Am I Going to Get Indicted? Nine Factors that Drive Outcomes in White-Collar Cases 

June, 2021 - Bill Athanas

I spent about a third of my 25-year legal career as a federal prosecutor. In that job, I was trained to apply the Principles of Federal Prosecution (PFP), Justice Manual, §9-27.001et seq., to determine whether and how to charge the white-collar cases I investigated. Sometimes that process was straightforward, but more often the answer was complicated by factors beyond the merits of a particular case.


Even though I’ve been out of the Department of Justice for over a decade, I still regularly use the PFP. Now, however, my purpose is to predict others’ charging decisions rather than guide my own.


In white-collar cases, clients rarely learn of an investigation for the first time when an indictment is returned. Instead, the prosecutor usually identifies the client as a subject, and perhaps even a target, at some point during the investigation. Once the investigation’s existence is made known, defense counsel must advise the client on a range of choices that can have a lasting and dramatic impact, including whether to agree to an interview or proffer, testify in related civil litigation or invoke the privilege against self-incrimination, attempt to negotiate a plea, or otherwise conduct themselves in a manner which facilitates inquiry into their past actions. To advise on those points, counsel is forced to try to forecast future prosecutorial decisions with limited information.


In employing the PFP from this perspective, I am struck by their inadequacy as predictors of charging decisions. Using them to try to anticipate what is going to happen to a client is like wearing pinhole glasses: you’ll perceive some information, but miss far more.


Prosecutorial decision making as a practical matter takes into account the elements of the PFP but is not limited to its identified considerations. It has been my experience that the choice of whether to move forward typically turns on nine elements, only some of which are specifically referenced in the PFP, with some mattering far more than others. Understanding that every case is different, I have found that this is the list of factors that really matter (in order of significance):


1. The strength of the evidence.


Pretty obvious, but this factor is more nuanced than it seems. Any prosecutor wants as many pieces of evidence as possible, but that doesn’t mean that each has equal value. In evaluating whether to go forward, the prosecutor is most interested in incriminating statements from the defendant and documentary evidence proving the scheme. But even within these categories of “prime” evidence, there is a subset that can elevate an otherwise marginal case to one more likely to be charged.


Simply speaking, regardless of the category they fall into, the more “wince-inducing” pieces of evidence in this category, the more likely the client is going to be charged. What qualifies as such? Among statements from the would-be defendant, confessions of wrongdoing to law enforcement are obviously the most problematic. Luckily, those are somewhat infrequent in the white-collar context. More common are those statements fundamentally inconsistent with good faith: false exculpatory statements, declarations that demonstrate knowledge and awareness, efforts to obstruct and inconsistent explanations.


As for documentary evidence, there are certain types that almost stand alone in pushing a case forward. My favorite as a prosecutor was the second set of tax returns. Particularly when those returns were used to secure loans or extensions of credit, offering a rational explanation for their existence can be challenging. Similarly, backdated contracts, altered documents and cash payments - especially those out of the ordinary course and transferred in a clandestine fashion - typically tip the scales toward charges. That does not mean there cannot be good reasons for these events, or explanations a factfinder would deem credible. But with prosecutors, the existence of this brand of “special” evidence - the kind which has no readily apparent explanation and cannot be reconciled with good faith - matters most in evaluating this factor and makes the climb to secure a declination steeper.


2. The case’s “age.”


When I speak in terms of the “age” of a case, I am seldom concerned about the statute of limitations. Federal fraud cases have at least a 5-year statute, and occasionally 10. Charging conspiracies and schemes gives greater flexibility because later overt acts or scheme “executions” (i.e., mailings or wirings) can be used to sweep in earlier conduct - including acts outside the statute of limitations. Even when an expiring statute stands as a real impediment, the government can usually save potentially viable cases with a tolling agreement, or simply charge the portion about to be lost and keep the indictment under seal. In my experience, it is rare that the clock runs out on a case the government really wants to pursue.


 


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