Government Investigation Response

SKILL 44: Government Investigation Response

Purpose

Know exactly what to do when FBI, DOJ, IRS-CI, SEC, CFTC, or state investigators initiate contact. Wrong moves in the first 24 hours can convert a civil matter into a criminal one.

If Agents Show Up at Your Door/Office

Say ONLY This

"I want to cooperate, but I need to speak with my attorney first. May I have your card?"

DO NOTs (All of These Are Mistakes)

• Do NOT answer questions about your business, products, or finances
• Do NOT consent to a search without a warrant ("Do you have a warrant?")
• Do NOT lie — lying to a federal agent is a crime under 18 U.S.C. § 1001, even if the underlying conduct isn't criminal
• Do NOT destroy, delete, or move documents after contact is made (obstruction of justice, 18 U.S.C. § 1519)
• Do NOT call employees to "get your stories straight"

DO (Immediately)

• Take the agent's card (name, agency, badge number, contact info)
• Note what they asked about (topic, not your answers)
• Note the time and location of contact
• Call your attorney IMMEDIATELY (before calling anyone else)
• Issue a litigation hold to all employees: preserve ALL documents, emails, Slack messages, code, financial records

If You Receive a Grand Jury Subpoena

What It Is

• Compels you to produce documents or testify
• More coercive than a civil subpoena — you generally MUST comply

What To Do

• Call your attorney IMMEDIATELY — do NOT produce anything first
• You can assert: attorney-client privilege, Fifth Amendment (for testimony, not documents in corporate context), work product doctrine
• Request a reasonable extension to produce (usually granted)
• Do NOT produce documents before privilege review

Litigation Hold

• Issue immediately upon receipt of subpoena, CID (Civil Investigative Demand), or any government inquiry
• Preserve: emails, Slack, Discord, text messages, code repositories (all branches/commits), financial records, contracts, corporate records
• Destroying documents after a subpoena = obstruction of justice = prison time

If You Receive a Search Warrant

What It Is

• Law enforcement CAN execute it — you cannot refuse
• Scope: they can only search for what's listed in the warrant

What To Do

• Ask for and READ the warrant — carefully note the scope
• Do NOT interfere with the search
• Do NOT delete files while they're executing (obstruction)
• Request your attorney be present (you can ask them to wait a reasonable time — they don't have to wait indefinitely)
• Document everything they take — request an itemized receipt (they're required to provide one)
• Note which devices were imaged/seized
• Preserve copies of everything you can access before or after the search

Parallel Proceedings (Civil + Criminal Simultaneously)

The Risk

• SEC/CFTC routinely refers matters to DOJ for criminal prosecution
• What you say in the civil case CAN be used in the criminal case
• Civil discovery can force you to produce documents that hurt you criminally

The Strategy

• Criminal defense attorney takes the lead on all strategy
• Fifth Amendment: you CAN assert the Fifth in civil proceedings to avoid self-incrimination
  • Cost: civil court can draw "negative inference" (assume your answer would have been bad)
  • Benefit: avoids criminal self-incrimination
• Civil case strategy MUST NOT compromise criminal defense — they cannot be managed separately
• Hire SEPARATE civil and criminal counsel when both proceedings are active

SEC/CFTC Informal Inquiries (Before Formal Investigation)

The Hidden Danger

• SEC/CFTC often contact companies "informally" before opening a formal investigation
• An informal inquiry feels like a friendly conversation — it's not
• Everything you say can be used to open a formal investigation
• Response: engage outside counsel, respond formally in writing, control the narrative

Wells Notice (SEC)

• A Wells Notice means the SEC staff intends to recommend enforcement action
• You have the opportunity to submit a Wells Submission — arguing why enforcement is unwarranted
• Success rate is low but not zero — a strong Wells Submission can result in no charges or reduced charges
• You have approximately 30 days (negotiable) to respond

Iowa-Specific

• Iowa AG: enforces Iowa consumer protection, privacy (ICDPA), and money transmission laws
• Iowa Division of Banking: money transmission licensing and enforcement
• Iowa Racing and Gaming Commission: gambling regulation enforcement
• State investigations often precede federal ones — a state inquiry is an early warning sign

Organizational Incident Response Plan (Build Before You Need It)

1. Designated outside counsel (federal criminal + regulatory) retained and on file
2. Internal investigation protocol document
3. Litigation hold template (ready to send within 1 hour)
4. Key contacts: criminal defense attorney, civil regulatory attorney, PR crisis firm
5. Pre-drafted communications to: board (if applicable), investors, employees
6. Cybersecurity forensics firm on retainer (for parallel digital forensics response)

Relevant Statutes

• 18 U.S.C. § 1001: False statements to federal agents (5-year felony)
• 18 U.S.C. § 1503: Obstruction of justice (10-year felony)
• 18 U.S.C. § 1519: Destruction/alteration of documents (20-year felony)
• 18 U.S.C. § 1956: Money laundering (20-year felony)
• 15 U.S.C. § 78j(b): Securities fraud (20-year felony)
• 7 U.S.C. § 13: CFTC fraud (10-year felony)

This is legal research and intelligence, not legal advice. Consult qualified legal counsel before taking action.