This transcript has been auto generated
00;00;00;24 - 00;00;27;21
Jonathan Porter
Welcome to another episode of False Claims Act Insights. I'm your host, Jonathan Porter. Thanks for joining us. To dig into the complex world of government fraud enforcement. In a previous episode, Catherine Hanaway and I talked about the first steps businesses and individuals should take when they find out they're under federal investigation. And one of the first steps Catherine told us about was to figure out through counsel exactly what type of investigation you're up against.
00;00;28;13 - 00;00;56;03
Jonathan Porter
Sometimes it's civil, sometimes it's criminal, but sometimes it's both. Today's episode talks about that both category when DOJ launches both a criminal and civil investigation and into particular conduct, commonly called parallel investigations or parallel proceedings. To me, the best way to understand why DOJ does this and how it works is through examples. And so in today's episode, we're talking examples of parallel proceedings.
00;00;56;24 - 00;01;25;11
Jonathan Porter
Joining me to walk through some examples is my friend Troy Clark. Troy and I worked together in the Justice Department and we worked on parallel criminal civil cases together. And we'll talk about an interesting parallel case as an example today. Troy left DOJ before I did and spent a few years as a defense attorney and then went in-house, first at Augusta University Medical Center, which is the Academic Medical Center tied to the prestigious Medical College of Georgia, which is Georgia's flagship public medical school.
00;01;25;23 - 00;01;51;02
Jonathan Porter
And the medical center recently merged with Georgia's largest health system, Wellstar Health System and Troy is now in house with the Wellstar. So Troy, let's let's start with a disclaimer because Wellstar is, you know, Wellstar is great has great people. It's run by great people. So Wellstar would never knowingly violate federal law. And so everything we're talking about here today has nothing to do with.
00;01;51;02 - 00;01;55;27
Jonathan Porter
Wellstar, we're talking about other people today. Troy, Troy, is that a a fair disclaimer for us to start with?
00;01;56;07 - 00;02;19;05
Troy Clark
Jonathan That is more than a fair disclaimer. And so I appreciate sincerely the invitation to join you today. It's always good to work with you and I'm happy to team up on the podcast today. But that is a fair disclaimer and I'll say, Well, I know that everyone at Wellstar would agree with that sentiment. They may not agree with everything I say.
00;02;19;05 - 00;02;33;12
Troy Clark
And so, of course, the views and the opinions that I share here today or gained from my years of experience in working on these cases through the Department of Justice and in defense practice and are not necessarily the views of Wellstar.
00;02;33;19 - 00;02;51;27
Jonathan Porter
That's fair, Troy. Thanks for that. And to make this doubly clear that we're not talking about, well, star, we're getting out of the world of health care today. We're going to tell a story of defense procurement fraud. So defense procurement, it's a huge area for FCA enforcement. It's actually the original reason that Congress created the FCA in the first place.
00;02;51;27 - 00;03;15;04
Jonathan Porter
It was procurement fraud during the Civil War. And we'll be digging into the nuances of defense procurement fraud in future episodes. But, you know, today we're telling a procurement fraud story that is really not nuanced at all. It's an Army colonel who took bribes in exchange for steering Army contracts. So, Troy, I'll lay the groundwork a little bit and then I'll ask you to talk about the details of the case.
00;03;15;14 - 00;03;39;26
Jonathan Porter
But here's what our listeners need to know to understand this story. So, one, in this case, Troy was the criminal prosecutor, and I was on the False Claims Act side, along with a good friend of ours, Tom Clarkson, who's coattails are in tatters. From my riding on them for so many years at DOJ, that's one, too. The Defense Department is required by law to set aside a certain portion of its contracts for small businesses.
00;03;40;09 - 00;04;07;24
Jonathan Porter
It's a way of encouraging small business growth and keeping our military less reliant on a few mega defense contractors. I think so. Remember in this story that the Army needs to partner with small businesses for many of its contracts. So that's two. Three bribing colonels in the army is generally frowned upon. That's three. All right. So, Troy, with that background, tell our listeners about this case and what you went about proving from the criminal side.
00;04;08;01 - 00;04;37;02
Troy Clark
Yeah, absolutely, Jonathan. And those are three good bright line rules that everyone should keep in mind. This really was a fascinating case to work on and to be a part of. It really had all the pieces in my mind of why I wanted to become a federal prosecutor. Like you said, bribes to active duty colonels, high ranking military officials, CEOs of private companies and private companies themselves.
00;04;37;14 - 00;05;12;25
Troy Clark
And so it came in to the office, the United States attorney's office, where you and I worked through Army CID or the Criminal Investigative Division and the Department of Defense investigators. And that really is kind of an interesting aside that you just alluded to, because the false claims act on the civil side is applied so heavily in health care that I think sometimes we don't give it the credit that it is due as it operates through the other sectors of our economy is specifically here in government procurement or government contracting fraud.
00;05;13;10 - 00;05;49;10
Troy Clark
And as you said, that's the reason that the False Claims Act was initially passed. And so taking the False Claims Act on the civil side, on the criminal side, we looked at all of the federal statutes which could apply your typical conspiracy statutes, false statement statutes, for example, bribery of public officials. And so this case, like I said, came in through Army CID and through the Department of Defense, which is interesting when you think about parallel proceedings, I think everyone knows who the FBI is.
00;05;49;10 - 00;06;33;06
Troy Clark
And if the FBI or HHS, OIG comes knocking, then they understand this is a very serious matter. This case started from agencies that I don't know that most people give them the credit that they are due. And they came into the office and presented what you said is a very straightforward case. It involved several active duty colonels, a former active duty colonel in his company, which we called by its acronym, CRACK, but it stood for Communications, Research, Engineering and Consultants Group, a current active duty colonel, and then a gentleman named Dwayne Fulton, who was the employee of a large defense contractor.
00;06;33;21 - 00;07;01;27
Troy Clark
The ins and outs of the cases was about an eight year conspiracy that we were able to prove out. And it involved Calvin Lawyer who was in active duty colonel. He was in charge of communications here at Fort Gordon. Now Fort Eisenhower, just outside of Augusta, Georgia. And prior to him leaving the military, he set up this company called REC, or the CRTC group.
00;07;02;05 - 00;07;37;18
Troy Clark
And immediately upon his retirement, the person that took his position was Colonel Roper. They had been buddies for a long time. And so in exchange for Calvin lawyer making payments to Colonel Roper, Colonel Roper steered contracts directly to his company. Some of these contracts otherwise would not have gone to his company. And some of these contracts they took advantage of the small business administrations, what we call the set aside program for those smaller companies trying to get into the government contracting business.
00;07;38;07 - 00;08;24;29
Troy Clark
The laborer was eventually supplied by Duane Fulton, who also created false and fraudulent invoices once the investigation went covert. And so these investigations can be very complicated. And so as we were told at Department of Justice, you like to distill it down to the lie, the cheat and the steal. And so it really is as simple as Calvin Lawyer, who was a former active duty colonel, created a company at his friend, steer contracts to him in exchange for cash payments and basically promoted them to that spot and used the labor of another company to fulfill the contracts obligations.
00;08;25;12 - 00;08;42;27
Troy Clark
Once the investigation went covert, they began to make a number of false statements, create fake and fraudulent business records and invoices to try and cover up their conduct. But ultimately, we were able to complete our investigation and prove out what we just discussed.
00;08;43;22 - 00;09;03;09
Jonathan Porter
That's that's a great joy. You said, you know, we were trying to distill stuff down to the sort of concrete facts and those critical facts. And you did a good job there. Yeah. It comes down to pinpointing the lying, the cheating, stealing, explaining how that happens. And the big lie here is that how we expect government contracts to be steered is through a merit system.
00;09;03;09 - 00;09;24;19
Jonathan Porter
And they bypass the merit system here took bribes and the bribes were what ultimately steered this work in a particular direction. And that's where they got into trouble. So on the civil side, said Troy, now we're working this together along with a great team of agents. And Troy, you're right, a lot of people don't recognize Army CID or DOD Office of Inspector General.
00;09;24;26 - 00;09;49;28
Jonathan Porter
I think they know NCIS from the TV show that's in the naval investigators. But this is just as robust. But on the civil side, what we were doing, our focus on the false claims side was primarily Troy. You were looking at a lot of the individuals. We were looking on a civil side to the company, the large defense contractor that employed Fulton, who was the guy that, you know, was behind this scheme to bribe the active duty colonel.
00;09;49;28 - 00;10;14;03
Jonathan Porter
So to me, the FCA functions best as a tool for getting corporations to take compliance seriously and making sure their employees aren't going rogue and doing awful things so our focus on the FCA side of the House was against that defense contractor. We actually had two different theories for that. Obviously getting contracts by bribing an Army colonel, that's an FCA predicate.
00;10;14;03 - 00;10;42;25
Jonathan Porter
And the law in the 11th Circuit is that acts of an employee, they're held against an employer for FCA purposes. If the acts are both for the benefit of the employer and within the scope of that employee's employment. And that's a case we'll talk about in a future episodes. Grand Union interesting case. But that law aside, we on the FCA side of the House for DOJ, we knew that the defense contractor employing Fulton viewed Fulton as a rogue and that bribery was outside the scope of his employment.
00;10;42;25 - 00;11;09;21
Jonathan Porter
And they just view that 11th Circuit case Grand Union as just wrong. So Troy, our friend Tom Clarkson, had a great idea on this. What we did on the civil side was to investigate a different theory that would get us to the very same place in terms of settlement posture, different FCA predicate. So we investigate it, not just bribery, but also the defense contractors knowledge that it was getting work that was supposed to be done by a legitimate small business.
00;11;09;21 - 00;11;28;16
Jonathan Porter
And that's where we got traction on the civil side. It take too long to fully explain the legal theory, but here's the short version. The small business getting these contracts wasn't actually doing anything. They were just passing along all the work to this large defense contractor and keep just keeping a percentage. And that's not how small businesses set aside.
00;11;28;16 - 00;11;48;25
Jonathan Porter
Contracts are supposed to work. The Army wants to support real small businesses and encourage their growth, not just give them money for nothing. So we were able to show that even if the large defense contractor were to win on the bribery angle and get Grand Union overturned, they'd still lose on their ability to do this work in the first place.
00;11;48;25 - 00;12;10;04
Jonathan Porter
So we focused RFK efforts on the defense contractor for those two theories knowing that that you Troy on the criminal side we're going to do your thing against the individual. So Troy, the imagery that DOJ uses about parallel proceedings is that of a train track, you know, two rails moving along in unison, but never, never coming together, never touching.
00;12;10;07 - 00;12;16;23
Jonathan Porter
Tell our listeners, Troy, how you went about proving your case and how coordinated our two sides were at.
00;12;16;23 - 00;12;51;13
Troy Clark
Jonathan I think it's important to recognize that both the criminal and civil side generally not only work together, but the justice manual encourages the civil and the criminal side to work together in parallel investigations. So if you were to go and read the justice manual, for example, you had nothing else to do, then you would understand that the Justice Department of Justice is really putting a premium on appropriate cooperation from the civil side, the criminal side, and even the administrative portion of these cases.
00;12;51;22 - 00;13;18;04
Troy Clark
And they want us as federal prosecutors, to begin that process at the case intake. So when the case comes into our office, ideally under the justice manual, what should happen is the civil and the criminal side sits down and discusses potential theories of liability, looks at who the potential actors are, looks at what the alleged actions or alleged criminal actions would be.
00;13;18;27 - 00;13;49;18
Troy Clark
And then they appropriately coordinate. And I think the biggest piece is they share information appropriately. So, for example, information gained by the civil side that can be shared with the criminal side. That's not the case, though, the other way around. And so the criminal side, we did a lot of our work through grand jury subpoenas and witness testimony before a grand jury and is coordinated as we would like to be.
00;13;49;18 - 00;14;15;03
Troy Clark
Jonathan, it stays parallel because there are a couple of things that we cannot cross as criminal and civil. One of those is directing the civil side to collect evidence for use and for the benefit of the criminal side. But the other is federal rule 60, which says that grand jury materials are secret and that rule is taken very seriously.
00;14;15;13 - 00;14;44;29
Troy Clark
And I think that that's why coordination is important and is done in the way it is, so that everyone understands civil is going to share as much as they can with criminal. Criminal will do the same, but with that very important limitation of Rule 60. And so we set out again in a very coordinated effort with our team of agents with you and Tom Clarkson on the civil side, as we would almost any criminal investigation.
00;14;45;02 - 00;15;17;08
Troy Clark
But just having that much broader team of who are potential actors, what are the potential allegations? What are the theories of liability? And then we would use, as I said, grand jury subpoenas, put witnesses before the grand jury to gain everything from bank records to statements. You know, this case was fascinating because once it went covert again, the wife, Olga Roper, Colonel Roper's wife, created a number of false and fraudulent invoices to say that, no, these payments were not bribes.
00;15;17;08 - 00;15;42;22
Troy Clark
Their defense was these were legitimate payments made to this company. And so did one of the other defendants, Wayne Fulton, who you mentioned, the employee of the large government contractor, created false and fraudulent invoices. And so what we did in response was send off a grand jury subpoena and said, if these are real companies, certainly you have employees, certainly you have business records, certainly you have Department of Labor records.
00;15;42;29 - 00;16;14;19
Troy Clark
Give us everything related to these companies. And again, when they only had the eight sheets of paper that they had previously given us, then it was pretty clear what was going on. And so through the traditional grand jury subpoenas to our agents continually beating the pavement, talking to people, if we thought those witnesses would create an issue down the road to put them before the grand jury to lock in the statement, and then, of course, coordinating with you, as we just talked about, to the extent that we could, keeping in mind those guardrails that are in place.
00;16;14;27 - 00;16;35;20
Jonathan Porter
You know, Troy, what's funny about this is this is the first time I'm hearing that you send grand jury subpoenas to these companies that weren't actually doing anything. That's what I mean. People may not believe this. We really are careful to keep the two sides separate when they need to be separate. So any time you're talking about grand jury subpoenas, the civil side, we weren't involved in that exactly as Troy was saying.
00;16;35;20 - 00;16;53;06
Jonathan Porter
We were involved in coordinating a lot of things that the agents are going to go out and interview people. That's not sexy. If you're compelling them to come before the grand jury, that's exciting. You got to take some precautions. But outside of that, you can coordinate an awful lot of stuff and it be something that you can share both on the criminal and civil side.
00;16;53;06 - 00;17;11;10
Jonathan Porter
So, you know, I recall Troy, we'd be meeting together and the conversation, it would start touching on something financial and then we'd pause and Tom and I would leave the room because I'm sure you guys need to talk about documents obtained via a grand jury subpoena. And then we'd come back when that conversation was done and we talk about some other aspect of the case.
00;17;11;10 - 00;17;27;04
Jonathan Porter
That's the way that we handled six in a lot of parallel cases. We actually got really good at using subpoenas other than grand jury subpoenas so that we could avoid those issues. But with financial records, there are some specific reasons why you've got to go to grand jury route, that we'll discuss the specifics of that some other time.
00;17;27;04 - 00;17;52;14
Jonathan Porter
But, you know, now I know that some other U.S. attorneys offices, they are confident that the language of 60 allows for historical documents like bank records to be shared with the False Claims Act investigators. But we we took precautions to be extra careful to not come close to that line, because, frankly, we on the FCA side didn't care what the bank records said they were there were important dishes and they were important for what you needed to prove.
00;17;52;14 - 00;18;05;18
Jonathan Porter
They weren't as important for what we needed to prove. And so that was something that we took precaution to do there. So Troy, cut the suspense for us. What ultimately ended up happening to Colonel Roper and all of his various coconspirators?
00;18;05;19 - 00;18;31;09
Troy Clark
Well, again, it's it was an interesting how it played out. We approached who we thought may be willing to plead early, and that was Calvin's lawyer, the retired colonel who had started their business c r e c and so he was a former colonel of 20 plus years and now the CEO of that company. We approached him and he actually pled guilty to an information.
00;18;31;09 - 00;18;53;25
Troy Clark
And I don't know if you've discussed that or not on the show so far, but basically waived his right to a grand jury indictment and decided at the time of charging to enter a guilty plea. So we had the information and we had the guilty plea of the CEO and former active duty colonel, kind of in our back pocket, if you will, on the criminal side.
00;18;54;05 - 00;19;26;28
Troy Clark
We unsealed that once the indictment was brought down against Anthony Roper, the current active duty colonel, his wife, Audra Roper, and then Duane Fulton. And so ultimately, those individuals were indicted and there was also a superseding indictment for a number of charges for the things that we've discussed so far. Your typical conspiracy charge under Section 371 of false statements under Section 1001, a government procurement fraud, bribery, obstruction of justice.
00;19;27;07 - 00;19;58;02
Troy Clark
And so they were facing a number of charges at the end of the day, ultimately, as I said, Calvin Lawyer was the first one to plead and he entered a guilty plea to the information and was sentenced to five years under the 371, which is the statutory max under that statute. Anthony Roper also entered a guilty plea eventually was sentenced to 60 months into federal custody and a $200,000 fine.
00;19;58;02 - 00;20;21;13
Troy Clark
And he entered a guilty plea to a charge of procurement, integrity, fraud. His wife, Olga, for her actions in the case was sentenced to five years probation but had to serve 28 days in prison, as she ultimately led to being an accessory after the fact. As they always say, Jonathan, it's the cover up that gets them and it's the cover up that got her in this case.
00;20;21;22 - 00;20;42;18
Troy Clark
And then Duane Fulton also entered a guilty plea to a conspiracy charge under Section 371, also sentenced to 60 months in a Bureau of Prisons custody and a $50,000 fine. So on the criminal side, we ultimately secure convictions against all the targets of the investigation.
00;20;42;23 - 00;21;11;03
Jonathan Porter
That's great, Troy. And on the civil side, what ended up happening? You know, we settled with the defense contractor that improperly obtained these contracts, ultimately having that second FCA predicated drove the settlement because, you know, showing two different FCA problems that left the defense contractor really with no path to victory. If they wanted to take this to litigation again, they they'd have to convince the 11th Circuit to overturn that long precedent on how acts are imputed to employers within FCA.
00;21;11;03 - 00;21;39;06
Jonathan Porter
And also, you know, our second theory on improper small business pastors, that was just a good theory. So there's an uphill battle for the defense contract and we ended up settling it also on the financial side of the FCA, it really rewards settling. Instead of litigating, you avoid the penalties, you get a better multiplier. You know, as we talked about in the previous episode with Lorinda Holloway, so it really was in the defense contractors best interest to settle this instead of litigating and their attorneys, they did a great job of navigating this court settlement with Troy.
00;21;39;06 - 00;21;51;27
Jonathan Porter
You know, I I imagine that some of our listeners might be curious about whether you could have criminally charged that large defense contractor and if so, why you elected not to criminally charge. Could you tell our listeners a little bit about that?
00;21;52;10 - 00;22;28;05
Troy Clark
Yeah, absolutely, Jonathan. You know, we had the mindset that just because you can charge someone doesn't necessarily mean that the Department of Justice should charge someone or in this case, a company. And just as we approached the investigation with great caution, we also approached charging decisions with caution and with care, trying to impose the right amount of liability to accomplish the goals of the justice manual or the sentencing guidelines and all the other things that we were working under within the Department of Justice.
00;22;28;10 - 00;22;55;12
Troy Clark
And so here, as you mentioned before, Duane Fulton was really looked at and I think proved out to be to some degree, at least on the bribery side of the house as a rogue employee. And that's a phrase that probably listeners are very comfortable with or probably know a rogue employee. And that's a phrase that I wouldn't necessarily say a term of art, but it's used as almost a label to say this is not a systematic issue.
00;22;55;12 - 00;23;31;18
Troy Clark
This is the actions of a single individual or or a very small group of individuals within a very large company. And when you look at that idea that it is not a systematic issue, what is the compliance programs of these large companies and the idea that criminal consequences can be very significant? For example, as we talk about parallel proceedings, we've talked about civil and criminal administrative side of the House, kind of the third rail is potential department for Defense contractor, meaning they're not allowed to be a defense contractor anymore.
00;23;31;18 - 00;24;09;19
Troy Clark
They can no longer bill the federal government or see funds from the federal government. And that's really what's been referred to as the corporate death penalty. And so those sort of liability should be reserved for, I would say, the worst offenders and very infrequently used. And so ultimately big corporate, large government contractor, we just did not feel that their culpability, at least on a criminal side, just didn't rise to the level where we thought the consequences of a criminal conviction was appropriate and as you already alluded to, let you guys handle it on a civil side with the False Claims Act settlement.
00;24;10;07 - 00;24;39;20
Jonathan Porter
I appreciate that. Troy. Yeah, but our listeners loved hearing your analysis right there because that's the exact analysis that I think people want to happen within the Justice Department. And that's really Troy. The reason I wanted to tell this story, to explain, you know, parallel proceedings gives DOJ creative resolutions to seek just results. You know, the colonel who took the bribes went to prison, the guy bribing the colonel went to prison in the company that benefited from the bribes and perhaps should have, you know, been a little more vigorous in their monitoring of this employee.
00;24;39;21 - 00;24;58;05
Jonathan Porter
They resolved their liability under the False Claims Act. That's how parallel proceedings are supposed to work. So, you know, Troy, we could talk for a long time about other examples of DOJ successfully running parallel procedures, but I want to make sure we cover the line that DOJ ought not cross because I think that's important here in this conversation.
00;24;58;05 - 00;25;21;10
Jonathan Porter
So when DOJ first started running parallel criminal civil investigations, those got challenged in courts under a host of theories. And courts have largely said that there's nothing inherently wrong with parallel investigations. But there's one bright line that courts have identified, at least so far, and we should identify that for our listeners so that they're on the lookout for it and defending parallel investigations.
00;25;21;10 - 00;25;38;13
Jonathan Porter
And that's the that's the stalking horse problem, using some law enforcement tool, not in good faith, but to achieve some other purpose. And the best example of this comes from the Scrushy case. So, Troy, do you want to give our listeners some of the background on the on the Scrushy case?
00;25;38;21 - 00;26;03;19
Troy Clark
Absolutely. Richard Scrushy was the target. Obviously, he was a health care executive in Alabama and was actually also under investigation by the SEC's Atlanta office during the SEC side or the civil side of that investigation, the U.S. attorney's office in Alabama opened a file. And so the SCC was overt or the target in this case, Scrushy knew about it.
00;26;03;19 - 00;26;33;21
Troy Clark
DOJ was covered. At some point, the SCC was going to take Mr. Strauss's deposition. But in preparing for that deposition, the SEC met with the department of Justice, and the DOJ gave them certain questions to ask Mr. Scrushy with the intention of keeping their investigation a secret. In addition, the Department of Justice asked the SEC to relocate the deposition from Atlanta here in Georgia to Birmingham over there in Alabama.
00;26;34;03 - 00;26;58;06
Troy Clark
So in case Scrushy lied during the deposition, the U.S. Attorney's Office in Alabama would have appropriate venue to prosecute Scrushy for perjury or for false statements. The S.E.C. interviewed Mr. Scrushy. They asked the Department of Justice questions, as we would say, not only requested, but worked in concert to ask. And so the SEC did, in fact, ask those questions.
00;26;58;09 - 00;27;35;18
Troy Clark
They kept the secret, and DOJ wanted them to. Of the ongoing Department of Justice investigation. And according to the Department of Justice, Scrushy, in fact, lied during his deposition. Thereafter, the U.S. attorney's office for the Northern District of Alabama indicted or charged Mr. Scrushy for a host of things, including lying. During the deposition that was taken in Birmingham, Mr. Scrushy got the discovery from the department of Justice, then learned of their plan between the Department of Justice and the SCC and asked the court to suppress his deposition and to dismiss all of the perjury counts based on that testimony.
00;27;35;24 - 00;28;02;09
Troy Clark
And ultimately, the court agreed with Mr. Scrushy and said that where DOJ and S.E.C. went beyond the proper administrative action of justice and the two were not parallel, but they merged. And so like you were talking about at the beginning of the discussion, there are two tracks that run parallel and never cross. And here they crossed. And that's the bright line rule in those areas.
00;28;02;09 - 00;28;26;06
Troy Clark
The Department of Justice cannot lean on other law enforcement components or the civil component of a U.S. attorney's office to create potential extra charges or to act at their direction for the benefit of the criminal investigation, such as in the Scrushy case, by bringing up perjury charges or being able to assert venue in a specific jurisdiction.
00;28;26;21 - 00;28;46;08
Jonathan Porter
That's perfect. Troy. I think there's a reason that cases used in DOJ trainings is because that is the bright line and you can't use one tool for another. I remember sometimes when we had False Claims Act investigations at DOJ, the agents would say something like, You know, I think they're not giving us all the documents. Can we just go get a search warrant, which is a criminal tool for those who don't know?
00;28;46;22 - 00;29;04;10
Jonathan Porter
I would say, look, you're free to consult a criminal AUSA the criminal AUSA is going to tell you we don't have criminal conduct here. You can't just go get a search warrant to help the civil investigation the same way you can't go and seize funds getting a seizure warrant just because you want to preserve funds. You got to have a criminal hook on those things.
00;29;04;10 - 00;29;22;25
Jonathan Porter
You can't use the criminal tools to help a civil and vice versa. So I think for the most part, DOJ does a great job. Now of training their people about that line and keeping ACS far, far from crossing that line. But let me say this. You can't just assume that DOJ is going to do the right thing every time.
00;29;22;25 - 00;29;56;18
Jonathan Porter
Defending these investigations means being vigilant on protecting the rights of your clients. And that means knowing where this parallel proceedings line is and making sure DOJ is not improperly using the tools entrusted to it. So, Troy, the question for you before we go. Based on your DOJ experience and your criminal defense experience for in-house counsel who learned that DOJ has parallel criminal civil investigations that their company is involved in, do you have any parting tips or wisdom for how in-house counsel should think about parallel proceedings?
00;29;56;27 - 00;30;39;22
Troy Clark
Yes, the one we as in-house counsel receive notification. The DOJ has a parallel proceeding against a company or our client, the corporate client. I think it's so important for everyone to take a step back and realize how important it is to have a knowledgeable attorney handling these issues. As we've talked about, parallel proceedings create multiple risks for companies on the civil side, on the criminal side, and on the administrative side, and knowing how to balance the evidence that is collected in each one of those ways, how to balance the rights and the privileges of the client in each one of those ways.
00;30;40;06 - 00;31;06;09
Troy Clark
It takes very sophisticated counsel. And so I think it's important to understand that you need to have the right legal team to handle these sorts of issues and preferably somebody who has been in DOJ. Because I think as a former AUSA myself, again, this is just my thought is a former AUSA who has been in the trenches and has worked on that side of parallel proceedings.
00;31;06;09 - 00;31;44;00
Troy Clark
You get a credibility that you may not get otherwise. And so starting with that understanding that even the most sophisticated corporations need to have a counsel who are capable of handling these sorts of matters is important. But then I would say through counsel, the company should reach out to the Department of Justice. That's one of the first and most important phone calls that can be made in any investigation is the first call to the United States attorney's office and to the either the civil attorney or to the prosecutor that's handling that case.
00;31;44;18 - 00;32;14;15
Troy Clark
And you really want to try to poke and prod and really get your hands around what is the civil theories of liability? What is the criminal theories of liability? Is our company or the corporate entity itself? Is it a target or a subject or witness? And all of those ideas are laid out in the justice manual. But also are these are they looking at specific employee use for prosecution or do Department of Justice think this is a much bigger issue?
00;32;14;24 - 00;32;43;03
Troy Clark
And also keeping in mind that those statuses can change throughout the investigation, I think it's important to realize that even though a decision is made at one point in the investigation, we need to have the mindset to constantly reevaluate as documents are produced, as depositions are taken, as subpoenas are responded to. We need to constantly be evaluating our is our company or our employees targets.
00;32;43;05 - 00;33;09;21
Troy Clark
Are they witnesses or are they subjects? And then the last thing that I have seen, I would say more recently, Jonathan is asking, obviously, whatever side of the house you get to speak with, whether it's civil or criminal, they may not tell you and they may not know the full extent. So it's always good to say, hey, if you're speaking to the civil AUSA, is there someone on the criminal side that I should speak with about this matter?
00;33;10;04 - 00;33;31;13
Troy Clark
Or if you talk to the criminal side, is there someone on the civil side of the house with which to speak about this matter and I think that's kind of a standard question that most folks know. But what I have seen to also be very effective is asking the U.S. attorney's office is have your agents deconflict it across the agencies?
00;33;32;04 - 00;34;18;25
Troy Clark
And I say that because the way that parallel proceedings work these days and the way that False Claims Act cases and Criminal Liability Act works these days, you may have a criminal case in one jurisdiction, a civil case in another jurisdiction, or you may have a number of jurisdictions looking at an entity criminally or civilly. And so it's important to learn the playing field and I think that's a question that has to be asked these days, is what other organizations, agencies or offices within the department of Justice are looking at this client and have your agents de-conflict it to ensure that we can get our hands around as quickly as possible, knowing which entities are
00;34;18;25 - 00;34;21;14
Troy Clark
investigating or looking into the client.
00;34;21;24 - 00;34;47;21
Jonathan Porter
That's exactly right. All good points, Troy. I think this gets really hard for in-house counsel when you've got criminal investigation, civil investigations, you've got individuals within, you know, current employees within your organization that could be could be targets or subjects. I mean, I don't envy in-house counsel who learn that their organization is the target of one of these parallel investigations and how you handle it, I think, depends on the situation.
00;34;48;06 - 00;35;12;02
Jonathan Porter
Obviously, if a corporation's employee is doing something unrelated to the company, that's an easy call. You don't get involved or the corporation's actually a victim of the of a of a crime, like in an embezzlement situation. That's also an easy call. You don't you don't get involved. Detroit is there's a lot of times where DOJ is investigating something the company did and that individuals within the company executed on behalf of the company.
00;35;12;02 - 00;35;37;05
Jonathan Porter
And that's where coordination, I think, is is important and understanding the roles that different people have and who can represent who. But that's a very fact specific question that needs to be thoroughly talked through and analyzed through your your state's professional responsibility rules. And, you know, maybe we'll talk about that again in a future episode. But for now, Troy, thanks for joining us to talk about parallel proceedings and giving our example of parallel proceedings.
00;35;37;05 - 00;35;47;18
Jonathan Porter
That to me worked really, really well. Hopefully our listeners learned a lot from from that story. And if they learned nothing else, maybe they learned that they should avoid bribing Army colonels. Is that a good lesson for us, Troy?
00;35;47;18 - 00;35;50;29
Troy Clark
That is a wonderful takeaway, Jonathan, for sure.
00;35;51;17 - 00;36;15;01
Jonathan Porter
So thanks for joining us, Troy. So we've got more great content planned for this podcast. So however you're listening to this, you can subscribe to our podcast and get a heads up when new episodes come out. Until then, for our corporate friends, listen to this and we'll talk about this in a future episode. But one of the takeaways from today's episode should be that employers can be liable under the FCA for acts of their employees in certain situations.
00;36;15;01 - 00;36;41;25
Jonathan Porter
And that's why corporations have to create cultures of compliance within their organizations. Staying out of FCA situations through robust compliance programs is coming soon on this podcast, so stay tuned for that episode. I'm getting better at this podcast thing, and the podcast pros call that a teaser, folks. So consider teased. So Troy, thanks for joining us. And we'll see you all again next time.