Law Enforcement Actions in the Wake of COVID-19March 26, 2020
- The Department of Justice, State Attorney Generals and federal and state regulators will be vigilant and aggressive in identifying, investigating and prosecuting fraud.
- Industries that are involved in government contracting and receive federal and state funds need to be particularly attentive to their processes, policies, procedures, and compliance programs.
In these challenging and unchartered times, our first thoughts are on the health and well-being of our clients, colleagues, families and communities. We hope that all of you are safe and managing this unique time as well as can be expected.
Unfortunately, law enforcement does not stop during troubling times, and that remains particularly true in the criminal, civil and regulatory enforcement fields. Typically, the government ramps up its enforcement actions as a result of the amount of federal and state funds that flow during these challenging times. Whether after 9/11, Hurricane Katrina, the BP Oil Spill or countless other national and state unexpected events, history teaches that investigations, prosecutions and convictions result from those who have attempted to capitalize on the crises. We expect the aftermath of the current COVID-19 virus to be no different. On March 16, 2020, United States Attorney General William Barr issued a memorandum in which, among other things, he directed that every United States Attorney’s office in the country prioritize the investigation and prosecution of coronavirus-related fraud schemes. Following up on that directive, on March 19, 2020, the Justice Department further directed each U.S Attorney “to appoint a Coronavirus Fraud Coordinator to serve as the legal counsel for the federal judicial district on matters relating to the coronavirus, direct the prosecution of coronavirus-related crimes, and to conduct outreach and awareness.” In conversations with federal prosecutors as well, it has become clear that the Justice Department’s statements on these issues are not just words, but rather a serious and concerted mission statement that is expected to be pro-actively pursued.
The expected investigations could affect any industry that receives federal or state funds, including under any federal coronavirus-specific program or stimulus package. Among other industries expected to come under scrutiny are construction, healthcare, financial services, securities and insurance, as well as any other business that has state or federal contracts. These cases will fall under a variety of federal and state statutes, including both the respective federal and state False Claims Acts. In addition, the investigations will be conducted not only by the Justice Department’s Criminal Division, but also its Civil (including Consumer Protection Branch) and Antitrust Divisions. Their efforts will rely on both traditional and non-traditional statutes and means to achieve their goals. For example, on Saturday, March 21, 2020, one day after the Justice Department’s press release announcing the Department’s aggressive approach, prosecutors in the Western District of Texas commenced a civil lawsuit seeking to enjoin a company from committing alleged on-going criminal conduct related to the coronavirus outbreak (alleged wire fraud). In announcing this action, Jody Hunt, the head of the Justice Department’s Civil Division, made it clear that “the Justice Department will not tolerate criminal exploitation of this national emergency for personal gain.” Of particular note is the immediate employment of civil lawsuits aimed at criminal conduct. However, no one should take comfort in the fact that this was a “civil” matter. It is fully expected, and in fact directed by Attorney General Barr, that criminal prosecutors will be investigating and prosecuting these cases. In short, investigating and prosecuting fraud arising from COVID-19 will be undertaken by criminal and civil prosecutors, as well as regulators, at both the federal and state levels.
We want to ensure that our clients are taking every step necessary and available to ensure that they do not get caught up in any government enforcement action, and know what to do in the unfortunate event that they do. First, it is critical that you adhere to your compliance plan, and your policies, procedures and protocols. Should you come under scrutiny, one significant line of response will be to demonstrate rigorous compliance with these items. Second, short cuts are ill-advised; in times of crises, it is all the more important to ensure that things are being done the right way. Third, consider having one designated “point person,” whether an in-house attorney or outside counsel, available at all times to run questions and issues by. Fourth, if you receive a written demand or inquiry from any law enforcement or regulatory agency – whether by a subpoena, civil investigative demand, or request for information, you should take it seriously and immediately consult with outside counsel. Typically, there is a date by which to respond and the requests are often broad and voluminous, both of which can often be negotiated. However, they cannot be ignored, and calling to ask for an extension the day before items are expected to be turned over does not sit well. Fifth, often law enforcement or regulatory agents will call or show up at a place of business or even peoples’ homes, “just to ask a few, informal questions.” No conversation with agents should ever be considered “informal.” The response to any such outreach should be to be polite and respectful, but to tell the agent that counsel will be in touch to follow up on the request. While anyone is free to speak to agents if they choose to, it is our advice that no one should ever speak to an agent without counsel present. Of course, if someone does choose to speak with an agent, he or she must be 100% truthful.
Hinckley Allen’s Government Investigations & White Collar Defense group is highly qualified and experienced to handle both corporate and individual representations in all government investigations and prosecutions, as well as conduct internal investigations. Our partners include former federal and state prosecutors, as well as a team of attorneys who have vast experience representing and defending corporate and individual clients in government investigations across all industries.
If you have any questions, please do not hesitate to contact Michael Koenig or Victoria Lane directly.PDF