During the 17 years I was a federal prosecutor, I conducted investigations of some of the largest and most complicated entities in the country, including organized crime groups in New York. Since leaving the government in 2004, I have conducted similar investigations on behalf of entities large and small, both in the United States and globally. Internationally I have conducted investigations in Brazil, China, Dominican Republic, Germany, India, Japan, Mexico, South Africa, South Korea, Taiwan, UAE and the United Kingdom. Within the United States, I have conducted investigations for a broad range of organizations including Fortune 500 companies, community banks, non-profit entities and educational institutions. My investigations have explored a range of issues, including FCPA allegations, revenue recognition concerns, antitrust, tax, theft, and sexual abuse allegations.
Decades of experience have led me to conclude that the formula for a good investigation is what I have defined as the three C’s: Confidence, Credibility and Cost.
The client needs to have confidence in your results. They must know that they can trust the results of your investigation so that they can respond to the facts and act in the best interests of the organization.
The investigation needs to be credible. Often, a third party will be provided the results of your investigation. The company’s auditors, the Department of Justice, and the S.E.C are all potential recipients of the results of the investigation. It is crucial that when they receive the results of the investigation that those results are credible. That means that the investigation must have been conducted using a process that those outside entities find acceptable. An investigator needs to be sufficiently experienced to know when enough documents have been reviewed and when the necessary witnesses have been interviewed to guarantee the investigation is complete. During this process, the investigator must navigate pressure from the client to end the investigation. Through experience that I have learned that you do not have to turn over every stone, but you need to overturn enough to accurately describe the field they cover.
Finally, the investigator must be aware of the cost of the investigation. Internal investigations are often expensive, and in a Sarbanes-Oxley world certain costs are frequently unavoidable. The scalable law firm model of Huggard Law LLC is designed to manage those costs while providing a first-class product.
Throughout the investigation, the client needs to consider whether to make a voluntary disclosure to the government. The government often stresses the need for companies to voluntarily disclose potential problems they uncover, and the government offers incentives for doing so. This option must be taken seriously. Nevertheless, it is up to the company – and not the government – to decide what is in the best interest of the company.
The company must also consider carefully whether to terminate employees involved in the allegations of wrongdoing. Those who have engaged in “Old-Testament” bad behavior (i.e. caught with their hands in the till) may have to leave. Others, however, get caught up in a regulatory web where the world is not so black and white. Terminating them may be the right thing to do. On the other hand, it may also lower the morale of remaining employees and put “blood in the water” that might encourage prosecutors. My experience has helped me advise numerous clients with these nuanced decisions.