant:

• Use immunity
• Derivative use immunity
• Transactional immunity
• Full immunity from prosecution for all crimes the defendant is suspected of having committed

What Evidence Counts as Derivative Use After a Proffer?

If the government believes it can use evidence that was uncovered in response to a proffer agreement, but the agreement does not authorize derivative use (i.e., it grants derivative-use immunity), Kastigar imposes the burden of proof on prosecutors to show that the evidence came from an “independent source.” Prosecutors that were informed of the terms of the proffer agreement’s immunity protections before the defendant’s session must prove the independence of the source “without reliance upon” the defendant’s immunized statements.

Under Kastigar, many types of evidence, ranging from witness testimony, documents, records, and other tangible items, can be considered derivative use, if the proffer session helped the government locate or shape the evidence. For example, testimony, records, and documents can become derivative evidence when:

• A witness is located through proffer disclosures, and then gives a statement.
• A witness who is already known to the government is contacted and a proffer disclosure helps the prosecutor shape their testimony in a certain way.
• A subpoena is issued for a witness’s records, but the proffer disclosure told the government that a subpoena was required.
• A search warrant for a location is approved, but the proffer disclosure prompted the government to search that location.
• A search warrant for evidence is approved, but the proffer disclosure led investigators to the location of the evidence (or how to find the evidence once located).
• Investigators perform forensic searches of the government’s case files and electronic data, but the proffer disclosure told the investigators what to look for and how to shape the forensic search.

However, Kastigar recognizes the opposite as well: evidence the government already possessed before the protected statement may still be used, because the prosecution can carry its affirmative burden by showing the evidence was “derived from a legitimate source wholly independent of the compelled testimony.”

Do Voluntary Proffers Trigger a Kastigar Hearing?

When prosecutors seek to use evidence that is allegedly derived from a proffer session at a voluntary proffer hearing, this can also trigger a Kastigar hearing, and then the burden is on the prosecutors to establish that they have evidence that proves it is admissible.

As a voluntary contractual proffer does not automatically trigger Kastigar hearing, in order to get the benefit of the Kastigar Court’s holdings, the defense needs to specifically make a motion to protect their client.

Does Authorized Derivative Use Equal “Independent-Source” Evidence?

Authorized derivative use and independent-source use are two different ways to admit evidence that originates with the defendant during a proffer session. While Authorized Derivative Use grants permission to the government to use evidence that is uncovered in response to a proffer session, Independent-Source Use provides a means for the government to use evidence that is not derived from a proffer session at all. Only authorized derivative use involves evidence uncovered in response to a proffer session; independent-source evidence, by definition, does not derive from the proffer at all, though both routes can yield evidence admissible at a criminal trial. The only difference is in how the evidence came to be in the government’s possession (or ownership).

Which Proffer Clauses Control How Prosecutors May Use Statements?

Proffer agreements vary significantly across federal districts and individual prosecutors. Factors such as the nature of the offense, the defendant’s criminal history, and the level of cooperation sought can all influence the agreement’s specific provisions. While there are certain general protections, a defendant’s proffer agreement will contain terms that are uniquely tailored to the government’s objectives and the defendant’s circumstances.

In the vast majority of cases, when a dispute arises regarding the scope of protection or enforcement of a proffer agreement, federal courts enforce the agreement strictly according to its written terms.

Though federal prosecutors generally dictate the terms of a proffer agreement, there is sometimes room for negotiation before the defendant signs. In this scenario, experienced defense counsel can work with the government to limit the government’s use of derivative information and ensure that any derivative use is strictly documented and limited to authorized or independent-source information.

Proffer letters are designed to be structured documents that govern the government’s use of information in various circumstances. As a result, a proffer letter typically sets forth separate rules for use in a trial, use in a sentencing proceeding, and use of information upon a defendant’s breach of the proffer agreement. As a result, while a proffer agreement might provide broad protection for use in a trial, it may allow for the use of proffer-protected information upon breach, such as in cases where the defendant’s proffer is deemed to have been intended to mislead the government.

Most proffer letters contain an “integration clause” stating that the written agreement constitutes the final agreement between the government and the defendant. This means that any unwritten or oral promises or assurances given by prosecutors before signing will likely be unenforceable in a federal court.

Impeachment and rebuttal are two triggers that allow the government to use protected proffer information in specific circumstances. If a defendant testifies at trial or if another witness provides testimony that contradicts the proffer, the government may be permitted to use protected information to impeach the witness’s testimony or rebut a defense, and both of these scenarios trigger different rules and circumstances as specified in the proffer letter.

The sentencing clause in a proffer agreement typically preserves the government’s right to use protected proffer information in connection with the sentencing proceedings, even if the agreement limits the government’s use of proffer information in its case-in-chief at trial.

When a proffer agreement is “integrated,” any oral promises made to the defendant by government prosecutors prior to signing are generally non-binding and unenforceable. This underscores the importance of ensuring that all protections promised by prosecutors are clearly and explicitly incorporated into the written proffer agreement itself.

If any of this describes your situation, it is worth talking it through with counsel. Spodek Law Group can be reached at 212-300-5196.

How Far Can Proffer Information Travel Beyond the Interview?

If a defendant’s proffer agreement explicitly grants USSG §1B1.8 protection, this protection needs to be expressly delineated from the letter’s other proffer protection language. The protection afforded by USSG §1B1.8 is for the purposes of the guidelines, and not all sentencing consequences; as such, it is important for the defendant’s proffer agreement to properly define and identify the specific limitations imposed by the proffer on the government’s ability to use proffer statements at sentencing.

Depending on the scope of the proffer agreement, information discussed during a proffer session may travel to other jurisdictions. The proffer agreement may permit federal prosecutors to share proffer information with other districts, and, again, it is important that the proffer agreement’s protections follow the proferred information.

While a proffer agreement generally protects against criminal prosecution, its protections may not extend to civil, tax, immigration, and professional licensing matters. If a defendant’s case could lead to other forms of prosecution or enforcement action, the proffer agreement must expressly incorporate appropriate protections.

If a proffer agreement applies to statements, it may not apply to records, documents, and electronics. This distinction can lead to an increased risk of derivative use, so it is important that the proffer agreement adequately addresses the risk of derivative use of all records, documents, and electronics that come to light during a voluntary proffer.

While the proffer agreement may protect the defendant, it generally does not protect associates that the defendant identifies during the proffer. Indeed, if the defendant volunteers information, this can often be the basis for a plea deal with the United States Attorney, the condition of which is to testify against those identified associates in a future cooperation agreement.

Crucially, while a proffer agreement can protect a defendant in various contexts, the proffer agreement does not guarantee that the defendant will have his or her charges reduced, or get leniency at sentencing. This is the subject of later negotiation in a voluntary federal cooperation agreement, the scope of which will depend on what the defendant offers to do in exchange for these benefits.

How Can a Lawyer Limit Derivative-Use Risk Before Signing?

Attorneys Proffer on Behalf of Their Clients

In some cases, a defendant’s attorney can proffer on behalf of the client. While attorneys are not permitted to proffer in certain contexts, when attorneys do proffer on behalf of their clients, this can significantly reduce some of the risks that would otherwise be present if the defendant itself provided statements. When an attorney proffers on behalf of the client, this can preview the value of the client’s potential cooperation without exposing the client to the inherent risks of voluntary proffering. However, attorney proffers only slightly mitigate these risks, as the defendant’s potential cooperation is still being evaluated by the government.

Revealing Trial Theory during a Proffer Session

Although protected proffer statements themselves can rarely be used at trial, they can, however, be used to reveal a defendant’s defense or trial strategy to the government. As a result, once a defendant proffers, prosecutors can use this information to shape a case that may negate the defendant’s theory before the case ever reaches trial.

Decline Proffering If Derivative-Use Limits are Weak

For some defendants, the derivative-use risks of proffering may be too great. In such scenarios, a compelling reason to decline proffering would be when prosecutors will not agree to limit derivative-use exposure or when other risks outweigh the benefits of proffering.

Evaluating the Value of a Proffer

Evaluating the value of a proffer session is not simple. Assessing the value of a voluntary proffer depends upon many factors, and one critical factor is determining what information prosecutors already know and what they know in contrast to the information the defendant may provide.

Confirming Information the Government Already Has

Providing information that is already known by the government during a proffer session will likely give a defendant little to no leverage. While this can sometimes be useful in certain circumstances, this type of proffer will generally not assist the defendant in negotiating a favorable plea agreement with the government.

Opening New Investigative Avenues

Giving the government new information opens new investigative avenues and this creates the highest risk of derivative-use exposure for the defendant. While this approach offers the potential for maximum leverage at the trial or sentencing stage, it requires meticulous preparation in order to mitigate the corresponding risk of derivative use.

Requesting the Scope and Terms of the Derivative Use Clause

In negotiation, it may be possible to include provisions that limit the scope and terms of derivative use. Specifically, these provisions can:

• Impose subject-matter limitations on the derivative use of protected proffer statements
• Set limits on the type of derivative evidence that may be admissible in a criminal proceeding
• Limit how long the government has to pursue leads resulting from a proffer session

What Can Happen if Prosecutors Violate the Proffer Agreement?

Proffers, Kastigar, and Waiver

Courts that have addressed whether a defendant can waive his or her constitutional immunity protections under Kastigar v. United States, 406 U.S. 441 (1972) generally treat Kastigar as a contractual waiver subject to enforcement under the plain language of the defendant’s proffer agreement. In these circumstances, federal courts will assess the scope of the proffer agreement’s protections and apply those protections according to the specific terms of the agreement. If it is clear that the government breached its proffer agreement, the agreement’s breach procedures will be invoked and the court will assess the proffer agreement’s language to determine whether a remedy is warranted.

Remedies for a Violation of a Federal Proffer Agreement

If the government violates a federal proffer agreement’s terms, possible remedies depend on the stage of the litigation when the breach is discovered.

• If the government is using protected information to support criminal charges, suppression of the affected evidence may be a remedy. But, suppression may be unavailable if the government invokes an independent-source exception.
• If the government is using protected information to support criminal charges, specific performance enforcing the proffer agreement may be a remedy.
• If a sentencing judge imposes a sentence that was based, at least in part, on the government’s use of proffer-protected information, a defendant can support a request for resentencing.

Waiver, Preservation, and Materiality

Similar to any other substantive defense or challenge, a violation of a proffer agreement must be preserved before a trial court to be reviewable on appeal. Defendants who fail to preserve a violation may face waiver, forfeiture, or other procedural consequences.

Additionally, once a defendant proves a violation of a proffer agreement, a finding of a constitutional error does not necessarily warrant the desired remedy. In addition to being harmless error, if the violation of the proffer agreement did not prove materiality, i.e., it did not have a material impact on the defendant’s trial, the defendant may be unable to secure the remedy they are seeking.

Proffer Disputes and Breach Procedures

Regardless of the specific defenses and arguments available, proffer disputes often turn on three important issues:

• Contract interpretation
• Whether prosecutors acted within their authority under the proffer agreement and whether their actions were sufficiently substantial to constitute a breach
• The rules that the proffer agreement establishes for determining the government’s compliance and enforcement

The burden of proof regarding the pemerintah’s adherence to proffer agreements may vary based on the agreement’s specific language. In a Kastigar hearing, the burden belongs to the government. In United States v. North, 487 U.S. 647 (1988), the Supreme Court addressed the scope of congressional use-and-derivative-use immunity.

Talk to Spodek Law Group

Every case turns on its own facts, and general information is no substitute for advice about yours. Todd Spodek, managing partner of Spodek Law Group, and the firm's attorneys defend federal criminal and white collar matters nationwide. Reach the firm at 212-300-5196.