As much as any Bank would prefer to avoid being pulled into a Federal Criminal case, the fact of the matter is: it happens. I have had occasion to deal with a few of these for clients and have some suggestions. The blog post considers a Bank’s response in the event a borrower is the subject of a Federal Grand Jury Proceeding and the Bank receives a subpoena.
For those of you who have not had to deal with it, a Federal Grand Jury is the body which considers whether to indict under Federal Criminal Statutes. Through this process, federal prosecutors have very broad power to compel testimony and production of documents. In my experience, when a Bank gets subpoenaed into a Federal Grand Jury proceeding, it is to produce documents. However, the difference between being a document source and a subject of investigation can be a close call. Below are my suggestions for immediate consideration by the Bank in such a scenario upon receipt of a subpoena from a Federal Grand Jury.
Don’t make it a topic of discussion around the office. If you are not the legal officer within the Bank, go directly to that legal officer and do not talk to anyone about the Federal Grand Jury subpoena. There are a number of good reasons for this, among them is that there may be a gag order in place.
Contact Outside Counsel. You probably hear this a lot from your outside counsel, but if you receive a Federal Grand Jury subpoena call your counsel immediately. Time is of the essence. Call me if you want, but please call your counsel right away. Time is running from the moment you receive it, and trust me this is the real deal.
Outside Counsel should make contact with the USA. It is difficult to overstate the value communications with the United States Attorney (a “USA”) or the Assistant United States Attorney (an “AUSA”). This can provide a credibility building exercise which can provide expeditious transfer of information, reduce cost and risk if done with integrity.
Be Prepared to Timely Produce Documents. There are surprisingly few objections to a Federal Grand Jury subpoena. Be prepared to produce documents and information. In my experience, the subpoena will request an enormous amount of information. Outside counsel’s credibility with the AUSA will be critical in the ability to narrow the scope of the subpoena.
A Gag Order is preferable. Most clients have an initially negative reaction to being involved in a grand jury proceeding with a gag order – an order that prevents disclosure of the information involved. I can tell you from experience, this is likely preferable for a number of reasons. However, this does pose a serious risk to undisciplined organizations who simply share the existence of the subpoena around the office for one reason or another.
What about a SAR? The first rule of a SAR is that we don’t talk about a SAR. There are rules about production of a SAR pursuant to a subpoena. If you have any issue come up concerning this please feel free to give me a call.
Each response will be incredibly fact intensive, and no two responses are the same. However, swift engagement by outside counsel and a coordinated and timely response by the Bank will make a big difference between providing documents or having to produce a Bank representative to the grand jury.