Individuals in Cross-Border Investigations or Proceedings: The US Perspective
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There has been a consistent trend in the United States in the past decade towards increased prosecution of individuals in white-collar cases, including for financial fraud and foreign corruption offences. Following widespread criticism after the 2008 financial crises for failing to criminally charge individual wrongdoers, the US Department of Justice (DOJ) implemented a policy shift towards individual accountability, focusing on prosecuting individuals responsible for corporate misconduct and financial fraud.
Three years into the Trump administration, the DOJ and the Securities and Exchange Commission (SEC) continue to focus on prosecuting and charging individuals in white-collar cases. The number of individuals prosecuted by the DOJ Criminal Division’s Fraud Section substantially increased in 2018 over the preceding years, with 406 individuals charged. And as with the ever-increasing globalisation of the world economy, white-collar enforcement against individuals is increasingly cross-border.
For American white-collar practitioners, this means representing clients in all corners of the world as they navigate cross-border criminal prosecutions, civil enforcement actions and corporate internal investigations. Although there are important distinctions unique to each, many of the issues discussed in this chapter are common to all three. Counsel representing overseas clients will need to consider a host of additional issues, including jurisdiction, extradition and collateral consequences, to name a few.
18.2.1Arrest and bail
The first critical issue counsel face in criminal proceedings is counselling a client through arrest and bail. US authorities have various means for apprehending criminal defendants, including arrest in the United States, arrest in a foreign jurisdiction and extradition to the United States, or using Interpol red notices to detain foreign individuals travelling abroad. If a client is arrested abroad, counsel should immediately arrange for experienced local counsel. The availability of provisional arrest and bail pending extradition will depend on the laws of the arresting jurisdiction.
Arrest in the United States presents its own difficulties. Counsel will need to arrange for the client to appear in US court and apply for bail. In most cases, an overseas client will naturally wish to return home pending proceedings in the United States. However, the client’s foreign status may be the very thing that makes it difficult to obtain a bail package allowing international travel. The court is more likely to find that the client poses a flight risk (i.e., a risk of fleeing the jurisdiction to avoid criminal prosecution) due to limited US ties. This concern is greater where the client has substantial financial resources or ties to a country that has not entered into an extradition treaty with the United States. Counsel should discuss these risks with the client and obtain a complete understanding of his or her financial and personal circumstances to submit a bail application that mitigates flight-risk concerns. Even if pretrial release is granted, courts commonly impose a stringent set of conditions to guarantee the defendant’s ongoing appearance. These conditions may include, for example, home confinement, restrictions of travel to certain countries or districts within the United States, confiscation of travel documents and electronic monitoring.
18.2.2Preservation of evidence and maintaining confidentiality
Counsel must promptly ascertain whether the client has physical evidence relating to the matter in question. This may include emails, hard drives, text and instant messaging, financial records, and documentary evidence. Counsel should advise clients of the obligation to preserve and not destroy evidence, and consider whether to procatively collect and review such data.
Counsel will likewise need to preserve the integrity of the client’s factual recollection. This includes assessing whether the client has discussed relevant matters with potential co-defendants or other parties. Clients should be advised not to communicate with any third parties regarding the matters under investigation and, in most cases, to cease communications with co-defendants entirely.
18.2.3Initial conversations with the client
Counsel should meet with the client to assess the facts and available evidence as quickly as possible. These early conversations will inform counsel’s strategy for reviewing evidence, pursuing additional lines of inquiry, assessing strategic options, identifying potential common interest discussions and determining what resources are needed, such as specialised counsel.
It is of increasing importance that counsel representing individuals in cross-border proceedings have, at a minimum, working knowledge of extradition law given the frequency with which extradition issues arise. In 2019, the United States continued the trend of recent decades of aggressively pursuing extradition, including in white-collar cross-border proceedings involving Foreign Corrupt Practices Act (FCPA), money laundering, and securities and commodities law violations.
The US government often is able to secure the presence of a criminal defendant for trial only with the assistance of foreign authorities. While there are technically no limitations on US authorities’ ability to seek extradition of individuals abroad, the United States typically does so through extradition requests made pursuant to a treaty.
Extradition treaties form the basis for extradition law and procedure. Signatory states agree to extradite individuals within their jurisdiction who have been charged with an extraditable offence to the requesting state for trial and punishment. Each treaty specifically defines which offences are ‘extraditable’. Most modern treaties permit extradition where the alleged conduct is criminal and punishable as a felony in the signatory states (the ‘dual criminality’ approach). Treaties may also specify which offences are not extraditable, for example military offences or those punishable by death. Other common provisions include prohibitions on double jeopardy, limitation periods and restrictions on the extradition of nationals.
To date, co-operation has bilateral extradition treaties with approximately two-thirds (over 100) of the world’s nations and is party to two multilateral extradition agreements.
Extradition procedure is determined by treaty, the responding state’s extradition laws, and considerations of diplomacy and foreign policy. Typically, US authorities must first obtain approval from the DOJ’s Office of International Affairs (OIA). The OIA advises prosecutors regarding what filings are required under the applicable treaty, and the US Department of State issues a formal request to the responding state. The responding state’s judiciary then determines whether extradition is permissible.
The US government may also seek provisional arrest, namely a request to the responding state to arrest the individual pending submission of a formal extradition request. The DOJ deems provisional arrests appropriate where there is a risk that the individual will flee the foreign jurisdiction. The conditions under which provisional arrest is permissible, and the duration an individual may be held until a formal request is filed, vary by treaty.
The timeline for extradition to the United States varies depending on the circumstances of the case and the responding state involved. On average, it takes more than a year from the time the formal request is made until the individual is surrendered to US authorities. While US courts have held that the Speedy Trial Clause of the Sixth Amendment requires that extradition be sought as soon as the individual’s location becomes known, this has no bearing on how long it takes the responding state to surrender the individual according to its laws or due to other considerations.
18.3.3Strategic options: litigating or waiving extradition
Key factors affecting the decision to litigate or waive extradition include:
- Strength of available extradition defences: The advisability of litigating extradition turns primarily on whether it can be resisted successfully. While there are several defences available to extradition, they are limited.
- Strength of evidence in the US criminal case: The strength of US authorities’ evidence of the charged crimes is also relevant. If the evidence is strong and there may be viable extradition defences, attempting to defeat extradition may be the best (and perhaps only) way to avoid liability on the criminal charges. If, however, the evidence is strong and there are no viable or weak extradition defences, it is advisable to consider how best to mitigate eventual liability in the United States, including by considering consent to extradition in the hope of obtaining a favourable plea offer and sentence. On the other hand, if the client has a strong case to defend against the underlying charges, he or she may wish to waive extradition, fight the charges in the United States, and attempt to assert the rule of speciality should the United States later try to supersede with additional or more serious charges.
- The client’s goals: Clients may nonetheless prefer to defer extradition for personal, family or similar reasons, even if they are unlikely to succeed. For example, if the client has health issues requiring treatment, or wants to remain close to relatives, it may be prudent to litigate. Conditions of confinement may also impact the decision, for example, if the client obtains a favourable bail package in the arresting state, he or she may prefer to delay extradition to the United States, where bail conditions may be uncertain and conditions of confinement more difficult.
- Costs and resources: Litigating extradition is expensive and resource-intensive. Clients, especially those with limited resources, may wish to direct finite resources to fighting the underlying criminal case.
These considerations must be balanced against the risk that if the United States successfully extradites the client, authorities likely will view prior resistance to extradition as avoiding responsibility or purposefully delaying the criminal case. Both could negatively impact the disposition of the case, impeding an effort to secure bail upon extradition and foreclosing or limiting favourable plea offers, co-operation opportunities, or sentencing recommendations.
If a client waives extradition, the procedure typically involves filing an affidavit of consent in the responding state acknowledging that the extradition requirements have been met. Individual states may have additional requirements to perfect waiver. Not all treaties allow waiver, in which case waiver may be denied.
Regardless of which option a client chooses, it is critical to retain extradition counsel in the responding state. Extradition proceedings have serious implications for a client’s liberty and involve multiple foreign jurisdictions. Experienced counsel is necessary to identify potential defences, attend court appearances, and communicate with foreign counterparts.
18.3.4Defences to extradition
Defences to extradition are limited, as the responding state generally must grant extradition provided treaty requirements are met. Ultimately, the specific language of the treaty at issue and, in some cases, the laws of the responding jurisdiction, determine which defences are available. Common defences include:
- Where the offence occurred: Historically, many treaties did not permit extradition for crimes for which the United States asserts extraterritorial jurisdiction. Another example of the location of the alleged misconduct operating as a defence is found in the UK’s ‘forum bar’, which has recently been successfully invoked in multiple cases. The majority of modern treaties now require extradition regardless of where the offence occurred or allow extradition provided that the signatory countries’ criminal laws are compatible.
- Nature of the offence: The next defence is whether the offences in question are extraditable under the language of the applicable treaty. For example, in dual criminality treaties, extradition typically is denied where the alleged offence is not a crime in the responding state.
- Procedural issues: Procedural defences may be available based on deficiencies in the extradition proceeding, for example insufficiencies in the United States’ filings such as a lack of signature or failure to produce the warrant. Counsel also should consider whether any statute of limitations or double jeopardy defences apply.
- Humanitarian considerations: Humanitarian defences may apply. Many states deny extradition where the requesting state may pursue the death penalty[47 or has inhumane prison conditions. A handful of states allow individuals to assert lack of mental competency as a defence. However, humanitarian defences often can be defeated by the US government by certain undertakings, for example agreement that the United States will not seek the death penalty.
18.3.5Appealing extradition orders
Although extradition orders typically are not appealable, counsel should consult with experienced counsel in the responding state, as local law may allow for appeal. Even if no appeal is made, the United States may file a new complaint to begin a separate extradition proceeding if unsuccessful in the first. Courts have uniformly held that there is no limit to how many times the United States may renew an extradition request, even when based on the same evidentiary facts as the earlier request and regardless of whether it was previously denied on the merits or procedural grounds. Similarly, clients may always challenge an adverse extradition ruling by petitioning for a writ of habeas corpus in the United States. The US court’s ruling on such a petition is appealable, and the court may choose to stay the foreign extradition proceeding during the appeal.
2019 saw significant extradition activity. New extradition treaties took effect, including treaties between the United States and Serbia and Kosovo. The US government also sought and successfully executed a number of extraditions. In perhaps the highest-profile case of 2019, UK authorities provisionally arrested WikiLeaks founder Julian Assange to face extradition to the United States. Extradition for FCPA offences also continued to be active, consistent with the DOJ’s and SEC’s increasingly broad view of their mandate to enforce the FCPA.
There are a number of strategic considerations counsel must bear in mind in advising a white-collar client navigating a criminal, civil or internal investigation or proceeding. While certain of these considerations are common to all three contexts, others are particular to criminal actions or internal investigations.
18.4.1Assessing the client’s status
In all three contexts – criminal, civil and internal – counsel must first assess a client’s status with respect to a current or potential criminal action (should one later be initiated). Individuals who come into the orbit of a US criminal investigation fall into one of three categories: witness, subject or target. Counsel must assess the client’s status to advise on strategic options, which will vary depending on status. For this reason, it is common for counsel to seek clarification from the DOJ regarding a client’s status. However, even if a client is a witness, the designation may change as the investigation progresses. It is therefore critical to independently and continuously assess the client’s exposure to advise on the relevant risks and strategic options.
18.4.2Decision to co-operate
184.108.40.206Co-operating with or defending a criminal or civil proceeding
A client facing criminal or civil prosecution must choose whether to co-operate with authorities or fight the case. Co-operation may be an attractive option to reduce the potential sentence or financial penalties. But these potential benefits are not without risks. The client must understand the duties that accompany co-operation, including admitting criminal conduct, meeting with the government to provide information about his or her (and others’) involvement, and potentially testifying against others at trial. The client also must disclose any other potential misconduct, even if outside the scope of the investigation, and be fully transparent about his or her finances. In determining whether to recommend co-operation, counsel should assess the quality of the client’s information, its likely usefulness to the government’s case, and the client’s capacity for candour and ability to endure probing proffer sessions or trial.
Co-operation typically begins with attorney proffers, during which counsel ‘previews’ for the government the information that the client can provide. The client will then typically meet with the government for multiple proffer sessions before entering into a formal co-operation agreement to resolve the charges. Client proffers should typically be conducted only after negotiating a proffer agreement, which provides limited protections from the government’s future use of any statements made. In addition, before the proffer, counsel should advise the client that he or she cannot be forced to provide information to the government, discuss the consequences of voluntarily speaking with the authorities, and ensure that the client understands the limited protections and potential pitfalls of any proffer agreement.
Clients co-operate with the hope, but no guarantee, of receiving a recommendation from the government for a reduced sentence. Practically speaking, this is delivered in a ‘5K1.1 letter’ from the government recommending a lower sentence than would otherwise be imposed in exchange for co-operation (or ‘substantial assistance’). Alternatively, clients may receive a deferred prosecution agreement (DPA), under which all charges are dropped after certain conditions are met. A DPA is preferable to a 5K1.1 letter but is harder to obtain.
Many clients choose to co-operate after they have been indicted. In these circumstances, clients usually must decide relatively quickly whether to co-operate, as timeliness of co-operation and acceptance of responsibility will impact the government’s plea offer, sentencing recommendation and, ultimately, the court’s sentence. Clients may have the opportunity to co-operate pre-indictment, though this typically requires that counsel be involved and proactively engage with the government from the investigation’s outset. In these situations, clients may be able to resolve the proceedings through a non-prosecution agreement (NPA), in which authorities decline to bring any charges.
Co-operation is not the right path for all clients. Several legal and personal factors may lead the client to fight the case. In those cases, counsel must carefully research and evaluate the client’s likelihood of criminal liability and potential defences, including limitation periods and jurisdiction. It is also important to understand the client’s personal, financial and family circumstances. Some clients who have a reasonable likelihood of successfully defending the case may nevertheless choose to co-operate because of the collateral consequences of a criminal trial.
220.127.116.11Co-operating with an internal investigation
In advising a client on co-operating with an internal investigation, counsel should first assess whether the client is a current employee with a duty to co-operate under relevant laws, employment agreements or company policies. If a client is a former employee, he or she nonetheless may be required to co-operate under the terms of any deferred compensation or separation package. Counsel should advise all clients to consider the ramifications of not co-operating on employment prospects and their relationship with the company.
Counsel must also assess whether co-operation will jeopardise Fifth Amendment protections. While private employees generally do not have a Fifth Amendment right against self-incrimination in internal investigations, the right applies where co-operation is compelled (e.g., threat of termination or economic consequence such as unpaid suspension), and the employer’s actions are ‘fairly attributable’ to the government. For example, earlier this year, a federal district court held that an employee’s statements were ‘compelled testimony’ protected by the Fifth Amendment in an internal investigation conducted by his employer at the direction of an enforcement agency. Accordingly, while a client cannot assert the Fifth Amendment in a purely internal investigation, he or she can likely do so where the investigation is conducted at the government’s behest, the government has substantial input into the investigation or the government has effectively ‘outsourced’ its investigation to the employer or its counsel.
Finally, counsel must consider the criminal, civil or regulatory consequences of co-operation, including the possibility that the company will share the substance of the client’s interview with criminal or civil enforcement authorities. While the client’s communications during such interviews are typically privileged in the United States, the underlying facts are not. Further, the privilege belongs to the employer, and the employer may choose to waive privilege, including through self-reporting or compelled disclosure. By the same token, counsel should consider the consequences of not co-operating, particularly in jurisdictions such as the United Kingdom, where FCA-approved persons have an positive obligation to co-operate and failure to do so could jeopardise licensed status.
18.4.3Dealing with multiple authorities
An additional consideration that often arises in cross-border proceedings is how evidence collected and statements made in one jurisdiction can be used by authorities in another. This issue is increasingly important because the United States is more frequently coordinating white-collar investigations with foreign authorities. It has also become common for foreign authorities to conduct parallel investigations into the same or related conduct, regardless of whether there is express coordination with US authorities.
Counsel must consider what impact investigations and corresponding procedures in other jurisdictions may have on US proceedings. One key consideration in this respect is whether a client might waive Fifth Amendment rights by testifying in a foreign proceeding, opening the door for that testimony to be used against the client in a present or future criminal or civil proceeding against the client in the United States. Providing some comfort to clients who are compelled to provide testimony in foreign proceedings, at least one US court has held that the Fifth Amendment’s prohibition on the use of compelled testimony extends to testimony compelled by a foreign authority, ‘even when the testimony was compelled . . . in full accordance with [foreign] law’.
Counsel should also consider whether a client’s voluntary interview with a foreign authority would require discussion of subject matter otherwise protected by the attorney–client privilege and therefore waive privilege, permitting US authorities to use that information in their own proceedings. In these situations, it is often advisable to consult with local counsel to confirm the client’s obligations and potential risks of refusing the interview request in the foreign jurisdiction.
18.104.22.168Evidence obtained pursuant to mutual legal assistance treaty (MLAT)
If a client does not co-operate, US authorities may seek testimonial or documentary evidence via an MLAT request. The MLAT process can be slow, taking more than a year between the time a request is made and the time testimony is taken or documents produced. Although most MLATs permit the requesting authority to be present during questioning, the interviews are typically conducted by foreign law enforcement officials pursuant to local procedural rules. This means that certain protections available in the United States may not apply, for example the right to counsel or attorney–client privilege. Accordingly, local counsel is essential to navigating the interview process in the foreign jurisdiction.
A client must also select counsel, which entails deciding whether to engage independent counsel or pursue joint or pool counsel representation with counsel for an employer or colleagues, or both.
Where the representation relates to a client’s current or former employment, many employers encourage retaining company counsel, particularly when the client is a current employee. For purely internal investigations, or where there is no indication of individual wrongdoing, an employee may not feel the need for counsel or may be happy working with company counsel. While joint representation by company counsel is often the most expedient and economical choice for employers, company counsel is not always the right choice for the client and ultimately may be problematic for the company. The opportunity for conflicts to arise in a joint representation is substantial, particularly where the client may give testimony contradicting the employer’s position or creating liability for the employer. For former employees, the risk of conflict is even more acute, as employee–employer interests are even less likely to be aligned. If clients elect not to co-operate, they will have no choice but to appoint independent counsel, owing to the inherent conflict created.
A client may alternatively choose to appoint pool counsel, wherein the client is represented along with several other clients by one counsel. Pool counsel is an efficient way to provide representation for multiple employees while saving time and resources. It is typically appropriate when the clients are fact witnesses with minimal or no personal exposure, or fall into the same category (e.g., former employees); the subject of the interviews is likely to be similar; or the investigation is expected to be finite. Pool counsel is not appropriate when clients may contradict or give testimony creating liability for one another. Pool counsel must vigilantly monitor for conflicts and ensure that each client is aware of the duty owed to the others. To this end, clients should be counselled about the potential conflicts and privilege implications of pool counsel, and engagement letters should require clients’ informed consent to the arrangement.
Regardless of the type of counsel selected, clients should also consider whether to engage specialised counsel, such as employment counsel to advise on co-operation obligations under applicable labour law or employment agreements, or counsel specialising in the law of the foreign jurisdiction, for example in jurisdictions with stringent privacy laws or circumscribed attorney–client privilege protections.
18.4.5Impact of company settlement
Counsel must consider the impact of a company’s settlement or plea agreement, which may name individual employees, reference employee conduct or admit facts implicating individual employees. The risk that a company names individual employees is particularly acute given the DOJ’s policy requiring companies to report misconduct by individual wrongdoers to receive co-operation credit. Counsel should advise clients that a company’s settlement or plea agreement with enforcement authorities does not necessarily extinguish potential criminal liability for the client, nor does it eliminate the potential for claims in separate civil litigation, for example a shareholder derivative suit.
18.5.1Privilege laws across jurisdictions
A key consideration in cross-border proceedings is whether legal communications will be protected from disclosure to regulators and other parties. While in the United States these communications are protected by the attorney–client and work-product privileges, analogous protections are not always available in foreign jurisdictions.
Additionally, in certain circumstances, US counsel’s own communications with a foreign client may not be protected under US law. To determine whether such communications are privileged, US courts apply the ‘touch base analysis’, deferring to the privilege laws of the country with the ‘predominant’ or ‘most direct and compelling interest’.
Privilege protections may also diverge among jurisdictions with respect to communications with in-house counsel, an issue that typically arises in internal investigations. Under US federal law and the laws of each state, the attorney–client privilege applies equally to communications with external and in-house counsel. In many European countries, however, the equivalent privilege applies only to written communications between clients and external counsel.
Foreign privilege rules have a meaningful impact on the scope of materials and information available to investigating authorities and even counsel. It is therefore prudent to consult with local counsel to understand the scope of protections in the relevant jurisdiction.
18.5.2Foreign restrictions on information transfer
Many countries have data protection laws restricting extraterritorial transfer of personal and corporate information. The General Data Protection Regulation (GDPR), which came into force in 2018, effected significant changes in data privacy. The data protection and transfer laws of some countries further restrict how data can be shared or used.
The practical effect is that counsel may not be able to transfer data to the United States and will need to review relevant material in a foreign jurisdiction. Similarly, there may be restrictions on the materials or information a client can disclose to US authorities in interviews or productions. Clients (and counsel) could expose themselves to sanctions for failing to comply with these regimes and should consult local counsel to ensure compliance.
18.5.3Evidentiary considerations in internal investigations
In internal investigations, clients may be asked to provide documents, emails or other records to company counsel. Clients typically must comply if the materials were created or maintained in the course of employment, as they are considered the employer’s property. Failure to comply risks disciplinary action, termination or being reported to authorities as unco-operative or obstructionist. For this reason, too, clients should be counselled to carefully abide by any legal holds. Even if a hold has not issued, clients should preserve all potentially relevant materials to avoid even the appearance of potential spoliation.
Notwithstanding the above, former employees may be able to assert the Fifth Amendment in refusing to produce incriminating documents to US authorities. Current employees generally do not have this right. Before turning over any documents to company counsel that may be shared with authorities, counsel should seek advice from local counsel regarding the client’s (and counsel’s) exposure for doing so under applicable data privacy or other local laws.
Finally, in most internal investigations, individual counsel is dependent on company counsel to obtain relevant materials. To this end, a cordial and co-operative relationship with company counsel is critical to facilitate information sharing.
18.6Asset freezing, seizure and forfeiture
Counsel should advise clients regarding the potential for asset freezing, seizure or forfeiture. In criminal proceedings, the DOJ may pursue criminal or civil forfeiture of tainted assets, that is, property derived from the criminal conduct, or substitute assets up to an equivalent value, if tracing the directly forfeitable property is impossible or the tainted assets are no longer available. Criminal forfeiture charges must be included in the indictment. A criminal forfeiture order typically cannot be obtained unless the client is criminally convicted of, or has pleaded guilty to, a forfeiture offence. In civil proceedings, the DOJ must file an in rem action, namely one against the property derived from or used to perpetrate the crime, and usually seizes the property (with the exception of real property) before the court’s entry of a civil forfeiture order.
The DOJ also may obtain a pre-indictment or pretrial restraining order to freeze assets that have not yet been seized. The SEC may similarly freeze assets through a temporary pretrial restraining order to ensure that funds for a future disgorgement order are available.
If the assets subject to forfeiture are unavailable as a result of the client’s act or omission, US authorities can satisfy the forfeiture order through substitute assets (other assets of the client of comparable value). Counsel should discuss with clients the impact this may have on joint assets such as a home or other property shared with a spouse.
US authorities have increasingly sought to freeze and seize assets in white-collar cases involving securities fraud, bribery, money laundering and insider trading, even when the assets in question are located outside the United States. 2019 was no exception to that trend.
Counsel must be attuned to numerous collateral consequences of a cross-border proceeding. These include the potential for (1) parallel actions by other authorities (domestic or foreign), (2) follow-on civil litigation by shareholders or victims, (3) revocation or suspension of regulatory or professional licences or registrations, (4) difficulty obtaining requisite background or ‘know your customer’ clearance for employment or personal finances, (5) reputational harm and (6) immigration or travel consequences, particularly if the offence is deportable or where extradition has been defeated.
18.8The human element: client-centred lawyering
Individual representations raise unique issues concerning client-centred lawyering beyond those that typically arise in a corporate representation. Criminal actions are particularly traumatic for both clients and their families, particularly given that most white-collar clients are interacting with the criminal justice system for the first time. While the luxury of time is not always available, counsel should strive to allow the client enough of it to process the situation before making any irreversible decisions.
Counsel also must be attuned to the impact of the proceeding on the client’s physical and mental health. Preliminary discussions should cover these issues, as well as the client’s support system. Engaging with the client’s support system is essential at all stages, including fact gathering, assessing strategic options, deploying financial resource and determining resolution. For clients facing criminal proceedings, family support impacts all aspects of the case, from bail conditions to the sentence imposed.
Finally, counsel must be sensitive to the impact of the proceeding on the client’s professional and personal reputation. Even if no enforcement action is taken, mere association with a proceeding – particularly if criminal – may so negatively impact the client’s reputation that he or she is unable to work in the industry again or live in the same community. Counsel should be prepared to advise clients on how to mitigate reputational risks and expect that these considerations will impact clients’ decisions.
1 Amanda Raad and Michael McGovern are partners, and Meghan Gilligan Palermo, Zaneta Wykowska and Sara Berinhout are associates, at Ropes & Gray LLP.
2 Beginning with the ‘Yates Memo’, issued in late 2015 by former US Deputy Attorney General Sally Yates, the DOJ instituted a policy emphasising the need for US prosecutors to pursue prosecutions of individuals involved in corporate wrongdoing. To effectuate this policy, the Yates Memo mandated that, for a company to receive any co-operation credit, it must provide the DOJ with ‘all relevant facts about the individuals involved in corporate misconduct’ in both criminal and civil cases, regardless of the level of their involvement in the alleged misconduct. See Memorandum from Sally Quillian Yates, Deputy Att’y Gen., U.S. Dep’t of Justice, Individual Accountability for Corporate Wrongdoing (9 September 2015), https://www.justice.gov/dag/file/769036/download.
3 In recent years, the DOJ has relaxed the rigid requirements of the Yates Memo, no longer requiring companies to identify every person with a role in wrongdoing, regardless of culpability level. However, DOJ policy still mandates that companies identify all individuals who were ‘substantially involved in or responsible for the misconduct at issue’ to receive any co-operation credit. In the civil context, the DOJ has implemented a ‘sliding scale’ approach where co-operation credit is awarded based on the degree of co-operation. See Rod J Rosenstein, Deputy Attorney General, U.S. Dep’t of Justice, Prepared Remarks for the 35th International Conference on the Foreign Corrupt Practices Act (29 November 2018), https://www.justice.gov/opa/speech/deputy-attorney-
4 See U.S. Dep’t of Justice, Criminal Division Fraud Section Year in Review 2018, https://www.justice.gov/criminal-fraud/file/1123566/download; U.S. Dep’t of Justice, Criminal Division Fraud Section Year in Review 2017, https://www.justice.gov/criminal-fraud/file/1026996/download (301 individuals charged in white-collar cases in 2017 and 300 in 2016).
5 For example, one of the DOJ’s headline cases in 2018 saw numerous individuals charged in a scheme to pay bribes to government officials in Venezuela in exchange for business with Venezuela’s state-owned energy company, Petróleos de Venezuela S.A. (PDVSA), Press Release, U.S. Dep’t of Justice, Five Former Venezuelan Government Officials Charged in Money Laundering Scheme Involving Foreign Bribery (12 February 2018), https://www.justice.gov/opa/pr/five-former
6 See U.S. Dep’t of Justice, Justice Manual § 9-15.635 (2018), https://www.justice.gov/jm/jm-9-15000-international-extradition-and-related-matters (Justice Manual); see also U.S. Dep’t of Justice, Justice Manual: Criminal Resource Manual § 611 (2018), https://www.justice.gov/jm/criminal-resource-manual-601-699 (Criminal Resource Manual).
7 For this reason, counsel engaged during the investigatory phase of a cross-border DOJ investigation should carefully consider the client’s exposure to prosecution and risk of arrest while overseas. The client should be advised to carry counsel’s contact details at all times. In some cases, and taking into consideration the client’s home country, counsel may advise the client to refrain from international travel while the DOJ’s investigation is pending.
8 Under the Bail Reform Act, 18 U.S.C. § 3142(b) & (c)(1)(B), US courts must order a defendant’s pretrial release unless the court ‘determines that such release will not reasonably assure the appearance of the person as required or will endanger the safety of any other person or the community.’ Where a defendant is released, the court must do so ‘subject to the least restrictive further condition, or combination of conditions that . . . will reasonably assure the appearance of the person.’ On the other hand, a court must order detention if it ‘finds that no condition or combination of conditions will reasonably assure the appearance of the person as required and the safety of any other person and the community.’ Id. § 3142(e).
9 See, e.g., United States v. Zarrab, 15-CR-867, 2016 WL 3681423, at *7 (S.D.N.Y. 16 July 2016); United States v. Epstein, 155 F. Supp. 2d 323, 326 (E.D. Pa. 2001).
10 Communications with such parties should be through counsel and only pursuant to common interest privilege.
11 See id.
12 Initial discussions with the client should include a detailed and candid conversation about the client’s financial resources, goals for how those resources are deployed and the availability, if any, of insurance coverage. Litigating criminal actions has grown increasingly expensive in recent decades. Counsel should ensure that the client has a complete understanding of the resources necessary to defend the case, particularly if the client fights the charges and all the more so if the client is self-funding the representation. Where a client is able to be covered under a ‘D&O’ (directors and officers) policy or similar liability insurance, counsel may advise the client to retain specialised insurance counsel to assist in obtaining and understanding potential limitations on coverage, for example, policy provisions allowing the insurer to claw back legal fees if the client later pleads or is found guilty of criminal charges.
13 In all cases, it is important to consider at the outset the need for other counsel, including employment counsel, extradition counsel, regulatory counsel or counsel specialising in the privacy laws of the relevant jurisdiction.
14 Bruce Zagaris, International White Collar Crime: Cases and Materials 413 (2d ed. 2015), https://www.cambridge.org/core/books/international-white-collar-crime/extradition-and-alternatives/ A89CB30F7457E4EFCD81B046DB0833A5 (‘According to the Department of State, U.S. courts certified 137 extradition requests between 1945 and 1960 – an average of only 9 per year. In 1995, in contrast, the U.S. extradited 79 people to other countries and received custody of 131.’).
15 See Ronald J Hedges, Federal Judicial Center International Litigation Guide: International Extradition: A Guide for Judges 1, 4 (2014), https://www.fjc.gov/sites/default/files/2014/International-Extradition-Guide-Hedges-FJC-2014.pdf.
16 For instance, the treaty between Albania and the United States includes an inventory of more than two dozen crimes. Extradition Treaty, Alb.-U.S., art. 2, 1 March 1933, 49 Stat. 3313.
17 Justice Manual, supra note 6, § 9-15.635 (2018); see also Criminal Resource Manual, supra note 6, § 603.
18 See, e.g., Extradition Treaty, U.K.-U.S., art. 4(1)-(2), 31 March 2003, T.I.A.S. 07-426 (UK Extradition Treaty).
19 Historically, the most common extradition treaty provision provided that signatory countries were not required to extradite their own citizens. See M Cherif Bassiouni, International Extradition: United States Law and Practice 746 (6th ed. 2014). This practice has evolved, however, and many modern treaties contain provisions either prohibiting signatory countries from denying extradition on the basis of nationality, or providing that denial on the basis of nationality is permissible only if the case is referred to local authorities for prosecution. See, e.g., U.K. Extradition Treaty, supra note 18, art. 3; Extradition Treaty, Peru-U.S., art. 3, 26 July 2001, T.I.A.S. 03-825; Extradition Treaty, Belize-U.S., art. 3, 30 March 2000, T.I.A.S. 13089; Extradition Treaty, Para.-U.S., art. 3, 9 November 1998, T.I.A.S. 12995; Extradition Treaty, S. Kor.-U.S., art. 3, 9 June 1998, T.I.A.S. 12962; Extradition Treaty, Pol.-U.S., art. 4, 10 July 1996, T.I.A.S. 99-917. Certain countries do, however, continue to prohibit extradition of their nationals but retain the discretion to do so. See, e.g., Extradition Treaty, Fr.-U.S., art. 3(1), 23 April 1996, T.I.A.S. 02-201 (France Extradition Treaty); Extradition Treaty, Ger.-U.S., art. 7(1), 20 June 1978, 32 U.S.T. 1485.
20 See U.S. Dep’t of State, Treaties in Force: A List of Treaties and Other International Agreements of the U.S. in Force on January 1, 2019, https://www.state.gov/wp-content/uploads/2019/06/2019-TIF-Bilaterals-6.13.2019-web-version.pdf.
21 See Inter-American Convention on Extradition, 26 December 1933, 49 Stat. 3111 https://www.oas.org/juridico/MLA/en/Treaties/en_Conve_Extra_Inter_American_1933_Montevideo.pdf; Extradition Agreement, European Union-U.S., 25 June 2003, S. Treaty Doc. No. 109-14, https://www.congress.gov/109/cdoc/tdoc14/CDOC-109tdoc14.pdf. In addition, the United States is party to several multilateral international conventions that further reinforce bilateral extradition treaties by binding member states to either extradite or prosecute individuals charged with particular offences. See, e.g., United Nations Convention for the Suppression of Unlawful Seizure of Aircraft art. 8, 16 December 1970, 860 U.N.T.S. 105; United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances art. 6, 20 December 1988, 1582 U.N.T.S. 95.
22 Justice Manual, supra note 6, § 9-15.210.
23 Id. § 9-15.300.
24 Specifically, the presiding judge in the foreign jurisdiction will confirm the identity of the individual, that the relevant treaty and domestic laws support extradition for the alleged offence, that the complaint filed by the United States sets forth sufficient facts to support probable cause to believe that the alleged offence was committed, and that all other elements of the extradition request comply with treaty provisions. See Hedges, supra note 15, at 10-11. The individual is then provided an opportunity to challenge the validity of the extradition request on various factual and procedural grounds. The Federal Rules of Criminal Procedure, Civil Procedure and Evidence do not apply in extradition proceedings. See In re Requested Extradition of Kirby, 106 F.3d 855, 867 (9th Cir. 1996) (Noonan, J., dissenting); Fed. R. Evid. 1101(d)(3); Fed. R. Crim. P. 1(a)(5). Accordingly, hearsay evidence and unsworn statements may be admissible. See, e.g., Haxhiaj v. Hackman, 528 F.3d 282, 292 (4th Cir. 2008); Zanazanian v. United States, 729 F.2d 624, 626 (9th Cir. 1984); Collins v. Loisel (Collins II), 259 U.S. 309, 317 (1922); Artukovic v. Rison, 784 F.2d 1354, 1356 (9th Cir. 1986).
25 All modern US extradition treaties include articles providing for provisional arrest. See S. Exec. Rep. No. 106-26, at 31 (2000) (report from U.S. Senate Committee on Foreign Relations); see, e.g., Extradition Treaty, Canada-U.S., art. 11(1), 3 December 1971, 27 U.S.T. 983.
26 Criminal Resource Manual, supra note 6, § 615.
27 Typically, once a provisional arrest is made, prosecutors have between one and three months to submit a formal extradition request. See Justice Manual, supra note 6, §§ 9-15.210, 9-15.230; see, e.g., Extradition Treaty, Canada-U.S., art. 11(1), 3 December 1971, 27 U.S.T. 983 (requiring release ‘upon the expiration of forty-five days from the date of his arrest’ if an extradition request is not received within that time).
28 If a client is taken into custody under a provisional arrest warrant, counsel likely will need to advise the client regarding bail, which may be sought in the responding jurisdiction while extradition is pending. Clients may need to mobilise significant resources and assemble bond guarantors to effectuate bail as quickly as possible. For this reason, too, it is essential that experienced extradition counsel in the relevant jurisdiction be engaged to navigate bail issues in the responding state.
29 Justice Manual, supra note 6, § 9-15.400.
30 Jonathan Masters, What is Extradition?, Counsel on Foreign Relations (11 April 2019), https://www.cfr.org/backgrounder/what-extradition.
31 United States v. Blanco, 861 F.2d 773, 780 (2d Cir. 1988), cert. denied, 489 U.S. 1019 (1989); United States v. Pomeroy, 822 F.2d 718, 720 nn.3-4 (8th Cir. 1987); United States v. Walton, 814 F.2d 376, 380 (7th Cir. 1987); see also Criminal Resource Manual, supra note 6, § 601-99.
32 For example, extradition proceedings in the foreign jurisdiction may be susceptible to political considerations, which may influence the timeline for extradition and even whether it occurs at all. The US government’s ongoing effort to extradite WikiLeaks founder Julian Assange from the United Kingdom is a prime example. After a long criminal investigation beginning in 2010, Mr Assange was charged by US authorities in 2018 with conspiracy and espionage related to the leak of classified documents. See Indictment at 4-6, United States v. Assange, No. 1:18-cr-111 (E.D. Va. 6 March 2018), https://www.justice.gov/opa/press-release/file/1153486/download. After spending seven years in the Ecuadorian embassy in London resisting extradition in connection with an unrelated prosecution in Sweden, Mr Assange lost the extradition case and Ecuador withdrew his asylum in early 2019. See Assange v. Swedish Prosecution Auth.  EWHC 2849. He was thereafter arrested by UK authorities on a provisional arrest warrant in 2019 and faces an extradition hearing in the United Kingdom in 2020. Current political uncertainties, likely will impact whether Mr Assange is ultimately extradited to the United States. See John T Nelson, L’Affaire d’Assange: Why His Extradition May Be Blocked, Just Security (7 June 2019), https://www.justsecurity.org/64425/laffaire-dassange-why-his-extradition-may-be-blocked/.
33 This approach, however, requires careful consideration of the collateral consequences of successfully defeating extradition, including the possibility that the United States may bring new charges and initiate another extradition proceeding even after their first attempt at extradition fails. In addition, the client likely will be effectively prohibited from travelling to any country with which the United States has an extradition agreement because of the risk that the United States could initiate extradition proceedings in that jurisdiction.
34 Another consideration relevant to assessing the strength of the evidence is that a client is not legally entitled to discovery from the US government related to the underlying criminal charges until he or she makes an appearance in a US court. While the foreign court presiding over the extradition proceeding may have have discretion to grant discovery pursuant to its ‘inherent power’, any discovery obtained (if at all) will be limited in scope and nature. See Quinn v. Robinson, 783 F.2d 776, 817 n.41 (9th Cir. 1986); see also Oen Yin-Choy v. Robinson, 858 F.2d 1400, 1407 (9th Cir. 1988). Accordingly, in most cases, clients will not receive any discovery until extradited (by force or consent), making it challenging to accurately assess the strength of the government’s evidence. Counsel likely will have access only to evidence the client has in his or her possession, information gleaned from co-defendants (pursuant to a joint defence agreement), and evidence provided by the US government, which is likely to be scant (or non-existent) if the client is resisting extradition.
35 US courts are divided on whether an individual defendant has standing to raise a ‘rule of specialty’ challenge. In some circuits, the defendant has the right to raise a doctrine of specialty challenge. See, e.g., United States v. Stokes, 726 F.3d 880, 889 (7th Cir. 2013) (collecting cases). Other circuit courts hold, on the other hand, that rule of specialty objections can be raised only by the sending nation, not the individual defendant. See, e.g., United States v. Suarez, 791 F.3d 363, 366-67 (2d Cir. 2015); United States ex rel. Saroop v. Garcia, 109 F.3d 165, 168 (3d Cir. 1997). Some of the remaining circuits take the middle ground, allowing the defendant to raise a rule of specialty claim unless the sending nation consents to the deviation, while others still have not expressed an opinion. See Stokes, 726 F.3d at 889 (collecting cases). See note 40 infra.
36 This risk is particularly acute for clients who are likely to become co-operating witnesses or plead guilty, as US authorities typically view resisting extradition as non-co-operation. For this reason, it is not uncommon for US authorities to require waiver of extradition as a precondition to co-operation or before they will even consider the client as a potential co-operating witness.
37 Hedges, supra note 15, at 8-10.
38 See Bruce Zagaris, U.S. Efforts to Extradite Persons for Tax Offenses, 25 Loy. L.A. Int’l & Comp. L. Rev. 653, 676 (2003) (US extradition treaties that entered into force prior to 1980 do not provide for waiver of extradition); see, e.g., Extradition Treaty, Austl.-U.S., 8 May 1976, 27 U.S.T. 957; France Extradition Treaty, supra note 19, art. 3(1).
39 For instance, in the United Kingdom, local law provides several specified grounds for defending against extradition. See Extradition Act 2003, c. 41, §§ 81, 87, 13.
40 Defences that may be available to a client upon arriving in the United States for trial typically are not available at the extradition stage. For example, the foreign judge presiding over the extradition proceeding may refuse to admit evidence supporting a defence of insanity or alibi, which may be raised as defences to the underlying substantive offences in the US criminal proceeding. See, e.g., Charlton v. Kelly, 229 U.S. 447, 462 (1913) (holding that the extradition magistrate properly excluded the evidence of insanity at the hearing stage); see also Shapiro v. Ferrandina, 478 F.2d 894, 901 (2d Cir. 1973). These defences are likely to be available only when the client arrives in the United States. Similarly, once a client has been extradited to the United States, he or she may assert the rule of specialty, which provides that defendants may be tried by the requesting state only for the specific offences for which extradition is granted. See United States v. Lopesierra-Gutierrez, 708 F.3d 193, 205–06 (D.C. Cir. 2013); United States v. Lomeli, 596 F.3d 496, 501 (8th Cir. 2010).
41 Criminal Resource Manual, supra note 6, § 603.
42 See, e.g., Extradition Treaty, Jordan-U.S., art. 2(4), 28 March 1995, S. Treaty Doc. No. 104-3; Extradition Treaty, Austria-U.S., art. 2(6), 8 January 1998, T.I.A.S. 12916; Extradition Treaty, Lux.-U.S., art. 2(1), 1 October 1996, T.I.A.S. 12804; Extradition Treaty, Hung.-U.S., art. 2(4), 1 December 1994, T.I.A.S. 97-318; Extradition Treaty, Bah.-U.S., art. 2(4), 9 March 1990, T.I.A.S. 94-922; France Extradition Treaty, supra note 19, art. 2(4).
43 See, e.g., UK Extradition Treaty, supra note 18, art. 2(1). This defence may be particularly relevant in the FCPA context, as many countries do not outlaw certain forms of payment to government officials that are prohibited as bribery under the FCPA. For example, in 2005, the US authorities indicted a Czech national residing in The Bahamas for participating in a scheme to bribe foreign government officials. Despite the existence of a U.S.-Bahamian extradition treaty, the Bahamian courts ruled that the defendant could not be extradited because the charges against him were for acts that, if committed in the Bahamas, would not constitute a crime. See Superintendent of Her Majesty’s Foxhill Prison & U.S. v. Kozeny, Privy Council Appeal No. 0073, § 53 (Judicial Comm. of the Privy Council 28 March 2012) (Bah.).
44 Justice Manual, supra note 6, §§ 9-15.240, 9-15.250.
45 Id. § 9-15.240.
46 These defences typically can be raised only where the applicable treaty specifically provides for such defences. See In re Extradition of Chan Seong-I, 346 F. Supp. 2d 1149, 1157 (D.N.M. 2004); United States v. Neely, 429 F. Supp. 1215, 1225 n.9 (D. Conn. 1977); Michael John Garcia & Charles Doyle, Cong. Research Serv., 98-958, Extradition to and from the United States: Overview of the Law and Recent Treaties 15–16 (2010), https://fas.org/sgp/crs/misc/98-958.pdf (citing extradition treaties that include provisions addressing lapse of time); UK Extradition Treaty, supra note 18, arts. 2, 5, 6; In re Ryan, 360 F. Supp. 270, 275 (E.D.N.Y. 1973), aff’d, 478 F.2d 1397 (2d Cir. 1973).
47 See, e.g., UK Extradition Treaty, supra note 18, art. 7.
48 For instance, in May 2019, a Dutch court suspended the extradition of an individual to the United Kingdom due to ‘inhuman or degrading’ conditions in a British prison. See Kaya Burgess & Jonathan Ames, Dutch court refuses extradition to UK’s ‘inhumane’ prisons, The Times (11 May 2019), https://www.thetimes.co.uk/article/dutch-court-refuses-extradition-to-uk-s-inhumane-prisons-w9dvjkqpm.
49 Jennifer Piel et al., Determining a Criminal Defendant’s Competency to Proceed With an Extradition Hearing, 43 J. Am. Acad. Psychiatry & L. 201, 202-03 (June 2015), http://jaapl.org/content/jaapl/43/2/201.full.pdf.
50 In 2001, for example, the Supreme Court of Canada ruled that it would not extradite two individuals who allegedly confessed to a brutal triple murder unless the Canadian government received assurances that the individuals would not be subject to the death penalty in the United States. Canada is entitled to seek such assurances under its extradition treaty. Extradition Treaty, Canada-U.S., art. 6, March 22, 1976, 27 U.S.T. 983.
51 Collins v. Miller, 252 U.S. 364, 369 (1920) (‘proceeding before a committing magistrate in international extradition is not subject to correction by appeal’); In re Mackin, 668 F.2d 122, 127-28 (2d Cir. 1981) (citing over a dozen cases holding the same).
52 In the United Kingdom, for example, extradition decisions are appealable by both the individual and requesting state. Extradition: processes and review, Gov.UK, https://www.gov.uk/guidance/extradition-processes-and-review#extradition-from-the-uk-category-2-territories.
53 See Collins v. Loisel, 262 U.S. 426, 429 (1923) (holding that double jeopardy does not apply to extradition decisions).
54 Renewed requests are generally heard by a different judicial officer and reviewed de novo. See Ahmad, 910 F.2d 1063, 1065 (2d Cir. 1990); In re Extradition of Mackin, 668 F.2d 122, 137 n.20 (2d Cir. 1981); Hooker v. Klein, 573 F.2d 1360, 1369 (9th Cir. 1978); In re Gonzalez, 217 F. Supp. 717, 720 (S.D.N.Y. 1963). Subsequent extradition requests may be based exclusively on evidence submitted in the initial request or supplemental evidence. See, e.g., Hooker, 573 F.2d at 1366 (government’s renewal of its extradition request was valid despite its first request being ‘denied following an extensive evidentiary hearing and full consideration of the merits of the case by an extradition court’); accord Mirchandani v. United States, 836 F.2d 1223, 1226 (9th Cir. 1988); In re Extradition of Tafoya, 572 F. Supp. 95, 97 (W.D. Tex. 1983); cf. Ahmad v. Wigen, 726 F. Supp. 389, 397 (S.D.N.Y. 1989), aff’d 910 F.2d 1063 (2d Cir. 1990); see also Ntakirutimana v. Reno, 184 F.3d 419, 423 (5th Cir. 1999); In re Extradition of Mackin, 668 F.2d 122, 137 n.20 (2d Cir. 1981).
55 See 28 U.S.C. § 2241; see, e.g., Ahmad, 910 F.2d at 1065 (‘An extraditee’s sole remedy from an adverse decision is to seek a writ of habeas corpus; the Government’s sole remedy is to file a new complaint.’). The scope of habeas review is narrower than traditional appellate review and essentially limited to three inquiries: (1) the adequacy of the trial judge’s jurisdiction; (2) whether the offence is covered by the relevant treaty; and (3) whether there was sufficient evidence to support probable cause. John T. Parry, The Lost History of International Extradition Litigation, 43 Va. J. Int’l L. 93, 97 (2002).
56 Criminal Resource Manual, supra note 6, § 622.
57 The writ of habeas corpus may be filed before an individual is extradited to the United States. However, the DOJ takes the view that ‘[t]he filing of the [habeas] petition does not automatically stay further proceedings, and in certain cases the government may go forward with the extradition if the proceedings are not stayed by the order of the [US federal] court.’ Criminal Resource Manual, supra note 6, § 622.
58 U.S. Dep’t of State, 2019 Treaties and Agreements, https://www.state.gov/2019-TIAS/.
59 Among others, the United States was successful in extraditing an individual from Kosovo under the new extradition treaty with that state for his alleged involvement in a multimillion-dollar securities fraud. See U.S. Dep’t of Justice press release, ‘Manhattan U.S. Attorney Announces Extradition of Kosovar Man for Securities Fraud Offenses’ (26 August 2019), https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-extradition-kosovar-man-securities-fraud-offenses.
60 Mr Assange continues to fight the extradition case, which is expected to last years. See supra note 32; Isaac Stanley-Becker & William Booth, Julian Assange, expelled from his embassy perch, will fight extradition from jail, Washington Post (12 April 2019), https://www.washingtonpost.com/world/europe/julian-assange-expelled-from-his-embassy-perch-will-fight-extradition-from-jail/2019/04/12/d388584c-5cb2-11e9-98d4-844088d135f2_story.html. While the particular defences Mr Assange intends to raise are yet unknown, it is likely that he will argue, at a minimum, that the charges against him are political, rather than criminal, and therefore extradition would violate the U.S.-U.K. extradition treaty. Lauren Said-Moorhouse & Muhammad Darwish, Julian Assange starts extradition fight from UK prison, CNN (2 May 2019), https://www.cnn.com/2019/05/02/uk/julian-assange-extradition-fight-gbr-intl/index.html; see U.K. Extradition Treaty, supra note 18, art. 4(1). (‘[E]xtradition shall not be granted if the offense for which extradition is requested is a political offense.’).
61 For example, in May 2019, a Malaysian national previously arrested in Malaysia waived extradition and made his first appearance in US federal court to face charges for conspiring to engage in a multibillion-dollar money laundering scheme and violate the FCPA by bribing foreign public officials to embezzle billions of dollars from 1MDB, Malaysia’s sovereign wealth fund. See U.S. Dep’t of Justice press release, ‘Former Banker Extradited from Malaysia to United States to Face Charges in Multi-Billion Dollar Money Laundering and Bribery Scheme Relating to the 1MDB Fund’ (6 May 2019), https://www.justice.gov/opa/pr/former-banker-extradited-malaysia-united-states-face-charges-multi-billion-dollar-money. Notably, the Malaysian authorities have described the defendant’s extradition to the United States. as a ‘temporary surrender’ so that they might later pursue charges for similar conduct brought against him in Malaysia. See Matthew Goldstein, Former Goldman Sachs Banker Pleads Not Guilty in Malaysia Fraud Case, N.Y. Times, 6 May 2019 at B3, https://www.nytimes.com/2019/05/06/business/goldman-sachs-roger-ng-1mdb.html.
62 See generally U.S. Dep’t of Justice & U.S. Sec. Exch. Comm’n, A Resource Guide to the U.S. Foreign Corrupt Practices Act 11 (14 November 2012); see also Should FCPA ‘Territorial’ Jurisdiction Reach Extraterritorial Proportions?, Am. Bar Ass’n, (8 November 2018), https://www.americanbar.org/groups/international_law/publications/international_law_news/2013/winter/should_fcpa_territorial_jurisdiction_reach_extraterritorial_proportions/.
63 Under federal law, a ‘witness’ is someone who authorities believe has information about facts relevant to a criminal investigation and that assist prosecutors in obtaining indictments against other individual or companies. A ‘subject,’ by contrast, is a ‘a person whose conduct is within the scope of the grand jury’s investigation,’ i.e., someone who engaged in activity or conduct at issue in the prosecutor’s investigation, but who the prosecutor has not yet determined participated in criminal activity. A ‘target’ is ‘a person as to whom the prosecutor or the grand jury has substantial evidence linking him to the commission of a crime and who, in the judgment of the prosecutor, is a putative defendant.’ Justice Manual, supra note 6, § 9-11.151.
64 The government often relies on co-operating witnesses in white-collar cases, both during the investigatory phase and also at trial, e.g., to explain otherwise complicated and document heavy cases. See, e.g., Kastigar v. United States, 406 U.S. 441, 446 (1972) (‘[M]any offenses are of such a character that the only persons capable of giving useful testimony are those implicated in the crime.’) Individual co-operators tend to be lower-level employees or those who are less culpable in the criminal conduct. In particularly complex white-collar cases, the government may rely on more culpable individuals to co-operate against the primary target of an investigation or a company involved in a criminal scheme.
65 During the attorney proffer, counsel should explain to the government counsel’s understanding of how the client was involved in the conduct under investigation and outline the information the client will be able to provide to the government. The attorney proffer is a critical opportunity to assess how the government is likely to react to the client’s testimony, identify potential risk areas, and potentially learn more about the government’s evidence and theory of the case depending upon the prosecutors’ questions and reactions.
66 The proffer agreement typically includes a provision that the government will not use statements made during the interview directly against the client. See United States v. Rosemond, 841 F.3d 95, 109–10 (2d Cir. 2016). However, the government may use the statements for other purposes, e.g., as a lead to obtain other evidence or, if the client later testifies at trial in his own defence, the government can usually offer into evidence contradictory statements made during proffer sessions.
67 Section 5K1.1 of the US Sentencing Guidelines enables the government to make a motion to allow the court to sentence a defendant below the applicable Sentencing Guidelines range. See Federal Sentencing Guidelines Manual § 5K1.1. In such motions, the government typically will set forth the nature, usefulness and significance of the client’s assistance during the proffer process. To receive credit for substantial assistance, the client will at a minimum need to be fully transparent about his own illicit conduct and to provide information about other people involved in the criminal activity. The client may also be required to produce documents, participate in investigatory operations (e.g., wearing a wire to record conversations with other defendants or targets), or testify before a grand jury or at trial. Importantly, a 5K1.1 letter is no guarantee of a favourable or reduced sentence, as the court retains discretion to impose a sentence up to the statutory maximum. See Federal Sentencing Guidelines Manual § 5K1.1 (2018) (explaining that a court ‘may depart from the guidelines’ in the case of a defendant’s substantial assistance to authorities) (emphasis added).
68 A DPA sets out certain conditions that must be met before charges in the indictment will be dropped. Such conditions typically include a fine, term of supervision by pretrial services, or community service. DPAs are typically available only after the client has provided substantial co-operation, including potentially acting as an informant. See, e.g., Enforcement of the FCPA – Criminal Procedures – Deferred Prosecution Agreements, 13 Bus. & Com. Litig. Fed. Cts. § 134:34 (4th ed.).
69 See Federal Sentencing Guidelines Manual § 5K1.1(5).
70 To obtain an NPA, the client usually must pay a fine and co-operate with the government. In exchange, the relevant agency will refrain from filing criminal or civil charges. In deciding whether to enter into an NPA, DOJ policy provides that prosecutors should balance the cost of forgoing prosecution with the need for the co-operation to the public interest. Justice Manual, supra note 6, § 9-27.600 (2018).
71 It is now commonplace for employers to write into employment agreements and internal policies a requirement that employees co-operate in internal investigations. Failure to do so can be grounds for disciplinary action, including suspension without pay or termination. It may be necessary to engage employment counsel to advise the client on co-operation obligations under relevant employment agreements, policies or labour law in the relevant jurisdiction.
72 Clients should be made aware that, even where no formal or legally enforceable co-operation obligation exists, employers may withhold deferred compensation or post-employment remuneration to incentivise co-operation with an internal investigation.
73 Garrity v. New Jersey, 385 U.S. 493, 497 (1967); see also United States v. Connolly, No. 16 CR. 0370 (CM), 2019 WL 2120523, at *10 (S.D.N.Y. 2 May 2019).
74 Connolly, 2019 WL 2120523, at *14.
75 See id. at *11-14. On the other hand, if the company acted entirely on its own, the resulting statements are not ‘compelled’ by state actors within the meaning of the Fifth Amendment and are therefore freely usable by the government at any later point in time.
76 For example, counsel should carefully assess whether co-operation will increase the risk that a parallel criminal action is brought against the client by US prosecutors or by civil authorities in a foreign jurisdiction in which the client is licensed or regulated.
77 Company counsel likely will inform the client accordingly in an Upjohn warning at the beginning of any interview. See Upjohn, 449 U.S. 383, 394 (1981); Model Rules of Prof’l Conduct r. 1.13(f), 4.3. Counsel should similarly advise clients, particularly where they may provide information that could be used against them in a future enforcement proceeding.
78 The company may even decide to turn over the notes or summaries of the interview, or may be required to do so under the laws of the relevant jurisdiction.
79 See Statement of Principle and Code of Practice for Approved Persons, U.K. Fin. Conduct Auth., § 2.1A.3 (September 2019), https://www.handbook.fca.org.uk/handbook/APER.pdf (Statement of Principle 4 provides that ‘[a]n approved person must deal with the FCA, the PRA and other regulators in an open and cooperative way and must disclose appropriately any information of which the FCA or the PRA would reasonably expect notice’) (emphasis in original).
80 See, e.g., infra note 81.
81 U.S. Const. amend. V; see United States v. Saechao, 418 F.3d 1073 (9th Cir. 2005).
82 United States v. Allen, 864 F.3d 63 (2d Cir. 2017) (reversing convictions of two Rabobank traders who provided testimony to the UK’s Financial Conduct Authority (FCA) in an investigation into LIBOR manipulation under threat of prosecution for non-cooperation under UK law, because the Fifth Amendment ‘prohibits the use and derivative use of such compelled testimony in an American criminal case against the defendant who provided that testimony’).
83 The United States has entered into MLATs or similar bilateral agreements with approximately
70 states allowing it to enlist the investigatory authority of those states to procure evidence. See
Mark A Rush and Jared A Kephart, Lifting the Veil on the MLAT Process: A Guide to
Understanding and Responding to MLA Requests (20 January 2017), http://m.klgates.com/
-01-20-2017/. In addition, the United States is party to an agreement with the European Union that enhances mutual legal assistance mechanisms with EU Member States. See Mutual Legal Assistance Treaty, European Union-U.S., 16 January 1998, T.I.A.S. 12923. The DOJ’s OIA, together with the Department of State, negotiates and implements MLATs, administers mutual legal assistance operations, and coordinates incoming and outgoing requests. Notably, unlike extradition treaties, MLATs generally do not require dual criminality.
84 See United Nations, Manual on Mutual Legal Assistance and Extradition (September 2012), https://www.unodc.org/documents/organized-crime/Publications/Mutual_Legal_Assistance_Ebook_E.pdf. For this reason, a request for mutual legal assistance to a foreign authority is often accompanied by a petition to a US court under 18 U.S.C. § 3292 to suspend the running of the statute of limitations during the pendency of a request. A court will grant the request if it finds by a preponderance of the evidence that an official request has been made and it reasonably appears that the evidence is or was in a foreign country. See, e.g., T Markus Funk, Federal Judicial Center International Litigation Guide: Mutual Legal Assistance and Letters Rogatory: A Guide for Judges 15 (2014), https://www.fjc.gov/sites/default/files/2017/MLAT-LR-Guide-Funk-FJC-2014.pdf.
85 See also Model Rules of Prof ’l Conduct r. 1.13 cmt. (Am. Bar Ass’n 2018) (providing that investigating counsel should advise employees whose interests may be adverse to the corporation that he or she ‘may wish to obtain independent representation’).
86 Counsel should also bear in mind that US authorities may take a dim view of joint representation, questioning the independence of the client’s testimony or, at the most extreme, alleging that a conflict has arisen and insisting that independent counsel be retained.
87 While ‘[a]n employee’s cooperation in an internal investigation alone is not sufficient to establish a common interest’, the privilege will be deemed waived where there is ‘some form of joint strategy’ among the parties. In re Grand Jury Subpoena: Under Seal, 415 F.3d 333, 341 (4th Cir. 2005) (quoting United States v. Weissman, 195 F.3d 96, 100 (2d Cir.1999)); see also United States v. Aramony, 88 F.3d 1369, 1392 (4th Cir. 1996) (‘To be entitled to the protection of this privilege the parties must first share a common interest about a legal matter.’). Furthermore, it has become increasingly common for companies to include in joint defence agreements language that expressly allows the company to unilaterally disclose joint defence materials and information to other parties to the representation. See Ed Magarian and Surya Saxena, ‘Joint Defense Agreements: What Is A Responsible Company To Do?’, 22 Andrews Corp. Officers and Directors Liability Litig. Rep., September 2008, at 1 (2008).
88 In both pool and company counsel representations, counsel will need to obtain the client’s consent to disclose confidential information to others in the pool and ‘use’ such information for the benefit of other clients (while maintaining the privilege to outside parties) under the joint defence privilege. Engagement letters also should clearly explain that pool counsel may use information provided by one client to zealously represent all clients in the pool (though information identified by a client as being confidential will only be shared with express authorisation). Relatedly, clients should be advised not to speak with any third parties about the substance of the investigation to preserve the integrity of the respective clients’ recollections, and also because those communications will not be protected by the common interest or joint defence privilege. See, e.g., United States v. Austin, 416 F.3d 1016, 1021 (9th Cir. 2005) (joint defence privilege protects the confidentiality of communications ‘passing from a party to his or her attorney’ and ‘from one party to the attorney for another party’, but only ‘where a joint defense effort or strategy’ exists) (quoting United States v. Schwimmer, 892 F.2d 237, 243 (2d Cir. 1989)).
89 In China, for example, there is no doctrine of legal privilege. Richard Bartlett and Yuan Min, A Lawyer’s guide to working in China, King & Wood Mallesons (15 November 2017), https://www.kwm.com/en/knowledge/insights/a-lawyers-guide-to-working-in-china-20171113. And while the European Union provides for the ‘legal professional privilege’, it is comparatively limited, covering only counsel who are admitted to the bar in one of the Members States of the European Union. Patrick Doris and Steve Melrose, Privilege: European Union, Global Investigations Review. (12 October 2018), https://globalinvestigationsreview.com/preview_jurisdiction/1005270/european%20union?preview=1000391.
90 Cadence Pharm., Inc. v. Fresenius Kabi USA, LLC, 996 F. Supp. 2d 1015, 1019 (S.D. Cal. 2014). The country with the ‘predominant interest’ is either ‘the place where the allegedly privileged relationship was entered into’ or ‘the place in which the relationship was centered at the time the communication was sent.’ Id.
91 See, e.g., Swidler & Berlin v. United States, 524 U.S. 399, 408 (1998); see also Doug Gallagher, Manasi Raveendran, Attorney–Client Privilege for in-House Counsel, Am. Bar Ass’n (2017), https://www.americanbar.org/groups/intellectual_property_law/publications/landslide/2017-18/november-december/attorney-client-privilege-inhouse-counsel/. Privilege issues arise more often in the context of communications with in-house rather than external counsel because, for example, in-house counsel may often play the dual role of offering both legal and business advice.
92 Ava Borrasso, Privilege and International Implications against the Backdrop of the Panama Papers, Am. Bar Ass’n (20 July 2016), https://www.americanbar.org/groups/business_law/publications/blt/2016/07/12_borrasso/.
93 The GDPR imposes certain obligations on individuals, organisations and companies who are ‘controllers’ or ‘processors’ of personal data and restricts how they may process and transfer that data. If the controller or processor wishes to transfer the data to a country the European Commission has not deemed adequate, such as the United States, it must identify whether a sufficient basis, or ‘derogation’, applies under the GDPR and implement safeguards to ensure GDPR compliance. One such derogation applies when the transfer is necessary for the establishment, exercise or defence of legal claims, which commonly applies in the context of criminal or other regulatory investigations, where transfer of data is necessary for the purpose of defending the individual client. See European Data Protection Board, Guidelines 2/2018 on derogations of Article 49 under Regulation 2016/679, 11 (25 May 2018), https://edpb.europa.eu/sites/edpb/files/files/file1/edpb_guidelines_2_2018_derogations_en.pdf.
94 See, e.g., Schweizerisches Strafgesetzbuch (Swiss Criminal Code), 21 December 1937, art. 349.
95 See, e.g., Loi 80-538 du 16 juillet 1980 relative à la communication de documents et renseignements d’ordre économique, commercial ou technique à des personnes physiques ou morales étrangères (Law 80-538 of 16 July 1980 Relating to the Communication of Economic, Commercial or Technical Documents or Information to Foreign Natural or Legal Persons), Journal Officiel de la République Française, 17 July 1980, art. 1A (Fr.).
96 See, e.g., Swiss Criminal Code 21 December 1937, SR 757 (1938), as amended by Gesetz, 4 October 1991, AS 2465 (1992).
97 The law is not entirely settled on this issue. The critical inquiry is whether (1) the materials were created or maintained in the course of employment, and (2) the employee had a reasonable expectation of privacy with respect to the materials. See, e.g., Smyth v. Pillsbury Co., 914 F. Supp. 97, 101 (E.D. Pa. 1996) (no reasonable expectation of privacy in email communications made voluntarily over company email system even where employer told employees electronic communications would be kept confidential); but see Levanthal v. Knapek, 266 F.3d 64, 73 (2d Cir. 2001) (public employee had reasonable expectation of privacy in contents of office computer because, inter alia, employee occupied private office with closed door and had exclusive use of desk, filing cabinet and computer); Kellher v. City of Reading, No. CIV.A.01-3386, 2002 WL 1067442, at *1 (E.D. Pa. 29 May 2002) (acknowledging that employee may have reasonable expectation of privacy in certain company email communications depending on the communication at issue and configuration of the relevant email system).
98 Note, however, that the client may have a cognisable claim that the materials are protected by the attorney–client or other applicable privilege. See e.g., Sims v. Lakeside School, No. C06-1412RSM, 2007 U.S. Dist. LEXIS 69568 (W.D. Wash. 20 September 2007).
99 Even where a company has not requested materials, it is prudent to advise clients to preserve any emails, notes or other documents that they believe may bear on the investigation. To assure adequate preservation, it may be necessary to engage a reputable third-party forensic technician to image or otherwise preserve the documents or data in question.
100 Former employees may claim an ‘act of production’ privilege in refusing to produce documents ‘where the act of production is, itself, (1) compelled, (2) testimonial, and (3) incriminating.’ In re Three Grand Jury Subpoenas Duces Tecum Dated Jan. 29, 1999, 191 F.3d 173, 178 (2d Cir. 1999). It is not clear, however, how a court might rule where the documents in the former employee’s possession are deemed to be the company’s property, e.g., where the employee took the documents upon leaving the employer without permission and/or in violation of company policy. But see id. at 182-83.
101 In Braswell v. United States, 487 U.S. 99, 102 (1988), the Supreme Court held that current employees may not claim the act of production privilege, even if those documents are incriminating against the employee, because the employee is an agent of the company and the records were in the employee’s custody in his capacity as an agent. The Court did not address whether the outcome might differ if the records in question were personal to the employee or not maintained in his capacity as an agent of the company. In light of Connolly, former employees in an internal investigation conducted at the behest of the government might have an argument that the act of production privilege applies to them as well.
102 See, e.g., 18 U.S.C. §§ 981, 982; 21 U.S.C. § 853.
103 See Fed. R. Crim. P. 32.2(a).
104 See 18 U.S.C. §§ 982(a), 1963(e); Fed. R. Crim. P. 32.2(b)(1)(A).
105 See 18 U.S.C. §§ 983(a)(4), 984(a)(1), 985(c); see also 18 U.S.C. § 983(a)(1); 19 U.S.C. § 1607.
106 Id. § 985(b)(1).
107 Id. § 983(j). The government must have probable cause to believe the property constitutes proceeds of crime or was used during the commission of a crime. See 21 U.S.C. 853(e)(2). An indictment returned by a proper grand jury ‘conclusively determines the existence of probable cause’. Kaley v. United States, 571 U.S. 320, 328 (2014) (citing Gerstein v. Pugh, 420 U.S. 103, 117 n.19 (1975)).
108 SEC v. One or More Unknown Traders in the Securities of Onyx Pharmaceuticals, Inc., 296 F.R.D. 241, 254 (S.D.N.Y. 2013) (citing SEC v. Unifund SAL, 910 F.2d 1028, 1041 (2d Cir. 1990)).
109 21 U.S.C. § 853(p).
110 See, e.g., United States v. Butler, 543 F. App’x 95, 97 (2d Cir. 2013).
111 The United States is a party to a number of treaties, as well as other formal and informal agreements, that provide for freezing or seizure of assets in foreign jurisdictions. See, e.g., U.S. Internal Revenue Service, Internal Revenue Manual § 22.214.171.124.2 (28 July 2003), https://www.irs.gov/irm/part9/irm_09-007-010#idm140235861363504. In addition, US authorities (and private civil litigants) may register seizure or forfeiture orders issued by US courts in foreign jurisdictions in hopes of enforcing those judgments abroad. See, e.g., Mutual Legal Assistance Treaty, U.S.-U.K., art. 19(2) 6 January 1994, T.I.A.S. No. 96-1202.
112 For example, in 2019, the DOJ announced the filing of a third round of civil forfeiture complaints in the 1MDB prosecution, bringing the total seizure amount over $1.5 billion. See U.S. Dep’t of Justice press release, ‘Former Banker Extradited from Malaysia to United States to Face Charges in Multi-Billion Dollar Money Laundering and Bribery Scheme Relating to the 1MDB Fund’ (6 May 2019), https://www.justice.gov/opa/pr/former-banker-extradited-malaysia-united-states-face-charges-multi-billion-dollar-money; see also supra note 61.
113 Reputational concerns are likely to be heightened when the proceeding is high profile and the client faces media inquiries. While clients may wish to hire a public relations firm, any decision to engage a third party should be carefully considered in light of the fact that those communications are often not privileged and could adversely affect the outcome of the proceeding. See, e.g., Haugh v. Schroder Inv. Mgmt. N. Am. Inc., 02-7955, 2003 WL 21998674, at *3 (S.D.N.Y. 25 August 2003).