As a white collar defense attorney and a former federal prosecutor for the Department of Justice’s Health Care Fraud Strike Force, I’ve witnessed the power of the grand jury subpoena in providing the government evidence against individuals and entities. The government can obtain a grand jury subpoena with relative ease while hiding the specific purpose of the subpoena under the veil of grand jury secrecy. As the Department of Justice continues to spend more money and resources investigating white collar crime, specifically healthcare fraud, it becomes even more important for businesses to equip themselves with experienced counsel and know their options should they receive a grand jury subpoena. The below provides an overview of the grand jury process and grand jury subpoenas, and discusses possible options for the recipients of grand jury subpoenas.
FEDERAL GRAND JURY
A federal grand jury consists of 12-23 members of the community, and has wide discretion to investigate violations of federal law by individuals and entities, and may investigate with no particular defendant or criminal charge in mind. The purpose of a grand jury is to probe into all information that might concern its investigation until it identifies whether or not a criminal offense has occurred. The federal grand jury has nationwide subpoena power and can subpoena individuals to testify personally in front of the grand jury, or subpoena documents and other evidence to be produced to the grand jury. The activity and deliberations of the grand jury, and the records and testimony the received by the grand jury are all kept secret under the concept of grand jury secrecy. The only persons allowed in a grand jury proceeding are the grand jurors, the prosecutor, a court reporter, and any witnesses who are commanded to testify under a grand jury subpoena.
GRAND JURY SUBPOENA
A federal grand jury subpoena is essentially an order issued by a federal grand jury, under the supervision of a federal district court, to appear and testify in front of the grand jury (subpoena ad testificandum) or to produce records or other items to the grand jury (subpoena duces tecum). Refusal to comply with a grand jury subpoena can result in federal district court finding a party in contempt of court.
HOW A SUBPOENA IS ISSUED
Unlike a search warrant, indictment, or wiretap, the threshold for obtaining a grand jury subpoena is surprisingly low. Under Rule 17(c) of the Federal Rules of Criminal Procedure a federal grand jury subpoena cannot be “unreasonable and oppressive.” Additionally, the United States Supreme Court has held that federal grand jury subpoenas cannot be used for “fishing expeditions.” United States v. R. Enterprises, Inc., 498 U.S. 292 (1991). Although technically issued by the grand jury under the supervision of a federal district court, it is typically a federal prosecutor that makes the decision to issue a grand jury subpoena. At the DOJ’s Criminal Division, Fraud Section, and at many United States Attorney’s Offices, the process is for the prosecutor to simply request an investigating agent to draft a subpoena specifying the records to be produced, or the witnesses who will testify. The subpoena then goes to the district court clerk to be file stamped, and thereafter the subpoena is served by a federal agent—often from the agency investigating the case, or the U.S. Marshal’s Office.
IMPLICATIONS OF NON-COMPLIANCE WITH A FEDERAL GRAND JURY SUBPOENA
The federal district court supervising the grand jury can find a party in contempt of court if the party fails to appear or produce records under a valid grand jury subpoena. When I was a prosecutor for the Department of Justice, however, if I knew that an entity was not fully complying with a subpoena, I would first informally advise that entity of their non-compliance and simply request their compliance. If the informal approach did not work, the next step would be to write a letter to the party’s attorney. If that didn’t work, the next step would be a motion to compel compliance with the federal grand jury subpoena.
The government may also attempt to obtain compliance with a grand jury subpoena in other ways. For example several years ago as a lawyer for the Department of Justice, DOJ attempted to obtain records via subpoena from an entity. That entity had produced some of the records requested, but not all of them. To ensure that the government was receiving all of the records pursuant to the subpoena, DOJ issued a subpoena for one of the heads of the entity, to testify in front of the grand jury and to personally bring the records requested. That individual showed up to the grand jury somewhat defiantly, and still did not produce all of the records. Consequently, that person endured an hour of questioning by the grand jury—and the prosecutor—as to what other records the entity possessed that would be responsive to the grand jury subpoena. What this means for a business is that if a grand jury or DOJ, believes that your company is not complying with the subpoena, they can issue a grand jury subpoena for the custodian of records, or someone else within the company to testify in front of the grand jury as to whether they have produced all of the records. Because of the broad powers of the grand jury, it is possible that the person that they request to testify could be the president or owner of the company. In many cases, simple compliance with the subpoena, can avoid this potentially unpleasant scenario. As discussed below, however, there are other factors to consider before complying with a subpoena.
As to healthcare providers who receive a grand jury subpoena that requests information that could include protected health information (PHI), according to the Code of Federal Regulations, a “covered entity” may disclose PHI to a law enforcement official for a law enforcement purpose without violating HIPAA. Because grand jury proceedings are closed to the public, HIPAA presumes that the privacy interests of the patients are protected. Accordingly, refusal to produce records under HIPAA grounds, is generally ineffective.
THINGS TO CONSIDER BEFORE COMPLYING WITH A GRAND JURY SUBPOENA
Before a person or company complies with a grand jury subpoena, they should be aware of the limits to subpoenas and consult with a lawyer immediately in order to explore these alternatives in a timely manner.
- The Fifth Amendment Right Against Self-Incrimination
One of the most important rights under the Fifth Amendment of the United States Constitution is the right of an individual not to be “compelled in any criminal case to be a witness against himself.” First and foremost, if an individual is subpoenaed to testify or produce documents to a grand jury, they can always assert their Fifth Amendment Rights. A corporation or other similar business entity, however, has no such right against self-incrimination. While individuals working within the corporation can assert their Fifth Amendment right against self-incrimination, the law is well-settled that the corporate entity cannot refuse to comply with a grand jury subpoena for records based on the Fifth Amendment.
A key factor in deciding whether to testify in front of a grand jury will be whether the government perceives you as a target, subject, or a witness. Under Department of Justice policy, a prosecutor must inform an individual as to which category they fall under.
A “witness” in an investigation is just that; a person who is a witness to potential facts of the investigation, but is not considered to be a target or subject of the investigation. If it is determined that the government is truly seeking your testimony only as a witness, it is generally advisable to testify in front of the grand jury and not assert your Fifth Amendment rights. Witnesses can later become targets, however, so the decision to testify even as a witness, should only be decided after careful consideration of the known facts and consultation with an experienced white collar criminal defense attorney.
A “target” is a person as to whom the prosecutor or the grand jury has substantial evidence linking him or her to the commission of a crime. An officer or employee of an organization which is a target is not automatically considered a target even if such officer’s or employee’s conduct contributed to the commission of the crime by the target organization. The same lack of automatic target status holds true for organizations which employ, or employed, an officer or employee who is a target. A “subject” of an investigation is a person whose conduct is within the scope of the grand jury’s investigation. DOJ Justice Manual. https://www.justice.gov/jm/jm-9-11000-grand-jury#9-11.010
If a person is known to be the target or subject of an investigation, it is often advisable for them to exercise their Fifth Amendment right against self-incrimination. First, they will know very little about the government’s investigation as the government is not required to provide them this information until they are indicted for a crime. Second, testifying before a grand jury can be a daunting experience considering they will be subject to questions by a prosecutor and probably several grand jurors, and they will usually not be privy to the questions they will be asked before they enter the grand jury room. Third, a person’s attorney is not allowed in the grand jury room while their client is being questioned. Under these circumstances, no one can really blame a person for not wanting to endure such an experience, however, it may be prudent to do so after consultation with your lawyer. Even if the government considers a person, or their business, a target of an investigation, under the right circumstances and factual situation, it still may be advisable for that person to waive their Fifth Amendment rights and testify. Testifying in front of the grand jury could provide a golden opportunity for a person to convince a grand jury to “no bill” the investigation. Similarly, a prosecutor who is truly seeking justice, will not present the case for indictment if the facts demonstrate the person did not violate the law. It is a bold move for even the most innocent, but on several occasions, I have seen suspects testify in front of a grand jury and persuade both the prosecutor and the grand jury of their innocence. Before deciding to do so, however, the target or subject should consult with their lawyer, and will likely need to spend hours with them in preparation for their testimony.
- Motion to Quash
Rule 17(c) of the Federal Rules of Criminal Procedure affords a party the ability to move to quash a subpoena that is “unreasonable and oppressive.” An example of an “unreasonable and oppressive” subpoena could be one that requests all documents of a business over the past ten years, or a similarly broad subpoena for documents. The district court has broad discretion in its supervision of the grand jury process, and it will depend on the individual court as to whether they will entertain quashing the subpoena. As many judges share the opinion that a grand jury subpoena can grant too much power to federal prosecutors, it is possible that the Judge may grant a motion to quash even though technically the subpoena is otherwise valid. As an example, a former colleague of mine once issued a grand jury subpoena for the principal of a company to testify before the grand jury. The subpoena ordered that the witness testify in front of the grand jury only three days before the witness was to testify. The attorney for that company filed a motion to quash the subpoena citing that it was “unreasonable and oppressive.” The Court was sympathetic to the company, and not happy with the prosecutor, and granted the motion to quash the subpoena. Rather than reissue the subpoena for another date, the prosecutor chose not to further anger the Court, and did not issue another subpoena. So in the right situation, a motion to quash a subpoena could be advisable and effective.
Additionally, in many cases where the language of the subpoena is simply overbroad, but otherwise acceptable, many times the more effective approach is for a party’s attorney to contact the prosecutor. The attorney can possibly negotiate that another subpoena be issued with more a more limited scope.
- Attorney-Client/Attorney Work Product
An individual or entity is not required to produce documents that are protected by the attorney client privilege. Accordingly, it is important that a business does not blindly produce all of the documents requested by a subpoena if some of those documents are protected under this privilege. Consult an experienced attorney in criminal defense as to what is and is not protected by the attorney-client privilege. For instance, some clients are under the mistaken belief that a document is protected under the privilege just because it is sent to their lawyer. In most cases it is not, but as there is substantial case law in the area of the attorney-client privilege that is often somewhat nuanced. Accordingly, it is imperative before complying with a subpoena, that an attorney evaluates what documents are protected under the privilege.
- Other Methods of Challenging the Grand Jury Process
There are other ways your attorney can challenge the grand jury process that will not be discussed in detail here. For instance, a party can allege prosecutorial or grand jury misconduct, or allege other irregularities in the grand jury process. Although rare as grand jury proceedings are under seal, in certain cases, a Court may grant a motion to disclose the transcript of the grand jury. Reviewing the grand jury transcript may uncover irregularities in the proceedings that provide a basis for combatting an indictment. These challenges are made after an indictment of a defendant, however, and fall outside the scope of this article.
The above certainly does not represent every scenario relating how a corporation or individual should handle a federal grand jury subpoena. As with most legal issues related to criminal matters, the best of course of action will depend on the myriad of factors, and should be tackled only after consultation with an experienced white collar criminal defense attorney. Additionally, it is preferable to hire an attorney or law firm that has first-hand knowledge of grand jury proceedings. Even many experienced white-collar attorneys, have never set foot inside a grand jury room—as only grand jurors, prosecutors, and witnesses are allowed in the grand jury room. As a white collar criminal defense attorney, and a former federal prosecutor, I’ve seen the grand jury process from both sides, and can offer a complete perspective on the process.