CALIFORNIA: An Introduction to Litigation: White-Collar Crime & Government Investigations

CALIFORNIA: An Introduction to Litigation: White Collar Crime & Government Investigations

From high-profile government investigations to the continued effects of COVID-19, last year reshaped all of our lives. And, like everything else, the practice of white collar defense and government investigations was not immune from impact. In our search for insight on developments within the practice, we spoke with Bird Marella attorneys Gary Lincenberg, Ariel Neuman, Benjamin Gluck, and Nicole Rodriguez Van Dyk. Their Los Angeles, California-based practice focuses on high-profile criminal defense and government investigations.

How has the pandemic affected the practice of White Collar Crime and Government Investigations? Has there been a benefit for clients?

Neuman: Broadly speaking, the pandemic has not significantly affected the practice. Investigations and cases slowed down, and trials have been postponed, but my experience is that all of these are picking back up. Some investigations will not be pursued because of the delays, but most of the significant cases either moved forward during the pandemic or are picking up again. The passage of time usually helps the defense in a government enforcement case – memories fade and witnesses disappear. The pandemic also limited our ability to conduct in-person investigations.

Gluck: Starting with the obvious, court operations have dramatically changed. For most of the past year, there have been no jury trials, and for a good portion of it, there were no grand juries. Despite this, the level of enforcement has remained surprisingly high. In terms of benefits, the pandemic has forced some inefficiencies out of the system. For example, flying across the country for a scheduling hearing is no longer necessary now that the courts allow video appearances. This allows smaller firms to become more efficient than before and, hopefully, will remain even after the pandemic ends.

Are there any proposed changes to legislation or trends you see impacting the practice of White Collar Crime and Government Investigations?

Lincenberg: I see growth in environmental, tax, securities, trade secrets, and civil rights prosecutions. As to environmental, the prior administration de-emphasized the area. Even where U.S. Attorney Offices did not decrease the number of prosecutors in environmental units, much of the work of those units focused on non-environmental crimes like consumer safety or FDA issues. That will change. And the current administration’s emphasis on climate change will bring with it increased budgeting for enforcement. With tax, the President has proposed a massive increase in the IRS’ budget, which will bring a significant increase in tax prosecutions.

Regarding securities, the widening income disparity is a hot-button political issue, and it will translate into increased prosecutions of wealthy individuals who have been seen as gaming the system in the area. Theft of trade secrets is one of the few areas of consensus in Washington. The majority agrees that more must be done to protect U.S. companies and their trade secrets, and further safeguard companies from hacking. “National security” is being redefined to encompass not just military secrets but commercial technology. While investigators will continue to face hurdles in gathering foreign evidence and capturing overseas perpetrators, I expect it to be a high priority. Finally, federal authorities have announced increased attention to civil rights issues like police misconduct.

Neuman: We see a significant uptick in public corruption cases, with the federal government taking an increasingly active role in policing local government actors and those interacting with them. Prosecutors continue to test the boundaries of conduct that fits within a federal public corruption case, and courts keep reining them in. In my practice, I have also seen increasing use of money laundering charges in matters which did not historically include such charges, primarily because of the ease with which assets can be forfeited. Trade-based money laundering is a particularly “hot” area for discussion. Mid-sized businesses around the country find themselves vulnerable to being exploited by bad actors; unfortunately, the government does not always accept that a company is an innocent victim instead of a knowing participant.

Gluck: Health care fraud is very cyclical. Every few years, there is a new “loophole” that the government tries to close, which drives aggressive providers to the next one. For example, compound medication cases are fading out, but toxicology labs are replacing them. There will be a good amount of scrutiny over the COVID-related Medicare waivers, and we’re already starting to see significant cases at their early stages in this area.

What advice would you give a client facing a government investigation or white collar matter for the first time? What’s the most important consideration before retaining an attorney in this space?

Neuman: The client needs to understand that nothing is a foregone conclusion. The government makes mistakes and files charges against people and entities who may have done nothing wrong. At the same time, the government can often be convinced to abandon enforcement efforts against those who did transgress, either because the evidence is not sufficient or because the fight will be too challenging.

Van Dyk: Clients evaluating an attorney to represent them when the government is knocking at their door should have confidence that the government lawyers and investigators will listen to and respect their attorney. They should want an attorney with a track record of reasonable but aggressive representation of their clients, ensuring that the government lawyers know that they can rely on what they are told when problems in their investigations are exposed. They also need to understand that they are in for a full-throated defense if they pursue a case against the accused.

Gluck: I tell my clients that their first decisions [here] may be the most important of their lives. The most important thing we can promise them is that, no matter what happens, they won’t look back and say, "If only I had understood things better from the beginning.” There are many terrific lawyers in the world, but if there isn’t a “connection” between the lawyer and the client, this already difficult situation will invariably get worse. As far as the overall strategy: every decision – from the very beginning – needs to be focused on how it will help the outcome. As the saying goes, “always be closing,” except that in this situation, it means even the earliest decisions need to focus on closing the investigation or, if necessary, the closing argument to the jury.

What’s a common misconception people have about White Collar Crime and Government Investigations?

Van Dyk: The biggest misconception is that the government knows what it is doing and has the facts, resources, and desire to always get to the truth. The second biggest misconception is that if the government has someone in its cross-hairs, you will not be able to change the government’s mind or put critical context around what they think they already know.

Neuman: That everything is a black and white question of guilt or innocence. Often, the key to successful work as a white collar criminal defense lawyer is finding and exploiting the subtleties of a situation, such as the nuances that may have been overlooked by an eager FBI agent or a minor detail that an Assistant United States Attorney (AUSA) may not be aware of. Understanding the incentives and agendas that drive government actors allows the lawyer to use those subtle and nuanced facts to thread the needle and manage the situation to a far more acceptable resolution.