This blog is the first in a series about interacting with government regulators and is intended to help our clients understand and manage contact with and outreach from government regulators, law enforcement, or both.
The Set Up
On December 9, 2020, the CEO of a biotechnology company was arrested by the FBI for security fraud and other crimes. At the time, in addition to the stress from being arrested unannounced at 6:00 a.m., the CEO was laboring under the symptoms of COVID-19 and had recently tested positive for the virus. He was tired, lacked energy, and conveyed to the arresting officers that he really just wanted to go back to bed—something the FBI permitted while they did a safety sweep of his apartment. The FBI thereafter appropriately and properly advised him of his rights, including his right to remain silent. The CEO waived those rights. On the way to the hospital for treatment, where hospital staff confirmed the CEO had COVID-19 and pneumonia, he was questioned by the FBI. In response, the CEO made several admissions—statements against his own interests and indicative of his guilt.
The CEO, through counsel, later moved to suppress those statements. Counsel argued that their client’s statements were involuntarily made and elicited in violation of his Miranda rights. It was to no avail. On December 16, 2021, US District Court Judge John G. Koeltl (Southern District of New York) denied the motion to suppress and, having concluded discovery was complete, set the matter down for trial. In ruling for the prosecution, Judge Koeltl found that the CEO was of “sound mind,” understood “what was going on,” and, as there was “no evidence . . . of police misconduct or coercion,” found the CEO’s statements admissible. This ruling was unsurprising and fully supported by the law, notwithstanding that the CEO was fully symptomatic of COVID-19 and had tested positive for the virus. “While the defendant was ill on the day of his arrest, . . . the defendant appeared engaged, attentive, and no more uncomfortable any arrestee [the FBI agent] had previously encountered.” “Where there is evidence that the defendant understood his rights, allegations that the defendant was too sick and tired to fully understand the proceedings are . . . insufficient, absent police misconduct” to support suppression. The takeaway is equally unsurprising: exercise your right to remain silent. Stay mum and assert your right to counsel and decline to respond to substantive questioning if arrested or confronted by law enforcement.i
The Law
The admissibility of a defendant’s statements is determined by assessing the factors surrounding the making of those statements. Generally called the totality test, it assesses whether under “the totality of circumstances,” a defendant’s statements were voluntarily made and whether they knowingly and voluntarily waived their rights. In New York State, evidence of a defendant’s statements may not be used against them if they were involuntarily made. A statement is “involuntarily made” if it:
- Was obtained by a public servant through the use, or threatened use, of force, improper conduct, or undue pressure such that it impaired the defendant’s ability to make a choice whether to make a statement
- Was obtained by any promise or statement that created a substantial risk the defendant might falsely incriminate themselves
- Was otherwise obtained in violation of the defendant’s constitutional rightsii
Coercive conduct by the police; a failure to follow procedures, including, in certain circumstances, the failure to give Miranda warnings; the length of the interrogation; and a host of other factors can result in statements being deemed improperly obtained and suppressed. On the other hand, a defendant’s willingness to talk or desire to initiate a conversation; their level of education, familiarity with the criminal justice system, or both; as well as their affect, demeanor, and orientation are all considerations that can weigh against suppression and in favor of admission. In this case, because the CEO appeared lucid, had previously been prosecuted, initiated the conversation, and had fully waived his rights were all considerations in favor of admission and cited by the judge in denying suppression and finding the CEO’s statements admissible. That he had COVID-19 and pneumonia did not outweigh those factors supporting a finding of voluntariness.
Our Advice
Stay silent and invoke your right to counsel. In this case, the CEO surrendered to the human tendency in stressful situations to want to explain oneself and, as a result, made significant admissions—ones that will likely hurt his defense at trial. Fight that urge. And don’t try to game the police or the interrogation process either (i.e., figuring you can outwit law enforcement or that you can answer some questions, the easy ones, and punt on the rest). There are no easy questions. Innocuous-sounding process questions are never innocuous and rarely about process. You don’t know what you don’t know. And generally you don’t know, and won’t know, the thrust of the government’s investigation and prosecution until after the parties exchange discovery, a step that occurs well after arrest and indictment. An acknowledgement, for instance, that you’ve received, read, and reviewed monthly regulatory updates is often enough to prove that you, as the business owner, knowingly violated the rules and regulations underlying a fraud investigation. Consider another more specific example, a Medicaid investigation into pharmacy fraud. Responding affirmatively to questions about who handles the resupply of medication or refills or physician call-ins can be enough to pin culpability on the responding party for overbilling. An innocent-sounding process question is generally anything but. Fight the urge to respond and exercise your right to remain silent. Be the smartest person in the room and say nothing.
If you have any questions regarding the content of this blog, please contact Chris Shaw, partner, at cshaw@barclaydamon.com, or another member of the firm’s White Collar & Government Investigations Practice Area.
iA note of caution: Questions from law enforcement following an arrest to acquire pedigree information (name, date of birth, home address, etc.) are always fair game and permissible, and your failure to respond to such questions could delay your arraignment or impact your ability to secure bail or both.
iiSee New York Consolidated Laws, Criminal Procedure Law Section 60.45.