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Criminal Liability Arising from Interviews with Securities Regulators

“I wish you had called us earlier.” This is often our response when clients call us after they have been interviewed by law enforcement, or governmental, regulatory, or private investigators. Often the reason for not hiring counsel is well-intentioned. Common explanations include, “I didn’t think they were after me,” “I didn’t want to spend the money on a lawyer,” or “if I showed up with a lawyer, they might think I’m guilty.” However, failing to hire a lawyer for an interview with an investigator or a deposition may cause you to unwittingly become the target of an investigation or appear guilty. The reality is that there can be serious consequences to providing false statements to a government investigator or false statements under oath.

Any witness called to give testimony or be interviewed by government investigators should seriously consider retaining their own counsel. Hiring a lawyer ahead of time doesn’t guarantee that you will not be sued or prosecuted, but it puts you in a must stronger position if you are. In our Contra Costa County civil litigation and regulatory defense practice, we are often retained by clients who are asked to make statements under penalty of perjury as witnesses, or to meet with state, federal, or quasi-governmental organizations (such as FINRA) in connection with formal investigations. Even if our clients are not the targets of the underlying investigation, it is crucial that they understand the ramifications of being truthful when answering questions.

Recently, prosecutors have elected to go after witnesses for lying to investigators even if no underlying crime is charged. Barry Bonds was not prosecuted for taking steroids. Instead he was charged with misleading a grand jury under oath. Martha Stewart was not prosecuted for insider trading; she was charged, and convicted, for lying to Securities and Exchange Commission (SEC) investigators. Although more common in securities cases, potential defendants are also sometimes interviewed in elder abuse and elder fraud cases,.

A recent article in the New York Times by journalists James B. Stewart illustrates that prosecutors are taking a similar stance with less famous witnesses. One of those indicted in connection with the collapse of the venerable law firm Dewey LeBoeuf was Zachary Warren, a recent graduate of Georgetown Law School and a clerk at the Federal Court of Appeals in Memphis.

Mr. Warren was a low-level employee at the Dewey firm and left for law school prior to the firm’s ignominious collapse. Apparently, Mr. Warren was indicted because the Manhattan District Attorney’s office felt he was not truthful when he met with investigators for an interview. According to the article, when Mr. Warren met with the investigators, a prosecutor sat in on the interview. Instead of asking for counsel, Mr. Warren, whose father is a judge in California and mother is a distinguished law professor, agreed to go forward with the interview. Although he isn’t quoted in the article, we can only assume it is a decision Mr. Warren now regrets. Sources say that the interview became antagonistic and hostile, which may have affected Mr. Warren’s answers. As seems to be more common these days, Mr. Warren was not charged with any wrongdoing that caused the collapse of the Dewey firm, which was the reason for his troublesome interview in the first place.

Mr. Warren’s story is cautionary, but not as unique as it might seem. If you receive a request for an interview from an investigator from the SEC, FINRA, or a private investigator, we strongly urge you to hire counsel who can assist you. Our office is located in Danville, and we regularly represent clients throuhgout the East Bay, and greater Bay Area.

Gordon C. Young
by Gordon C. Young
Updated: November 27, 2022

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