A new president’s administration takes a different tack on enforcement
Do you have a response plan if the feds come knocking?
Many of them have carried over from the former administration. Investigations and prosecutions related to fraudulently obtained or used Covid-19 relief funds, for example, continue apace. With hundreds of billions of federal dollars pumped into the economy over the past year, that carryover is unsurprising. Businesses that received Economic Injury Disaster loans or Paycheck Protection Program funds thus remain at high risk for federal oversight and scrutiny. Yet there are also areas where the Biden administration is poised to break from its forebear.
For example, federal law prohibits importing goods and materials produced with forced labor — a broad term that can encompass practices as simple as holding a worker’s passport for “safekeeping” or taking recruitment fees out of their paycheck — and penalizes those who benefit financially from it.
Human rights organizations have campaigned for years to draw attention to forced labor practices overseas, but historic efforts to enforce this prohibition have been anemic. Those organizations have ideological allies in the new administration, and any company with an international supply chain stands at risk of increased scrutiny by an alphabet soup of federal agencies, including DOJ, CBP, ICE and OFAC.
The administration also has taken a firm stand in support of racial equity, with the president issuing a first-day executive order proclaiming a commitment to advancing equity for under-served and marginalized communities. That proclamation will echo through the government’s enforcement arms. Expect to see increased investigations not only in areas that traditionally have touched on racial equity — fair lending and fair housing practices, employers’ pay, promotion and hiring practices — but also in areas where federal pressure may effect structural change, such as minority access to healthcare and venture capital funding.
Simply put, the Biden administration is expected to regulate through enforcement. That enforcement almost always begins with a search. Wise businesses will have a response plan ready when the feds come knocking.
Knowing what to do and say when regulators show up best serves your company and your people — employees, owners and customers.
Search warrants allow the government to cart off computers and cabinets full of original business records before you can copy or review them to ensure they’re specified by the warrant. Warrants also give agents a chance to interview company employees when they are under stress and without counsel. Only someone who has experienced a government search or been interrogated by federal or state agents truly understands how intimidating this can be.
Government agents come prepared, and there’s little ability to resist. But you and your companies have rights. Know those rights and how to respond in your best interest.
Do you have a plan if agents arrive with a search warrant? Do your employees know what to do and not do? Here are practical considerations for surviving a search by the government:
- Contact your attorney immediately.
Don’t “wing it.” Call the in-house attorney designated to handle situations like this. If you don’t have in-house counsel, call an attorney with experience responding to government investigations. If the only thing you do is designate an in-house or outside attorney to call — and keep their phone number at the ready — you’ll have done much to protect yourself and the business.
- Navigate the search efficiently and effectively. If the agents want to search the premises or want a particular item or file, ask for a search warrant. If they have one, ask for a copy — you’re entitled to it. Take a picture of the warrant with your smartphone, and email or text it to your attorney so they can review it in real time. If they only have a subpoena, you should accept it, but shouldn’t produce anything until your attorney has an opportunity to review it. Either way, ask the agents to identify themselves and their agencies and to provide you with their credentials and contact information.
While agents may be polite and professional, don’t be lulled into a false sense of security. They’re not your friends. Remember: They’re there to develop evidence against your company. Nonetheless, do not obstruct or hinder the search. You might want to offer the agents an office or conference room to work in.
When possible, take notes on which agents searched where, and what they examined. Ask to make copies of seized documents (under an agent’s supervision), to back up any electronically stored information, and for a complete written inventory of seized items before the agents leave.
- Prepare for publicity. Inform company public affairs personnel about possible press inquiries. Statements of any kind to the media following a search should be carefully vetted with legal counsel. What an employee says to the media can be detrimental for the speaker and the business.
- Advise employees of their rights if the government attempts to interview them. Executing a search warrant gives agents an opportunity to interview company employees. Advise employees — both as part of standard company policy and when an investigation begins—that they have no obligation to answer agents’ questions without an attorney. If they do choose to answer questions, even in an “informal” interview, they can be charged with federal crimes if agents later believe they provided false or misleading information. You might designate a specially trained supervisor as sole point of contact with agents during the search to avoid these complications. Employees also should know their rights if government investigators seek an interview later, whether at work or their home.
Developing a plan to handle government investigations, including search requests and warrants is smart, responsible management. The lack of a clear, simple response policy can have catastrophic consequences for a company and expose employees to unnecessary anxiety and the risk of prosecution.
Being the target of a search warrant is always a serious matter. The fact that a warrant has been issued means a judge already found probable cause to believe wrongdoing occurred and evidence might be found at your business. But all is not lost. Warrant applications are one-sided affairs, representing only the government’s view. Responding appropriately when government agents show up at your door can ensure that misinformation doesn’t carry the day.
Dave Vicinanzo, Dan Deane, Mark Knights and Michael Strauss comprise Nixon Peabody’s New Hampshire Government Investigations team. Collectively, their prior experience includes managing the U.S. Attorney’s Office in Concord, clerking for New Hampshire federal judges and successfully defending or prosecuting some of the most challenging cases in the history of the district of New Hampshire.