Government Scrutiny of Businesses and Nonprofits
Government regulatory agencies and law enforcement are on high alert for economic crime by organizations - for profit and nonprofit corporations.
Bid rigging, Ponzi schemes, unfair trading practices, embezzlement, theft and other fraud is believed widespread. Drastic changes to business regulation is a reality at all levels - local, state, national and international. An increase in scrutiny, investigation and prosecution of main street business and corporate crime is expected.
Regulate and Investigate
Business crime enforcement has seen increased cooperation between local, state and federal government agencies. State Attorney Generals have ramped up their investigative and prosecution efforts through consumer protection, unfair and illegal trade practices litigation, etc. Businesses and corporations through their legal counsel must be sure of their regulatory and statutory compliance at all governmental levels.
Enhanced cooperation of government authorities and selective use of investigative techniques more common to drug crimes, organized crime and terrorism investigations are being adapted to the nuances of business crime. Wiretaps, data-mining software, informers and other investigative techniques are becoming commonplace as government agencies believe business is becoming adept at concealing evidence, and avoiding written communications that leave a trail or record.
Wiretaps and some other surveillance techniques are vulnerable to the “exclusionary rule”. The Rule can exclude evidence that is acquired unlawfully. The government’s case can fail if it is heavily dependent on wiretap evidence where probable cause is shaky. For defense lawyers, experience in challenging these investigative techniques is essential. The use of informers presents new challenges in the defense of business and corporations.
Aggressive law enforcement attitudes has far-reaching implications for businesses. Law firms are turning their attention to business crime more than before and marketing their anti-fraud services.
There are preventive measures. Cooperation, self-reporting and assistance in the pursuit of wrongdoers can be beneficial. Internal investigations, audits and general compliance work are useful measures. Voluntary compliance agreements can allow some pre-charging work outs.
Business criminal and administrative defense work is an expanding practice area for us. With the continuing economic downturn, fraud and investigative advances that make business crime easier to uncover, regulators and police are following up with aggressive investigations and prosecutions. Businesses need to enhance their internal controls on fraud and corruption. We believe this is an area set to develop in terms of the volume and the complexity of the work. We are prepared for the challenge.