Procedural issues.

• Author: Blalock, Kaija
• Position: Twelfth Survey of White Collar Crime

1. INTRODUCTION II. INITIATION OF PROSECUTION

   1. The Grand Jury

      1. Standard of Review for Grand Jury Error

      2. Prosecutorial Misconduct

   2. Document Production

      1. Fifth Amendment Aspects of Document Production

      2. Act of Production Doctrine

      3. Collective Entity Doctrine

      4. Required Records Exception

      5. Immunity

      6. Computer Records as Evidence III. PARALLEL CIVIL LITIGATION

   1. Standards for Parallel Discovery

      1. Internal Revenue Service

      2. Other Government Agencies

   2. Stays and Protective Orders

      1. For the Benefit of Private Parties

      2. For the Benefit of the Government

   3. Disclosure of Grand Jury Materials

      1. Matters Occurring Before the Grand Jury

      2. Preliminary to or in Connection with a Judicial Proceeding

      3. Balancing Test and Particularized Need

   4. Constitutional and Procedural Considerations

      1. Fifth Amendment--Double Jeopardy

      2. Fifth Amendment--Self-Incrimination

      3. Fifth Amendment--Due Process

      4. Sixth Amendment--Right to Counsel

      5. Eighth Amendment--Excessive Fines Clause

      6. Note on Collateral Estoppel IV. SPECIAL CONSIDERATIONS FOR ATTORNEYS

   1. Subpoenas Served on Attorneys

   2. Attorney-Client Privilege

      1. Exceptions to the Attorney-Client Privilege

      2. Waiver of the Attorney-Client Privilege

      3. Attorney-Client Privilege and the Corporate Client

      4. Enforcement Actions Against Attorneys and Potential

      Criminal Liability.

   3. Attorney Fee Forfeiture

   4. Status of the Thornburgh Memorandum.

1. INTRODUCTION

   This article discusses criminal procedure, emphasizing issues which are particularly relevant to white collar crime litigation.(1) Section II discusses the initiation of white collar criminal prosecutions. Section III examines the concerns that arise from parallel civil and criminal proceedings. Finally, the special issues faced by lawyers litigating white collar crime cases are addressed in Section IV.

2. INITIATION OF PROSECUTION

   A prosecutor has enormous discretion in determining whether and how to charge a defendant. In United States v. Batchelder,(2) the Supreme Court examined this discretion, holding that it is within the prosecutor's power to charge a defendant under the more severe of two overlapping statutes.(3) The Court in Batchelder upheld such discretion in the face of a variety of constitutional challenges.(4) Where statutes overlap, a defendant can avoid prosecution under the earlier, more severe statute only if the intention to repeal it is clearly manifested in the language or legislative history.(5) Also, a defendant may succeed in a challenge based on racial or other invidious discrimination,(6) but must establish that similarly situated individuals of a different race were not prosecuted.(7)

   1. The Grand Jury

      The Fifth Amendment mandates that "no person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury."(8) Therefore, a grand jury indictment is a necessary precursor to the prosecution of any federal felony.(9) A grand jury is a "jury of inquiry . . . whose duty is to receive complaints and accusations in criminal cases, hear the evidence adduced on the part of the state, and find bills of indictment in cases where . . . a trial ought to be had."(10) A grand jury does not adjudicate guilt or innocence;(11) rather, it determines whether there is probable cause for a trial.(12) Acting both as a "shield" and a "sword," the grand jury protects the accused from "ill-conceived and malicious prosecutions," but also assists the government in investigating crimes.(13)

      It is extremely difficult for a defendant to succeed in having a grand jury indictment dismissed.(14) This difficulty results from grand jury secrecy rules,(15) the limited discovery allowed to defendants,(16) the inapplicability of many trial safeguards to grand jury proceedings,(17) the government's power to reindict once an indictment is dismissed,(18) and the application of the harmless error rule to errors occurring during grand jury proceedings.(19)

      A defendant asserting defenses or objections based on defects in the indictment must do so prior to trial, unless the challenge is based on the indictment's failure to establish jurisdiction or to charge a crime.(20) Furthermore, a guilty verdict returned by a petit jury generally establishes that any error in the grand jury proceedings was harmless.(21)

      The following sections describe (1) the standard of review used in deciding whether error in grand jury proceedings warrants the dismissal of an indictment, and (2) prosecutorial misconduct.

      1. Standard of Review for Grand Jury Error

         In Bank of Nova Scotia v. United States,(22) the Supreme Court reaffirmed that the "harmless error rule" set forth in Rule 52(a) of the Federal Rules of Criminal Procedure(23) generally governs error in grand jury proceedings.(24) The Court held that while a court may invoke its supervisory powers(25) to dismiss an indictment, it may only do so where the process of procuring the indictment entailed prejudice to the defendant amounting to harmful error.(26) Harmful error exists "if it is established that the violation substantially influenced the grand jury's decision to indict, or if there is grave doubt that the decision to indict was free from the substantial influence of such violations."(27)

         The harmless error rule does not apply to "fundamental errors" occurring in grand jury proceedings.(28) An error is "fundamental" when "the structural protections of the grand jury have been so compromised as to render the proceedings fundamentally unfair."(29) When a court finds the existence of fundamental error, it may dismiss the indictment without a "particular assessment" of the harm caused to the defendant; prejudice is presumed.(30)

         The selection of grand jurors based on race or sex is an example of fundamental error.(31) Errors such as the violation of grand jury secrecy requirements(32) and the government's improper introduction of evidence have been deemed to be not fundamental.(33)

      2. Prosecutorial Misconduct

         Prosecutorial misconduct "denote[s] situations in which the prosecutor engages in improper behavior usually to gain an unfair advantage over the accused or otherwise to prejudice . . . the grand jury."(34) To remedy prosecutorial misconduct, a court may dismiss an indictment, reverse a conviction, suppress grand jury testimony, quash subpoenas, discipline the prosecution, and impose other, similar sanctions.(35)

         Forms of prosecutorial misconduct include violations of grand jury procedural rules,(36) violations of a defendant's due process rights,(37) interference with the attorney-client relationship,(38) and other prejudicial conduct.(39)

         In most cases, a court will not question the admissibility or sufficiency of the evidence supporting a facially valid indictment.(40) A prosecutor's suppression of exculpatory evidence, or use of "shoddy" evidence, may constitute prosecutorial misconduct.(41) While frequently raised as error, however, presentation of inadmissible evidence to the grand jury is rarely grounds for the dismissal of an indictment. Even when an indictment is supported by false evidence or perjured testimony, a court will let the indictment stand if it is facially valid and the alleged error is harmless.(42)

         One reason for the harmless error rule is that the grand jury proceeding is preliminary, and the defendant will be afforded full constitutional protections at trial.(43) However, if a defendant is able to show that the prosecutor knowingly presented false evidence or perjured testimony to the grand jury, and there is no other inculpatory evidence, the court may perform a pre-conviction examination of a facially valid indictment.(44)

   2. Document Production

      The rights of the government and the defendant to discover evidence in each other's possession are codified in Rule 16 of the Federal Rules of Criminal Procedure.(45) The government's right to discovery is limited and does not arise until the defendant has made a discovery request under Rule 16(a)(1)(C), (D), or (E), and the government has complied with that request.(46) The government can discover three types of information: (1) documents and tangible objects in the defendant's possession or control that the defendant intends to introduce as evidence at trial;(47) (2) examination and test reports in the defendant's possession or control that the defendant intends to introduce as evidence at trial, or similar reports prepared by a witness for the defendant and related to that witness's testimony;(48) and (3) a summary of the testimony of expert witnesses that the defendant expects to use at trial.(49) The defendant has identical discovery rights, as well as the additional right to inspect "buildings or places" under the government's control.(50) Rule 16(c) creates a continuing duty for both the prosecution and the defense to disclose material evidence that becomes available after formal discovery.(51)

      1. Fifth Amendment Aspects of Document Production

         To invoke the protection of the Fifth Amendment privilege against compelled self-incrimination,(52) a potential witness must show that three conditions are met with respect to the requested documents.(53) First, the individual must demonstrate that the government is compelling compliance with its demands.(54) Voluntarily prepared personal and business documents are not protected by the privilege because the element of compulsion is lacking.(55) Also, failure to assert the privilege affirmatively is considered proof that the response was not compelled.(56)

         Second, the individual must prove that the information sought is testimonial in nature.(57) In order to be testimonial, an individual's "communication must itself, explicitly or implicitly, relate a factual assertion or disclose information."(58) Finally, the individual must show a likelihood that the requested evidence is incriminating.(59) Witnesses are not required to prove that the information will actually be used against them in a criminal prosecution, but they...