As COVID-19 cases rapidly grew in the United States, federal prosecutors warned the public to beware of opportunistic fraudsters seeking to exploit fear and uncertainty for personal gain. The Department of Justice (DOJ) and the Federal Bureau of Investigations (FBI) issued warnings about the potential increase in price-gouging and similar crimes whose perpetrators would seek to take advantage of the panic surrounding the virus.

In late February the apparel company you work for realized that COVID-19 might have a serious effect in the United States.  You were able to reach out to your contacts and lock in orders for voluminous quantities of difficult to obtain critical supplies. You are not involved in marketing or pricing done by your company.  You have seen some of the media reports about federal price gouging investigations into suppliers of personal protective equipment, but did not think much of them.  Then, one evening, while at home, there is a knock on the door. You open it to find two nicely dressed professionals on your doorstep. "We are from the FBI," they announce. "We are serving you with a grand jury subpoena. Can we speak with you?" There is no need to panic, but there are better and worse ways to proceed.

There are three rules to always observe:

1. It is never a good idea to speak to agents on your own.
2. If you cannot resist the natural urge to explain, tell the truth. It is a crime to lie to the FBI.
3. It is best to seek competent counsel before speaking to the government or responding to a subpoena. It is not a sign of guilt or concern; it is a sign of intelligence.

The guidance that the apparel company employee should consider is the same for anyone in a similar situation. This note focuses on federal grand jury subpoenas under Rule 6 of the Federal Rules of Criminal Procedure.  There are other types of requests for information that also trigger varying considerations and legal obligations that can be explained by counsel.

What Is a Grand Jury Subpoena?

A federal grand jury is an investigative body tasked with determining whether an individual or company should be tried for a federal crime based on evidence presented by prosecutors. Federal grand jury subpoenas, which are written orders compelling an individual or company to provide information, are issued at the direction of prosecutors as a part of criminal investigations.  A grand jury subpoena can command witnesses to appear before the grand jury to provide testimony, or can require the production of documents or other tangible items. The subpoena itself will inform you what information it seeks.

Why Did You Receive the Subpoena?

There are three reasons you may be served with a grand jury subpoena. First, you may be a "target" of an investigation, which means the prosecutors believe they have substantial evidence linking you to the commission of a crime and will likely seek to indict you. Second, you may be a "subject," meaning your conduct is within the scope of the grand jury investigation, but the prosecutors need to continue to gather evidence to determine whether you were involved in the commission of a crime. Third, you may be a "witness," meaning that you are not under investigation but have personal knowledge or documents relevant to the investigation. You may be a witness for several reasons. For example, the grand jury may subpoena a current or former employee of a company managed by individuals who are potential defendants.

If you receive a subpoena you should determine the government's view of you as soon as possible. At the beginning of an investigation, most people who are not clearly targets are considered subjects, as that is the broadest category and prosecutors are reluctant to treat an individual as a mere witness unless and until they are certain the individual has no involvement in criminal activity. During the course of an investigation, one's status can change from subject to witness or target, and often does.

In What Capacity Were You Subpoenaed?

You may be subpoenaed either as an individual or custodian of records for a business entity. If you are subpoenaed for testimony in your individual capacity, you may be able to avoid answering substantive questions by invoking your Fifth Amendment right against self-incrimination. This is true even if you are not a target of the investigation; if a truthful answer to a grand jury question would even tend to incriminate you, you can invoke the privilege and refuse to answer.

You may also be able to invoke the privilege against self-incrimination to avoid producing certain documents. If the very act of producing a document would tend to incriminate you, the privilege may apply. For example, if you are under investigation for forging official documents, and you are subpoenaed for those documents, the very act of producing the documents to the grand jury is in itself incriminating and you may be able to refuse to produce them.

If you are a target, but are viewed as "low-level" with valuable information against "bigger fish," the government may offer you immunity to testify in the grand jury. There are two types of federal immunity. There is "transactional" immunity, which means that you cannot be prosecuted for any crime related to the subject matter of the testimony. "Use" immunity, also referred to as "derivative" immunity, is narrower and only provides that your testimony, or evidence derived from it, cannot be used against you if you are prosecuted. In practice, use immunity is the favored approach of federal prosecutors. Transactional immunity is generally only offered in connection with non-prosecution agreements, which are agreements between the government and an individual in which the government agrees not to prosecute in exchange for useful information. A witness who refuses to testify after being given immunity can be held in contempt and even jailed.

Corporations and other business entities cannot invoke the Fifth Amendment privilege. But since a corporation operates through human agents, it must designate a custodian of records to appear in response to a subpoena. The corporate custodian is only required to answer questions relating to the search and collection of the subpoenaed documents. Corporations must also take all necessary steps to preserve the information requested in the subpoena, including instructing employees to not destroy information and documents that are or may be within the scope of the subpoena.

In certain circumstances, a federal judge may limit or "quash" a subpoena that calls for testimony that would violate the Fifth Amendment right against self-incrimination, or for testimony about protected information, such as attorney-client privileged information.  Similarly, with subpoenas to produce documents, the court may modify a subpoena if it is overbroad or calls for protected materials. In practice, however, federal grand jury subpoenas are almost never quashed on grounds that they go beyond the grand jury's authority, and failure to comply can have serious penalties, such as monetary fines, or even imprisonment.

How Can an Attorney Help?

Although prosecutors may or may not tell your lawyer whether you or your company is a target, subject or just a witness, they are more likely to discuss the subpoena with counsel and may identify the information most relevant to the government.  This can help limit the scope of the request saving you or your company time and money. It can also give you an idea of the focus of the government's investigation.

You are under no obligation to talk to government agents outside the grand jury room. These pre-grand jury interviews are rife with peril and prosecutors have no authority to compel them. You may make a harmful admission during these interviews or forget important facts, making the agents view you as dishonest and hiding the truth. The best course is to politely tell the agents that before speaking with them you want to consult with an attorney. Although a lawyer cannot accompany you into the grand jury room in a federal case, she can prepare you for your appearance and can be immediately outside the room, and you have the right to consult with your lawyer as much as needed.

In many cases, your attorney may be able to arrange for an office interview with prosecutors in lieu of a grand jury appearance. Such an interview can be beneficial because your attorney can be present. If you take this approach, you must be completely truthful when speaking to prosecutors and agents, as lying to an agent is a separate crime which prosecutors will not hesitate to bring if you are untruthful during your interview.

Receiving a subpoena to appear before a federal grand jury or provide documents can cause panic in almost anyone. Just remember, take a deep breath, read the subpoena carefully to ascertain what is being asked of you or your company and call an experienced criminal defense lawyer. Do not attempt to speak with agents or prosecutors on your own and never ignore the subpoena.

Armed with this understanding of risks, rights and obligations, the apparel company employee, and anyone in a similar situation, is better able to handle rationally an unexpected encounter.

Jason H. Berland is a partner at Lewis Baach Kaufmann Middlemiss.