DoJ Tools to Pry Information From You

In modern Corporate America, what happens overseas rarely stays overseas—especially if federal prosecutors want to hear about it.

Any regulatory investigation can be difficult for a public company, and criminal probes can turn into a nightmare. A probe that reaches overseas subsidiaries or employees, however, only compounds the headache; that’s because the need to produce information, documents, and even people located in other parts of the globe can make an already protracted and difficult process even more complicated.

The Justice Department, of course, has a wide variety of tools at its disposal to get the information it wants, regardless of where that data may reside. And to see the most commonly used tool, compliance officers need only look in the mirror.

Drimmer

“Cooperating in an investigation by providing documents and evidence to get credit is now the norm for companies,” says Jonathan Drimmer, former deputy director for the Office of Special Investigations in the DOJ’s Criminal Division, now a litigation partner at Steptoe & Johnson.

For that reason, George Terwilliger, former deputy attorney general and now partner at the law firm White & Case, says: “The most common way for [federal prosecutors] to get information is still through the voluntary production of information by companies.”

“The difficulties in obtaining overseas information, particularly from foreign companies and foreign subsidiaries, is one of the reasons the DoJ deems companies who do internal investigation and voluntarily disclose results to them to be cooperative,” Terwilliger says. “If company doesn’t do that, it takes a long time and a lot of resources to get the information.”

For example, stringent privacy laws outside the United States can often make it difficult for prosecutors (and companies that cooperate with them, for that matter) to obtain the information they want or need during an investigation—and in particular, to send it back to U.S. authorities.

Terwilliger

That being said, observers are quick to note that the DoJ can get the information it wants, even without a company’s help.

“It’s a safe bet they’ll get it anyway,” says Drew Arena, a former Justice Department official and now associate general counsel for law enforcement and national security compliance at Verizon Communications. “The U.S. has moved quite a ways; we have a more extraterritorial jurisdiction than we did 40 years ago.”

“The most common way for [federal prosecutors] to get information is still through the voluntary production of information by companies.”

— George Terwilliger,

Partner,

White & Case

Drimmer agrees. He says the ability to transmit information quickly, the rise of statutes that allow for extraterritorial criminal enforcement, and the growth in cross-border investigations and crimes “has increased the formal processes used and dramatically increased the informal communications behind the scenes.”

While the DoJ relies on a wide range of formal mechanisms for obtaining various types of evidence, “It’s really the informal coordination and discussions between law enforcement authorities that make the system go,” says Drimmer.

A spokesperson for the Department of Justice said the agency could not comment on its investigatory techniques. Terwilliger, however, says the dialogue between U.S. prosecutors and foreign counterparts “has really increased.”

How the DoJ Gets What It Wants

The most common dialogue between U.S. prosecutors and overseas investigators is still the informal communication—say, someone at the FBI calling an acquaintance at Scotland Yard in London. The cross-border favor lets federal prosecutors gain local perspective and intelligence, which can be invaluable as U.S. agents tailor formal requests for documents or other evidence in a format admissible in court and in compliance with foreign privacy statutes.

Margolis

Daniel Margolis, a partner at the law firm Pillsbury Winthrop Shaw Pittman, says the Justice Department’s ability to obtain evidence in foreign countries depends largely on the United States’ relations with the country where the evidence is located. “Generally, the better relations the U.S. has with the foreign country, the easier it is for DoJ to obtain evidence located in that country,” he says.

Beyond informal means, federal prosecutors rely on a number of formal mechanisms to obtain information during an investigation, including subpoenas. U.S. courts can issue subpoenas to a national or resident of the United States located in a foreign country to appear or to produce evidence. Prosecutors can also use so-called “Bank of Nova Scotia” subpoenas (named for the federal appeals court ruling that allowed them) to obtain bank or business records located abroad by serving subpoenas on branches of the bank or business located in the United States, even where producing the records would violate the foreign country’s secrecy laws.

TREATY BREAKDOWN

United States Mutual Legal Assistance Treaties (MLATs) as of April 30, 2007.*

MLAT With:

Signed:

Entered Into Force:

Antigua-Barbuda

Oct. 31, 1996

July 1, 1999

Argentina

Dec. 4, 1990

Feb. 9, 1993

Australia

Apr. 30, 1997

Sep. 30, 1999

Austria

Feb. 23, 1995

Aug. 1, 1998

Bahamas

Aug. 18, 1987

July 18, 1990

Barbados

Feb. 28, 1996

Mar. 3, 2000

Belgium

Jan. 28, 1988

Jan. 1, 2000

Belize

Sep. 19, 2000

July 2, 2003

Brazil

Oct. 14, 1997

Feb. 21, 2001

Canada

Mar. 18, 1985

Jan. 24, 1990

Cayman Islands

July 3, 1986

Mar. 19, 1990

Cyprus

Dec. 21, 1999

Sep. 18, 2002

Czech Republic

Feb. 4, 1998

Mar. 6, 2000

Dominica

Oct. 10, 1996

May 25, 2000

Egypt

May 3, 1998

Nov. 29, 2001

Estonia

Apr. 2, 1998

Oct. 20, 2000

France

Dec. 10, 1998

Dec. 1, 2001

Grenada

May 30, 1996

Sep. 14, 1999

Greece

May 26, 1999

Nov. 20, 2001

Hong Kong

Apr. 16, 1997

Jan. 21, 2000

Hungary

Dec. 1, 1994

Mar. 18, 1997

Org.

of American States

Jan. 10, 1995

June 24, 2001

India

Oct. 17, 2001

Oct. 3, 2005

Israel

Jan. 26, 1998

Mar. 25, 1999

Italy

Nov. 9, 1982

Nov. 13, 1985

Jamaica

July 7, 1989

July 25, 1995

Japan

Aug. 5, 2003

July 21, 2006

Latvia

June 13, 1997

Sep. 17, 1999

Liechtenstein

July 8, 2002

Aug. 1, 2003

Lithuania

Jan. 16, 1998

Aug. 8, 1999

Luxembourg

Mar. 13, 1997

Feb. 1, 2001

Mexico

Dec. 9, 1987

May 3, 1990

Morocco

Oct. 17, 1983

June 23, 1993

Netherlands

June 12, 1981

Sep. 15, 1983

Nigeria

Sep. 9, 1989

Jan. 14, 2003

Panama

Apr. 11, 1991

Sep. 6, 1995

Philippines

Nov. 13, 1994

Nov. 22, 1996

Poland

July 10, 1996

Sep. 18, 1999

Romania

May 26, 1999

Oct. 17, 2001

Russia

June 17, 1999

Jan. 31, 2002

South Africa

Sep. 16, 1999

June 25, 2001

South Korea

Nov. 23, 1993

May 23, 1997

Spain

Nov. 20, 1990

June 30, 1993

St. Christopher

and Nevis

Sep. 18, 1997

Feb. 22, 2000

St. Lucia

Apr. 18, 1996

Feb. 2, 2000

St. Vincent-

the Grenadines

Jan. 8, 1998

Sep. 8, 1999

Switzerland

May 25, 1973

Jan. 23, 1977

Thailand

Mar. 19, 1986

June 10, 1993

Trinidad-Tobago

Mar. 4, 1996

Nov. 29, 1999

Turkey

June 7, 1979

Jan. 1, 1981

Ukraine

July 22, 1998

Feb. 27, 2001

United Kingdom

Jan. 6, 1994

Dec. 2, 1996

Uruguay

May 6, 1991

Apr. 15, 1994

*The U.S.-Cayman Islands MLAT was extended to Anguilla, the British Virgin Islands, and the Turks and Caicos Islands on Nov. 9, 1990, and to Montserrat on April 26, 1991.

Source

U.S. Mutual Legal Assistance Treaties (April 30, 2007).

While a U.S.-based company might try to argue that records from U.S. subsidiaries located in the European Union are subject to the EU’s data protection regime, Arena says, “For U.S. criminal jurisdiction purposes, those subsidiaries may not be separate enough.”

In other cases where it’s not clear that the government can compel the parent of a separately managed and controlled subsidiary to offer up documents, Terwilliger says another common course might be to rely on a Mutual Legal Assistance Treaty with the foreign country involved to obtain the information.

MLATs, which emerged in the 1970s as a way to deal with bank secrecy laws in Switzerland, are commonly used to obtain bank records maintained in a foreign country, Margolis says, since white-collar criminals often deposit the proceeds of their criminal activity in foreign bank accounts.

While the terms of such treaties may vary from country to country, former federal prosecutor Damian Martinez, now with the law firm Proskauer Rose, says MLATs “are one of the best ways to get information from abroad,” because they enable prosecutors to get search warrants and to obtain evidence, such as testimony, in a form admissible in court.

The drawback: gathering evidence via an MLAT can take a prolonged period of time. “Depending on the country, it can take months, if not years, for the foreign country to respond to an MLAT request,” Margolis says.

Moreover, MLATs are only an option in those countries that have signed such treaties with the United States—and that’s only 53 nations, according to the Justice Department’s last count. In some countries without an MLAT, U.S. prosecutors might rely on less-formal agreements that give them reach to at least some types of information, if not unfettered access.

Absent a treaty or executive agreement, one of the oldest—and slowest—tools the Justice Department has at its disposal are letters rogatory. The DOJ Criminal Resource Manual describes them as a request from a judge in the U.S. to the judiciary of a foreign country “requesting the performance of an act which, if done without the sanction of the foreign court, would constitute a violation of that country’s sovereignty.”

While useful when no MLAT is in place, Drimmer says using letters rogatory “is really cumbersome and requires lot of bureaucratic steps.” Indeed, the Criminal Resource Manual warns prosecutors to “assume that the process will take a year or more,” and says “even in urgent cases the request may take over a month to execute.”

Margolis notes that, in rare cases where information can’t be obtained through a traditional treaty request or letters rogatory, a provision of the U.S. Patriot Act provides that any foreign bank that maintains a correspondent bank account with a U.S. bank may be served with a subpoena for bank records maintained by the foreign bank, even in its home country. That “essentially allows DoJ to do an end-run around the MLAT and letters rogatory process to obtain certain bank records,” he says.