Here’s Why Legal Compliance Check-ups Are So Crucial
Ever wonder how the FBI and federal prosecutors build their white-collar cases against business men and women who are under the watchful eye of the government’s binoculars? Ever wonder about the special tactics the FBI’s white-collar task force employ in order to establish if any one of the 4500 federal criminal statutes have been violated by you and your business?
A former CEO and an MCG white-collar crime advisor shared his startling encounter—which was his first encounter—with the FBI, and the most beautiful and unassuming FBI agents he’d ever seen or imagined. This encounter occurred during the early stages of the FBI’s investigation into his federal securities violations that resulted in him serving a 25-year sentence in federal prison.
As defense attorneys and Mr. CEO were in the throes of the trial preparation back in 1995, in an effort to exercise Mr. CEO’s constitutional right to defend himself, defense counsel sought the services of a white-collar forensics expert and former FBI agent who turned consultant and expert witness for the government, for Wall Street executives, and for large-scale industrial companies throughout the United States.
During their engagement with this forensics expert, Mr. CEO had the privilege of reviewing a manual the forensics expert had written, a manual he called his FBI Field Manual for Investigating White-collar Crimes. From this manual, Mr. CEO became privy to 10 critical things politicians, executives, and business owners (and their employees) should know about white-collar crime investigations:
1. THE PAPER CHASE
Every business has a genesis, a beginning, a starting place from where it all began. As expected, the FBI begins with your business’s birth certificate, be it from the city where you filed your application for a city license to the state capitol where your initial corporate documents were filed, or both. In this process, they also pull any special state or federal licenses and permits granted to you and your business. From these documents, the FBI will begin its focus on the names of the owners, agents, officers and directors of your company. With these names, profiles are compiled for the purpose of identifying who all of you are. For example, are any of you related by birth or by marriage? Check. Are any of you holding dual positions in the company? Check. Do any of you appear to be using aliases or fake names to conceal your true identity? Check. Here is where the case building begins, as in building a case for multiple counts of fraud and misrepresentation against some or all of you. The more the merrier.
2. FOLLOW THE LEADER
In every white-collar investigation, there’s always a leader/organizer of the alleged crime; or what law enforcement often refers to as the “head of the dragon.” That’s a given. The leader/organizer must be fully and thoroughly identified first and foremost. Why? Because he’s the trophy piece for the agent’s mantel, especially if a felony conviction is yielded from the agent’s efforts. The term “identify” here means “to unearth”. In other words, the FBI’s aim is to identify the key assets you have used to conceal the fruits from what they believe were ill-gotten gains, such as your home(s), bank account(s), credit cards, family trusts, close domestic and international associations, and any illusory finance instruments and tax shelters you might have crafted along the way. These are identifying factors that aid in the FBI’s efforts to establish your “intent” to commit a white-collar crime, and do so as the leader/organizer.
3. THE SUPPORTING CAST
Now the net widens as the investigation is turned to your supporting cast. According to the FBI’s field manual, the casting is divided into 3 categories: (1) your family, specifically those who work for you, (2) your employees, and, (3) your close associates. Right about now, several of the dots in the investigation are beginning to connect, such as the chain of command and associations you have established within the company. The key objective here is to begin uncovering and compiling a list of “projected co-conspirators” to the white-collar offenses for which you are being investigated.
4. IDENTIFY VENDORS AND CONTRACTORS
Vendors and contractors often play a pivotal role in the FBI’s investigation. Here’s why. Vendors and contractors are sometimes used by unscrupulous business people as “front men” to aid in the furtherance of a white-collar crime, or aid in the concealment of certain financial transactions that would normally raise a red flag if associated with them, such as large cash transactions. So if you are being investigated, some, if not all, of your vendors and contractors may be questioned regarding your accounting and debt-paying habits.
5. ISOLATE THE VICTIMS
The one thing the FBI is quick to do is isolate who they perceive to be your victims. In other words, if the victims are individuals who suffered a loss through you, those victims will likely be ordered to refrain from speaking with you. And out of fear, most will comply. On the other hand, if the victims are businesses or financial institutions, they would not be so easily isolated. At any rate, the FBI collects data and other intel from every victim as a means of unearthing names of “other people” (or “co-conspirators”) they had yet to discover thus far, names of those who might have worked for and with you during the commission of the alleged white-collar crime.
6. ENEMIES AND EX’S
This should give you an entirely new outlook on the term “never burn your bridges.” Why? The FBI is big on hunting down your enemies and ex’s when investigating white-collar crimes. Unlike all the other 9 items in this post, this one can do you in faster than all the others combined. Why? Because we all have enemies and ex’s lurking out there somewhere, enemies and ex’s who probably wouldn’t mind sticking a hot pitch fork into our tender backsides. Enemies such as hostile competitors, old creditors, or jilted investors. And then there is the brood of ex’s, such as ex-wives, ex-lovers, ex-business partners, ex-in-laws, ex-employers. The FBI knows that each of these exes holds valuable information about you and your past dealings—dealings that could aid in building a solid case against you and others. Some ex’s will even go so far as to flat-out lie or fabricate untruths about your dealings with them, in hopes of attending your burial just to kick mud on top of your carrot-orange federal-prison coffin.
7. COURT RECORDS
Remember all those small-claims cases filed against you, or those you filed against others? Remember those civil law suits you were dragged into, those that named you as a defendant/respondent? How about that nasty divorce and child-custody proceeding you suffered a few years ago? Or how about that heated labor-board proceeding that named you as that disgustingly greedy and deceitful employer? Buried in all these court records and other public documents are names, dates, dollar amounts and unfounded accusations that can be resurrected to the benefit of the FBI’s investigation.
8. STATE AND FEDERAL TAX RETURNS
How much did you report you earned when filling out that loan application at your bank? Funny how the amount on the application fails to jibe with what you declared you earned in your tax returns. Question now is . . . which document is correct? And which one is incorrect? Well guess what? Doesn’t matter to the FBI at this point. Tax fraud or bank fraud: either one will do just fine. No worries. They’ll just add one or both of these charges to the list of other white-collar charges they’ve already compiled against you.
9. FOLLOW THE MONEY
At this juncture, most of your banking records have been pulled and compared to your internal financial records provided to the FBI by, perhaps, a former disgruntled business partner, or an ex-lover, or an ex-employee—or hell, possibly even by a close yet envious family member who’s waiting to take your place at the office as soon as the federal government’s ax drops on your head. The aim here is for the FBI investigators to make a case for wide-spread theft against you, as well as to lay the proper foundation so as to seize your assets (and possibly others’ assets) and force you into forfeiture proceedings.
10. VISITING YOU
Let the games begin!
Depending on how well all the dots have been connected thus far, it’s now time to come out and either arrest you on the spot (if the cumulative evidence is overwhelming), or have a little face-to-face meeting with you as the investigators wrap up the final details before arresting you. Of course, by then, most of the questions that will be posed to you would have been answered by way of the first 9 FBI Essentials listed above. So in essence, it’s an exercise of futility. Truth be told, you’re actually being pre-measured for your carrot-orange federal-prison jumpsuit, along with being sized for your matching carrot-orange federal-prison kung fu shoes. Also, a visit with you allows the FBI to assess potential dangers and other risks that could lay in wait for the arresting agents or the local police when they come for you later.
Of course, the size and scope of your business will determine the size and scope of the FBI’s investigative process. However, according to my forensic expert’s field manual, the core principles of all non-public company, white-collar investigations are the same when considering the FBI’s 10 Essentials.
Now, in light of these 10 Essentials, ponder this question: If the FBI were to initiate a 10-Essentials investigation on your business, your financial, or your political dealings, and overlaid them against the backdrop of their matrix of 4500 criminal statutes, what are the odds you might have committed a criminal offense without realizing it? That’s why legal compliance really matters.
Call us for a free and highly confidential attorney-client consultation regarding your business or personal legal compliance BEFORE you are lulled into a legal nightmare from which you will never awake.