What to do when the Feds knock on your door

The federal stimulus package means that an unprecedented amount of federal spending will occur throughout the country, and just as night follows day, claims of abuse will arise as the public becomes aware of the ways in which some of these vast sums of money are spent.

Many entities will be the subject of informal inquiries, and some of these will ripen into official investigations. While investigators often attempt to gain information informally by asking for cooperation from a target business, grand jury and administrative subpoenas seeking documents and other evidence from regulated businesses, or those that have obtained federal money, are in the news on a daily basis. More troubling, federal agencies are seeking with greater frequency to obtain far more intrusive court-ordered search warrants, which allow investigators to forcibly enter a business and seize documents and other “evidence.”

Search warrants allow the government to cart off file cabinets full of original business records before they can be photocopied or reviewed by the business to make sure that the seized documents are called for by the search warrant. They also give government agents a chance to seek interviews with company employees when they are under stress and do not have counsel present.

Only someone who has experienced a government search or has been interrogated by federal or state agents truly understands how intimidating it can be. But understanding your rights and how to respond appropriately to an unwanted government intrusion is critical to the future of the company and the well-being of its employees, owners and customers.

Among the practical considerations for surviving a search by the government are:

• Contact designated legal counsel: Do not try to “wing it.” If the only thing you do in preparation for a government visit is designate an in-house or outside counsel who should be called — and ensure their phone numbers are close at hand — you will have done much to protect yourself and the business.

• Navigate the search efficiently and effectively: If the agents tell you they want to search the premises, or want a particular item or file, ask them if they have a search warrant. If they do, ask for a copy of the warrant — you’re entitled to it.

Ask the agents to identify themselves and their agencies and to provide you with their credentials with contact information for you to record.

While agents may be polite and professional, they are not your friends. Remember: these agents are most likely there to develop evidence against you and/or your business. On the other hand, remember that there is nothing to be gained by hostility or rudeness. In fact, some agents may interpret such conduct as suggesting guilt or liability or even, in extreme cases, obstruction.

If the agents have a signed search warrant, don’t obstruct or hinder them. It may be wise to offer them an office or conference room to work in.

When possible, take notes recording which agents searched certain areas and what they examined. Ask to make (under an agent’s supervision) copies of seized originals before the agents depart and to back up any electronically stored information. Also, ask for a complete written inventory of what has been seized.

• Prepare for publicity: Contact company public affairs personnel to alert them about possible inquiries from the press. Statements of any kind to the media should be carefully vetted with legal counsel.

• Advise employees concerning their rights should the government attempt to interview them: Executing a search warrant provides government investigators with an opportunity to seek interviews with company employees about the subject matter of the investigation. Advise employees that they are under no duty to answer questions posed by government agents without first consulting legal counsel.

Moreover, advise them that if they choose to answer questions about the subject matter of the investigation — even in what the employee may consider an informal interview — they can be charged with federal crimes if agents later allege any of the statements to have been false or misleading.

It may be prudent to designate a supervisor trained for the task to be the sole point of contact with the agents during the search. Employees also need to be informed of their rights should government investigators seek to interview them later, whether at work or their home.

• Have a response plan in place: Training in how to handle government investigations, including search requests and warrants, is simply a matter of smart, responsible management. Failing to implement a clear, simple response policy can have catastrophic consequences for the business. It also exposes employees to an unnecessary level of anxiety and risk of prosecution.

Being the target of a search warrant is always a serious matter. The mere fact that it was issued means a judge has already found probable cause to believe wrongdoing has occurred, and that the evidence may be found at your business.

But warrant applications are one-sided affairs in which only the government’s view is presented. And responding appropriately when government agents show up at your door is essential to ensure that misinformation doesn’t carry the day.

David Vicinanzo, a longtime former federal prosecutor in New England and Washington, is a partner in the Boston and New Hampshire offices of Nixon Peabody. He can be reached at 617-345-1177. Dan Deane, a litigation associate in Nixon Peabody’s New Hampshire office, can be reached at 603-628-4047.