5 Tips for Dealing with Government Investigations

5 Tips for Dealing with Government Investigations

Protect your business interests when the Fed’s come knockin’

The country needs entrepreneurs. As my good friend, and Rich Dad Advisor on taxes, Tom Wheelwright will tell you, the government rewards entrepreneurs and investors for providing jobs, housing, transportation, etc.

With that said, it’s important to understand that although government investigations or raids are brought against bad people who deserve to go to prison, there is a percentage of government actions that are brought against innocent entrepreneurs who had no intent to violate the law. But as the government now writes the laws, intent is not a factor.

The following are five tools and information you will need if you and your business become involved in such actions:

Know the Standard

While it didn’t used to be this way, many crimes are now of the strict liability variety, where no intent is required.

With strict liability crimes, if you commit the act you are guilty of the crime. Whether you had no clue it was a crime or no idea your actions could even lead to a problem does not matter.

A famous, and recent, strict liability case involved a facilities engineer at a Washington D.C. military retirement home. To stop the noxious flooding from backed up toilets where military retirees were residing, the engineer diverted the blocked sewage system into an outside storm drain pipe, which everyone believed was tied into the city’s sewer system. Instead, the pipe ran to a nearby creek. As such, a strict liability environmental law was violated. The engineer had no intention to pollute. The engineer received one year probation and was placed under court order supervision. For what he thought was dealing with backed up toilets to help out military retirees the engineer now has a criminal record.

Hire the Right Lawyer

When you’re an entrepreneur and you put your team in place, it likely includes a CPA, financial advisor, insurance agent or even a broker. An important—maybe most important—but often overlooked team member is a good lawyer for when the government comes calling. The right attorney is one who has dealt with the investigating agency and the matter being investigated. Typically, they are referred to as ‘white collar’ criminal attorneys.

Respond

Ignoring the government is not a good idea, ever. They are not going away. Any government inquiry must be met with an immediate response from your competent counsel. Your attorney should contact the lead agent or head prosecutor to find out if your company is a target or a witness. You will want your attorney to make sure you are cooperating with all of the government’s request for information.

No Destruction

Do. Not. Destroy. Any. Information. Even routine pre-planned document destruction should be halted until the matter blows over. It’s easy for the government to prove obstruction of justice nowadays. Don’t hand them the easy case by destroying documents. Besides, it makes you look guilty.

Subpoenas and Search Warrants

If you receive a subpoena requesting the production of documents you are typically a witness in the government’s investigation. Even so, contact your white collar criminal attorney to assist you with the production of such documents.

If you receive a search warrant at your place of business from a team of armed agents, take a deep breath and contact your attorney immediately. Hopefully, your attorney gets there in time to monitor the search as you’ll be told to stand aside while the agents take whatever documents they want.

Next Steps

A good lawyer may be able to convince the government there is not enough evidence or that the evidence is flawed. Sometimes a ‘deferred prosecution agreement’ can be negotiated whereby fines are paid, reforms are implements and there is full cooperation with the investigation.

Sometimes the government has brought pressure to bear so you will be a witness against a bigger fish up the line. A good attorney may be able to work out a favorable deal with prosecutors.

Know that, like earthquakes and lawsuits, a government investigation can arrive out of the blue. Remember the steps above to protect your interests.

To learn more about how to deal with government investigations, and running your business get my book, Run Your Own Corporation.

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