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“Am I going to get indicted?” Nine factors that drive outcomes in white-collar cases

I spent about a third of my 25-year legal career as a federal prosecutor. In that job, I was trained to apply the Principles of Federal Prosecution (PFP), Justice Manual, §9-27.001, et seq., to determine whether and how to charge the white-collar cases I investigated. Sometimes that process was straightforward, but more often the answer was complicated by factors beyond the merits of a particular case.

Even though I’ve been out of the Department of Justice for over a decade, I still regularly use the PFP. Now, however, my purpose is to predict others’ charging decisions rather than guide my own.

In white-collar cases, clients rarely learn of an investigation for the first time when an indictment is returned. Instead, the prosecutor usually identifies the client as a subject, and perhaps even a target, at some point during the investigation. Once the investigation’s existence is made known, defense counsel must advise the client on a range of choices that can have a lasting and dramatic impact, including whether to agree to an interview or proffer, testify in related civil litigation or invoke the privilege against self-incrimination, attempt to negotiate a plea, or otherwise conduct themselves in a manner which facilitates inquiry into their past actions. To advise on those points, counsel is forced to try to forecast future prosecutorial decisions with limited information.  

In employing the PFP from this perspective, I am struck by their inadequacy as predictors of charging decisions. Using them to try to anticipate what is going to happen to a client is like wearing pinhole glasses: you’ll perceive some information, but miss far more.

Prosecutorial decision making as a practical matter takes into account the elements of the PFP but is not limited to its identified considerations. It has been my experience that the choice of whether to move forward typically turns on nine elements, only some of which are specifically referenced in the PFP, with some mattering far more than others. Understanding that every case is different, I have found that this is the list of factors that really matter (in order of significance):

1. The strength of the evidence.

Pretty obvious, but this factor is more nuanced than it seems. Any prosecutor wants as many pieces of evidence as possible, but that doesn’t mean that each has equal value. In evaluating whether to go forward, the prosecutor is most interested in incriminating statements from the defendant and documentary evidence proving the scheme. But even within these categories of “prime” evidence, there is a subset that can elevate an otherwise marginal case to one more likely to be charged.

Simply speaking, regardless of the category they fall into, the more “wince-inducing” pieces of evidence in this category, the more likely the client is going to be charged. What qualifies as such? Among statements from the would-be defendant, confessions of wrongdoing to law enforcement are obviously the most problematic. Luckily, those are somewhat infrequent in the white-collar context. More common are those statements fundamentally inconsistent with good faith: false exculpatory statements, declarations that demonstrate knowledge and awareness, efforts to obstruct and inconsistent explanations.

As for documentary evidence, there are certain types that almost stand alone in pushing a case forward. My favorite as a prosecutor was the second set of tax returns. Particularly when those returns were used to secure loans or extensions of credit, offering a rational explanation for their existence can be challenging. Similarly, backdated contracts, altered documents and cash payments - especially those out of the ordinary course and transferred in a clandestine fashion - typically tip the scales toward charges. That does not mean there cannot be good reasons for these events, or explanations a factfinder would deem credible. But with prosecutors, the existence of this brand of “special” evidence - the kind which has no readily apparent explanation and cannot be reconciled with good faith - matters most in evaluating this factor and makes the climb to secure a declination steeper.

2. The case’s “age.”

When I speak in terms of the “age” of a case, I am seldom concerned about the statute of limitations. Federal fraud cases have at least a 5-year statute, and occasionally 10. Charging conspiracies and schemes gives greater flexibility because later overt acts or scheme “executions” (i.e., mailings or wirings) can be used to sweep in earlier conduct - including acts outside the statute of limitations. Even when an expiring statute stands as a real impediment, the government can usually save potentially viable cases with a tolling agreement, or simply charge the portion about to be lost and keep the indictment under seal. In my experience, it is rare that the clock runs out on a case the government really wants to pursue.

Instead, in this setting, I am looking at the age of a case to gauge its inertia - whether it is gathering steam or weakening. The first step in that process requires assessing the length of time an investigation has been open. There is almost always a gap between a case’s opening and defense counsel’s awareness of that fact. The initial instance of the government “going loud” - whether, by the issuance of a grand jury subpoena, an agent’s visit to a subject, or taking some other overt step - necessarily occurs after the investigation’s opening. How long after matters greatly.

To determine that interval, counsel should start by trying to ascertain the case’s USAO ID. Every investigation is assigned a number by both the investigative agency and the US Attorney’s Office. The former can be tough to determine (they are usually only listed on the interview memoranda, which counsel typically don’t get before charges are filed) and their structure doesn’t offer any insight about when the case began. Contrast the USAO ID number. It shows up on grand jury subpoenas issued (e.g, “2015R00586”) and when those exist and counsel can access them, he or she can quickly figure out the year the case was opened by looking at the first four digits (“2015”) and typically get a rough sense of what point in the year that happened by looking at the last three or four digits (“586”). Determining when the case was opened depends on how busy the individual US Attorney’s Office is, but generally speaking, the higher the number, the later in the year the case was opened.

Once counsel has at least a rough sense of when the case was opened in the US Attorney’s Office, the next step is to discern whether - and, more importantly, how - it has changed hands. While it is not unusual for cases to be reassigned among prosecutors, when more than two AUSAs have inherited the case as lead, that’s often an indicator that the case is likely to die on the vine. The significance of those transfers grows even more when the recipient is newer to the office. Most prosecutors can recount the stories of the “gift basket” of existing investigations they were assigned almost immediately after being sworn in; a significant number of which practically have fleas crawling on the file jackets. The longer and more frequently the case has been passed around, particularly to prosecutors just starting out, the better the chances it will be closed without action.

But evaluating age alone can be misleading. In contrast to the inverse relationship between the age of a case and the probability of charges, sometimes there is a direct correlation between the case’s maturity and the likelihood it will produce an indictment. The key to evaluating the latter scenario is to measure the investigative effort expended. In my experience, every case has a tipping point: the stage at which the government has invested so many resources that charges become almost a foregone conclusion. This is usually agent-driven: investigators who have committed a certain quantum of time and effort (which can vary by agency and individual) push hard for charges, feeling a need to validate their exertion with some tangible result. To be sure, as noted below, the agents don’t make the final decision. But they do make their views known, sometimes forcefully, and that can have an impact.

To recap, in the first context, the longer the lifespan of the case, the better for the would-be defendant; in the second, the worse. What’s the difference? The level of effort expended. Cases that have been open for 12-24 months with relatively little activity and few developments are on a glide path toward closure without action. Cases opened for the same duration with substantial time spent by investigators and prosecutors are far more likely to go in the opposite direction.   

3. The case’s “width.”

If the client is one of a larger number of alleged wrongdoers, everything else being equal, my experience tells me that charges are more likely. In a case with more than three targets, the incremental effort required to “charge one more” is often minimal.

Larger cases have charging economies of scale. They develop a momentum of sorts which leads to a class of putative defendants being defined with the understanding that all will be given the opportunity to plead and cooperate. Those who agree get deals, those who decline get indicted.

That is not to say that all hope is lost in larger cases, however. In fact, those cases often provide opportunities for counsel to distinguish the individual client’s role and circumstances from those more culpable. Moreover, advocacy at that point is no longer an “all or nothing” evaluation of the case, but rather a question of whether leaving one individual off the indictment will have any measurable impact on the overall strength of the case, including possibly making it more complicated or risky at trial.

4. Prospects for cooperation.

A client’s ability to cooperate obviously impacts charging decisions, but the extent of that impact turns on a couple of key issues. On the one hand, an individual who can provide valuable insight into the nature of the scheme may be able to cooperate his way out of being charged, particularly where he is the exclusive source of that information. On the other, more insight typically results from greater involvement in the scheme, which means greater culpability. Declining prosecution entirely on an individual who was integral to the scheme theoretically reduces that person’s value as a witness, and so most prosecutors are loath to agree to a full declination. This is particularly true where the individual was an active participant and beneficiary of the scheme.

Navigating between “involved enough to have information of significant value” and “involved to such a degree that charges are warranted” can be a challenge. The PFP provides some guidance through a detailed framework for entering into non-prosecution agreements. The touchstone here is that “the person's timely cooperation appears to be necessary to the public interest and other means of obtaining the desired cooperation are unavailable or would not be effective.” Justice Manual, §9-27.600. This section discusses the role that the individual’s invocation of his Fifth Amendment might have on the case at large, as well directing prosecutors to determine whether other means exist to secure the information.

Being well-versed in this framework is essential to advocating for clients in this scenario, but navigating through this issue is often more art than science. Two general principles typically guide my efforts here:

a) Counsel’s experience in this area matters greatly. If the prosecutor knows that counsel will have the client ready to be a solid witness who can overcome a vigorous cross on the perceived imbalance between their conduct and their reward, that can overcome the traditional hesitancy that exists and make a declination more palatable to the government. In my experience, however, few prosecutors “take it on faith” that the lawyer will deliver - they want to see counsel has an established track record of success in that particular area.

b) The impact of an individual’s ability to cooperate ties closely to the “width” element discussed above. Everything else being equal, the more individuals who are involved, the more potential cooperators. This diminishes the value of each. Relatedly, prosecutors who require one cooperator to plead guilty are less likely to give similarly situated individuals a pass - particularly those who come to the table later - sensing a certain unfairness about that outcome. Counsel must be prepared to explain why their client is different from others, and why those differences merit dissimilar treatment.

5. The prosecutor.

When I consider the likelihood that a prosecutor will move forward, I’m not focusing on whether he or she is smart or energetic: in my experience, it’s the rare exception when a federal prosecutor lacks either of those qualities. Far more often than not, the prosecutor has both. Instead, I’m more interested in the prosecutor’s bandwidth and demonstrated areas of interest.

On the former issue, I want to know how much the prosecutor has going at the time. When I was gearing up a big trial or involved in a major investigation, my criteria for determining whether to spend time on a different case became far more stringent. As a general rule, when a prosecutor has less time, he or she is more inclined to demand that the cases they spend it on truly warrant that attention. In my experience, a prosecutor coming back from vacation after a long trial is about the worst draw one can hope for: a clean desk and open schedule mean a combination of resource availability and charging decision flexibility that can push an otherwise borderline case to indictment.

On the latter front, knowing that a particular prosecutor has an affinity or distaste for tax cases or procurement fraud can often be a better predictor of the charging decision than the volume or quality of the evidence uncovered. In my experience, this is true even when the subject matter is among the office’s or Department’s enforcement priorities. Under the PFP, the line prosecutor enjoys wide latitude to pursue or decline a case, and it would be naïve to conclude that interest - or lack thereof - in the subject matter does not play an outsized role in that decision-making process. Even if a structured environment with heavy supervision, prosecutors are human beings first, and their individual preferences matter greatly in predicting their decisions. 

6. The would-be defendant’s history and circumstances.

The PFP makes clear that certain characteristics about a defendant (including race, religion, gender and national orientation) cannot influence charging decisions. In my experience, they never do.

But there are factors that prosecutors are allowed to consider, and that can make an individual more or less likely to be charged. For example, a defendant’s prominence typically makes it more likely that he or she will be charged with a tax crime, on the theory that part of the goal of such prosecutions is general deterrence. In addition, prosecutors can and often do look at whether the would-be defendant has a history of questionable conduct and is likely to continue to engage in activity of concern. If prosecutors think they are dealing with a recidivist - even in the absence of any prior convictions or even charges - indictment is more likely. But the reverse can also be true: where the individual has otherwise lived a law-abiding existence and the conduct occurred as the result of a particular set of circumstances unlikely to recur, passing on the case is easier to justify.

7. The investigating agent.

Figuring out whether and to what extent a prosecutor has faith or doubt in the lead case agent can pay huge dividends is predicting outcomes. Agents don’t have the authority to overrule prosecutors, but they can make their views known in a way that has a dramatic impact on charging decisions. Most former prosecutors can recount at least one solid case they declined because of concerns about the agent (whether his or her integrity, work ethic, or skill), and at least a couple where faith in the agent made all the difference in the choice to go forward. Very early in my tenure, I connected with an FBI agent whose skill and commitment dwarfed any I saw before or since. He never brought me a single case that I passed on, in large part because if he liked it, I knew it was good. And he was always right.

8. The amount of loss.

One might expect this element to receive a higher ranking. In my experience, however, it has only a minimal impact. So long as the financial injury exceeds the office policy’s threshold, in my experience the amount of loss is not one of the most prominent factors in determining whether a case is pursued.

DOJ statistics bear this out. The federal government has the resources to investigate and charge large fraud cases, and often does. But the DOJ brought roughly 4500 fraud cases among 94 districts in 2019 (the most recent year data is available), and the overwhelming majority of those were “small” by comparison to expectations. Data from the Sentencing Commission shows that a median loss number of $51,281 among roughly 4,800 resolved economic crime cases for the fiscal year 2020.

Of course, everything else being equal, the larger the case, the more likely it gets indicted. But a large loss amount - even a huge one - doesn’t enhance the merits of a weak case in the eyes of most prosecutors. By way of example on this point, several years back I represented a company accused of realizing over $35 million in gain from submitting claims to the government in an atypical manner. Agency representatives were convinced this practice was fraudulent, and worked aggressively to convince the U.S. Attorney’s Office to charge the case criminally and file suit under the False Claims Act. But while the billing practice was unusual, our efforts demonstrated that all representations made to secure payment were literally true. Much to the chagrin of the involved agencies, the prosecutor declined the case entirely.

9. The victim.

The existence of a victim matters in two primary respects. First, everything else being equal, the fact that a non-government entity was harmed financially tilts in favor of charges being filed. This is particularly true where the victim is unsophisticated or otherwise particularly vulnerable. Cases involving abuse of trust resulting in loss to charitable organizations will get an especially hard look before being declined.

But the flip side can also be true: the presence of a victim can sometimes actually reduce the likelihood of the case being charged. Where the victim has the ability and inclination to pursue an alternative means of recovery (usually a civil suit for damages), the need for federal prosecutors to intervene is diminished, particularly when the evidence is less compelling. Bear in mind, however, that even in such cases prosecutors will look at the time, effort and cost associated with such an effort, and the chances that prevailing constitutes anything other than a pyrrhic victory. For example, even where a victim can obtain a civil judgment, the likelihood that the defendant will be able to avoid paying effectively nullifies this factor as a grounds for declination. To make a difference, the victim has to be able to obtain restitution quickly and with relative certainty.

There’s an old saying that “one should never make predictions, especially about the future.” Defense counsel rarely have the luxury of being able to follow that directive, and so they must necessarily undertake a structured approach to anticipating the upcoming events. In that process, the stakes are almost always high, the amount of information available almost always low, and the traditional framework for making decisions often less than clear. But by applying a principled methodology based on available information and with the benefit of experience, counsel can undertake a practical assessment that leads, more often than not, to an informed assessment of what’s coming next.

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Bill Athanas
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