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Gregg Sofer
Ever wonder what is going on behind the scenes as the government investigates criminal cases? Are you interested in the strategies the government employs when bringing prosecutions? I'm your host, Gregg Sofer, and along with my colleagues in Husch Blackwell's White Collar, Internal Investigations and Compliance Team, we will bring to bear over 200 years of experience inside the government to provide you and your business thought provoking and topical legal analysis.
00;00;28;09 - 00;00;56;13
Gregg Sofer
As we discuss some of the country's most interesting criminal cases and issues related to compliance and internal investigations. Welcome to Episode 27 of The Justice Insiders. Today we're going to talk about the remarkably successful white collar defense of Nishad Singh this past October. Lou Kaplan, judge in the Southern District of New York, ordered three years of supervised release and a sizable fine in the case of Nishad Singh.
00;00;57;00 - 00;01;27;19
Gregg Sofer
But significantly, most importantly, Judge Kaplan imposed no prison time in the case. Mr. Singh is commonly considered to be the right hand man of Sam Bankman-Fried. The cryptocurrency mogul who was sentenced earlier by Judge Kaplan to 25 years for orchestrating a multibillion dollar fraud scheme. How did SBF or Sam Bankman-Fried get 25 years in federal prison while one of his chief lieutenants got nothing at all and basically walked away?
00;01;28;10 - 00;01;55;24
Gregg Sofer
To help answer this question, I have invited Catherine Hanaway on to today’s show to talk about some of the toughest issues in white collar defense. That is how and when to self-disclose, potentially illegal conduct to the government and how and when to cooperate with government prosecutors. Catherine is a veteran defense attorney who also spent a good deal of her career as the actual United States attorney in the Eastern District of Missouri, leading federal law enforcement efforts.
00;01;56;22 - 00;02;15;28
Gregg Sofer
She also served as speaker of Missouri's House of Representatives, the only woman to do so. And she also served a term as chair of Husch Blackwell, the firm at which I am a partner. I can't think of a more knowledgeable person at our law firm to discuss the notions of voluntary self-disclosure and cooperation. Catherine, welcome to the show.
00;02;16;12 - 00;02;39;02
Gregg Sofer
The question I want to start with today is one of definitions, because cooperation is often in the eye of the beholder and has to be interpreted, for instance, by the government and courts similarly substantial assistance. Another key concept here is a term that can mean different things to different people at different times. Most importantly, again, the government and the courts.
00;02;39;02 - 00;03;03;05
Gregg Sofer
And yet it's critical to assessing how and when to self-disclose information to the government or to cooperate with prosecutors. Additionally, from one perspective, the only difference between self-disclosure and cooperation is really just a matter of timing. Once you self-disclose those you set in motion events that are hard to stop, it's hard to get off that train and fall short of full cooperation.
00;03;03;05 - 00;03;11;04
Gregg Sofer
But what does that cooperation entail? How does the government view it? All of these can be very complicated concepts, wouldn't you say?
00;03;11;28 - 00;03;39;21
Catherine Hanaway
Absolutely. And maybe that would be helpful to our listeners to kind of talk about and let's maybe start with the simplest of all cases where you have an individual who comes to you, they want to be represented. They think they have evidence of a crime that's been committed, that's being investigated. And so as in the case of Mr. Singh, he knew about Sam Bankman-Fried scheme and through counsel went to the government and told the government his story.
00;03;39;21 - 00;04;03;28
Catherine Hanaway
So often you and I have clients who come to us and they say, I think I might be being investigated. I know another individual or company is being investigated. I think I have information that would be helpful to the government. Boy, I really just want to go in there and talk to them and explain my innocence, but also what the other guy did wrong.
00;04;04;11 - 00;04;17;04
Catherine Hanaway
And I think where you're going is the tremendous amount of risk that accrues to our clients when they just want to go in and tell the government their side story. Do you want to talk a little bit more about that?
00;04;17;14 - 00;04;33;03
Gregg Sofer
Yeah, well, that scares the hell out of me as a general matter. Somebody calls up and says, I'm sure you do the same thing. First thing I say is, Where are you? And when can we sit down so that I can stare across the table at them like I would when I was a federal prosecutor and look them in the eyes and start asking the questions.
00;04;33;03 - 00;04;54;26
Gregg Sofer
I know the government's going to start asking. I always say to begin with, before you do that, we better be darn sure that your house is clean. And I'm not just talking about what you want to talk about because the first thing that happens in a case like this, and I'm sure it happened with Mr. Singh, is that the government is looking at that person as a potential witness against other people.
00;04;54;26 - 00;05;19;24
Gregg Sofer
And what do you worry about when you're going to call someone as a witness? You worry about ways that another lawyer will attack them. And that could be lies in any other aspect of their lives. That includes taxes, it includes other elements of their lives, banking, even in their personal lives, where they are subject to cross-examination. So your story might be fantastic, but if you've got a whole bunch of skeletons in the closet, they're all going to come out.
00;05;19;24 - 00;05;48;11
Gregg Sofer
And at the very first meeting, many federal prosecutors and state prosecutors and agents are going to ask questions even beyond the subject matter that you're coming in to talk about. And they're going to be very skeptical because prosecutors have gotten themselves in all kinds of trouble. You look at the kind of prosecutorial misconduct issues that prosecutors face, a high percentage of them come with dealing with cooperators, and cooperators lie and cooperators have jammed up lots of cases.
00;05;48;11 - 00;06;14;26
Gregg Sofer
So the first thing they do is a very significant look at the person's credibility. And again, if you walk that person in without knowing it and really, really having spent a lot of time with them first and at all the questions and looked for corroborating information, which is another thing that prosecutors are going to be doing. If you haven't done that work before and you rush in, then you're setting your client up for trauma and trouble down the line.
00;06;14;26 - 00;06;23;24
Gregg Sofer
And remember, sometimes it's a race to get in there. So that's another thing is you always ask them, what are these other people going to say about you? What are your text?
00;06;23;24 - 00;06;47;19
Catherine Hanaway
Yeah, before we get to the race, let's spend just a little bit more time talking about what that meeting is like. And one of the things that I like to do in addition to everything else you said, I like to say to my client, can I see yourself? And you learn a lot just by asking that question. And you know, all too often there's a lot of personal stuff that they're embarrassed by that's irrelevant to the case.
00;06;48;03 - 00;07;12;19
Catherine Hanaway
But there's also usually text messages, at the very least put them in a bad light related to the case. And it's a good way to quickly find out how much exposure your client has. But also when you go into that meeting, you get a proper letter from the government that says that the evidence that you're giving in that meeting can't be used to prosecute your client.
00;07;12;29 - 00;07;45;11
Catherine Hanaway
But lies told in that meeting can be used to prosecute your client. And it's always amazing to me. Sophisticated. Well prepared, well sort of vetted clients who walk in and are so intimidated sitting across from the government and they almost kind of start to default to half truths or inaccuracies. Their memories become clouded and on more than one occasion, I've had to pull a client out and say, You got to calm down.
00;07;45;25 - 00;07;55;21
Catherine Hanaway
I know you're not lying on purpose, but you're coming across as a liar. And we're going to create a lot more risk doing that then by not going in at all.
00;07;56;16 - 00;08;30;26
Gregg Sofer
The great point and my goal many times is to have the prep be worse than the proper. And like you said, I think you can expect that your cell phone's going to be asked for by the prosecution, if not physically right there. They're going to go check to corroborate the way that a witness who comes in with a motivation to help themselves and hurt other people the way that they are bolstered, which is inappropriate, but in practicality, the way that those witnesses are bolstered in the way that their credibility is proven is by corroborating what they have to say.
00;08;30;26 - 00;08;57;18
Gregg Sofer
And that's good these days in an electronic world. Boy, your texts and your emails and everything that's on that phone absolutely are going to be gone through. And there are a lot of folks who really have a big problem with the depth to which their lives and the information they share is turned over and examined. But you put it simply, once you start this, once you come forward, you lose basically all control over the further dominoes that fall.
00;08;58;00 - 00;09;15;08
Gregg Sofer
Many of the people we represent are high powered executives who are used to being in charge. But going through this process is the exact opposite of being in charge. You basically have to give in to the government investigators and prosecutors. Do you find the psychology of government cooperation to be a challenge for some clients?
00;09;15;16 - 00;09;39;29
Catherine Hanaway
It's a ridiculously good point because these people are sophisticated, they are powerful. They're fighters by and large, and they've won a lot of fights. Most of them have been involved in some civil litigation at some point, and they assume that the balance of power is going to be a lot like civil litigation, and it's simply not the government old all the cards.
00;09;40;12 - 00;10;06;17
Gregg Sofer
You know. And to your point, Catherine, we talked a little bit about this. We could do a whole episode really on what you described as a proper letter. We used to call them queen for a day when I was in New York many, many years ago. But it's really a limited use immunity agreement. But many of these limited use, I mean, in agreements, not only can you be prosecuted for lying, but if you lie and the government can demonstrate that all of the protections of the agreement are evaporated.
00;10;06;17 - 00;10;30;00
Gregg Sofer
And so whatever you said is usable at that point, and it depends what district you're in and which prosecutors you're dealing with, but those agreements are drafted in different ways. Some only carve out an exception for what's 1001, or lying to federal officer or agent prosecution. Others, you lose all of your protection, all of it the moment you tell one lie.
00;10;30;09 - 00;10;56;29
Catherine Hanaway
We should talk a little bit about the point you made about the race to the courthouse, because it kind of goes to that issue of whether your client can, in fact, provide substantial assistance to the government. So just because your client is willing to acknowledge what they've done wrong and have some information about what others might have done wrong, that won't be enough for the government to agree to recommend a reduced sentence.
00;10;57;09 - 00;11;32;04
Catherine Hanaway
You're client really has to have information that helps the government get a conviction of someone else. And often there are many people who have information about the case and each of those are represented by counsel. And it's a question of who gets to the prosecutor and shares that information first. And I think going to your point about trust, this is where you really have to rely on the experience of your lawyer to have a sense of how mature the government's case is.
00;11;32;15 - 00;11;48;08
Catherine Hanaway
Hopefully have a relationship with the assistant U.S. attorney who's working on the case so that you're getting some information and that you're able to get to the courthouse in time to help your client. What are your thoughts about that?
00;11;48;13 - 00;12;12;24
Gregg Sofer
And again, this is a fraught situation. I think you're absolutely right. The fact that all of these ugly, difficult, terribly consequential decisions have to be made sometimes in the context of a race makes it all the more difficult because you're you're under a time pressure. So you don't have the luxury of sitting around necessarily for three or four weeks to try to figure this all out.
00;12;13;10 - 00;12;34;07
Gregg Sofer
And it's very hard to tell. I constantly say, I wish I had a crystal ball. I could tell you what's going on. You're right. Any sort of clue you can get by talking to the prosecutors, using your experience about what cases like this, how they progress, where they are, whatever kind of tidbits of clues you can get, sometimes you'll get someone to actually lay it all out for you.
00;12;34;17 - 00;13;05;28
Gregg Sofer
But very rarely are you making the decision with a lot of information. So you are taking some chances no matter what. And the time pressure on, I think, makes it very difficult. This case that we're using just as the vehicle to talk about it, judge saying, you know, he saved himself 25 years in federal prison or certainly a significant amount of time in federal prison because he got there early and he was able to guide the government through the investigation and through the complex series of transactions and whatever else was going on with Sam Bankman-Fried and it paid off.
00;13;05;28 - 00;13;28;09
Gregg Sofer
And you can actually see that now in retrospect, because this was what was discussed at the sentencing that he got there quickly. He went the whole route. Now, maybe the case will plead like most federal cases go away before there's a trial. But if there's a trial, you will be on the witness stand very likely. And if you refuse to be on the witness stand, or if something happens in the interim, it makes it impossible for them to call you as a witness.
00;13;28;12 - 00;13;45;10
Gregg Sofer
Then the discount you're going to get is going to be discounted itself and what is the gold standard for a cooperator? It's this. It's this situation. Start early. Keep going. Star witness, end of case. He gets nothing. $11 million.
00;13;45;20 - 00;14;28;15
Catherine Hanaway
Which is a remarkable, remarkable reserve. I mean, 11 billion in restitution, but no time. Just the best example of how much cooperation has the potential to help someone who's been involved in a scheme. The most frustrating case I've ever had was one where I had a client who wanted to cooperate. And this is key for our listeners to know when you going into this meeting where you're going to disclose what you know, the government doesn't give you any assurances about what they're going to recommend when you get to the end of this or whether they're going to recommend a reduction in the sentence.
00;14;28;24 - 00;15;01;06
Catherine Hanaway
It really all hinges on whether you get in there. You provide truthful and helpful information that's novel to them. So my client, it was such a frustrating situation, went in, told the government everything he knew was very truthful, but turned out to be redundant of other witnesses and kind of two small fish in the entire scheme. So he was big enough to be indicted, but not critical enough to provide assistance in getting the kingpins.
00;15;01;16 - 00;15;20;00
Catherine Hanaway
It's really, really a nuanced sort of decision as to whether or not to go in. And you've got to be prepared when you do it and you're not going to know the outcome until the big bad guy is convicted and sentenced. And to your point, you got to be prepared to go the whole distance.
00;15;20;13 - 00;15;40;19
Gregg Sofer
It was a lot of moving parts here right. So this guy had 24 meetings with the AUSA, according to the prosecutors, and he's in front of a particular judge. And one of the things we haven't talked about is most of the time, if you're going to be a cooperator and you're going the whole way, they make you plead guilty to something early so that they have you by the short hairs.
00;15;40;19 - 00;15;57;24
Gregg Sofer
You can't escape. You can't back up. And to your point, Catherine, it often doesn't say in the plea agreement, and if you do all this, you're going to get blank. It usually says your sentence recommendation will be up to the sole discretion of the United States attorney's office. That's the language in the plea agreement, not everyone, but in many.
00;15;58;09 - 00;16;18;19
Gregg Sofer
And so it's a leap of faith. But I will tell you that the judge matters in a huge way for this also, because some judges don't like when the prosecutors decide, I'm going to I'm going to we had a judge where I practice who there is no way in a million years under this scenario he would have given this sentence.
00;16;18;22 - 00;16;35;20
Gregg Sofer
He would have sentenced this guy to decades in prison because he didn't like the government telling him what he could do. And he was very offended by fraud. And if he heard $11 billion in restitution, there's just no way he would have done it. And so it's judge dependent. And you don't know who the judge is going to be at the beginning of these cases.
00;16;35;20 - 00;16;50;00
Gregg Sofer
Sometimes when you first start cooperating, there is no judge in many cases. And so, again, a lot of putting your faith in people who you don't even know yet. There's just a lot of moving parts. It's very, very scary.
00;16;50;00 - 00;17;24;02
Catherine Hanaway
The other aspect of cooperation that we haven't really talked about is when we have a big corporate client and the department has gone back and forth, a number of times on whether corporate clients need to sort of name names if they are to be given any kind of cooperation credit. And right now, the department's position is, yes, if a corporation is going to get credit for cooperation, they have to identify specifically the individuals they believe engaged in wrongdoing.
00;17;24;16 - 00;17;53;21
Catherine Hanaway
It's a terrible position to put corporate leadership in and even individuals that they suspect were engaged in wrongdoing. And they talk about ripping the morale and the loyalty of your organization to shreds. If you have to go in on, say, a false claims act case where really you're trying to make the argument legitimately trying to make the argument that these were just mistakes, that they weren't actual wrongdoing.
00;17;54;02 - 00;18;12;22
Catherine Hanaway
And in order for the corporation to get a deferred prosecution agreement, they've got to name the people who were involved in some aspects of it. I think this is something that might change with the new administration, that there might be less pressure to sort of name names by companies. What do you think about that?
00;18;13;25 - 00;18;45;12
Gregg Sofer
I certainly think it's possible. I think once these kinds of policies are in place, it's hard to back up on them, frankly. And I do think there is some wisdom from the Department of Justice's standpoint of saying that it's really ultimately the prosecution of human beings that scares people the most. You can't put a company in jail. Obviously, an indictment of a publicly traded company is potentially a financial disaster to the company's business, but actually sticking people in prison, I think there is something to that.
00;18;45;21 - 00;19;11;25
Gregg Sofer
The traditional thought is that under a Republican administration that corporate crime is not as strongly enforced. I have not seen that in my years in the Department of Justice. I do think there will be a serious questioning of a lot of DOJ policies under the new administration, as there always is, as we flip back and forth here. But I don't know what they'll do with the corporate compliance programs, the corporate cooperation program.
00;19;12;05 - 00;19;21;27
Gregg Sofer
I think there's a little bit of healthy walking some of that back at this point. So I would not be shocked to see things stay very similar in the white collar area.
00;19;22;10 - 00;19;51;16
Catherine Hanaway
Well, I think you're probably right, which is too bad, because it's very difficult to say to your client, look, the only way that we're going to avoid indictment is if you name the names and some of your absolutely key leadership and those people then get investigated and have to defend themselves. You know, you really do risk ripping apart great institutions that may or may not have actually done something wrong.
00;19;52;00 - 00;20;10;23
Gregg Sofer
I agree. We haven't touched on this yet, but that's another emotional again, once you've started this ball rolling and especially if whoever it is that's running the investigation need you and want you to name names, you may have to throw your friends under the bus and, you know, in the street, you're a snitch and you're a rat if you do things like that.
00;20;11;00 - 00;20;34;22
Gregg Sofer
There are some folks who think that breaks a moral code, but either way, it's a extremely difficult thing to do in a company which again, the company doesn't enjoy a Fifth Amendment right. The company is this entity, but the company is people. And like you say, they're going to make you name high level members or low level members of the company that you know, and these people are then facing a loss of their freedom.
00;20;34;22 - 00;20;59;25
Gregg Sofer
That's not an easy thing to do. And again, goes back to what we said before. People have to understand the consequences of that before they start, because you just can't throw the train in reverse in the middle of the process. We've talked a lot about the downsides and how fraught the decision is, but the bottom line is, if this works right there, a major payoff and Mr. Singh is the example of it.
00;21;00;05 - 00;21;29;01
Gregg Sofer
He faced decades in prison and he got nothing. He got three years of supervised release. He got time served so that I don't know how much time that was. Probably very little. He was probably released relatively quickly at some point. I'm not sure he did any time. But whatever it is, he didn't go to prison. He had pled guilty to six counts, six felony counts, connected to an $11 billion fraud scheme, and basically walked out of the courtroom and I wouldn't say scot free, but pretty darn close.
00;21;29;21 - 00;21;36;00
Gregg Sofer
So the upside is tremendous. Catherine, you want to talk a little bit about that? I mean, bottom line is sometimes this works like a charm.
00;21;36;20 - 00;22;02;19
Catherine Hanaway
Absolutely. And, you know, we often recommend it to our clients because they may be able to avoid prison time that they wouldn't avoid unless they cooperated. So with the right counsel at the right time, going in and cooperating with the government not only helps you to avoid prison time or other penalties, but it's also often the right thing to do.
00;22;02;19 - 00;22;24;21
Catherine Hanaway
You might have information that is very helpful to the government in prosecuting somebody who's really a bad guy and a wrongdoer. And so there's there's a moral upside. There's a personal benefit upside. There could be a corporate benefit upside and done right, done well at the right time. It's a tremendous benefit.
00;22;24;29 - 00;22;58;19
Gregg Sofer
It's a good point, actually. The federal system runs on cooperation. So despite the obstacles and difficulties we've described, I would say the vast majority of the people who are asked to cooperate or have an opportunity, cooperate, do. And that's because, generally speaking, if you don't, there can be extremely difficult consequences. And so in addition to the moral question, which I agree with you many times, actually cooperating against people who are stealing people's money and hurting other people is the morally correct thing to do.
00;22;58;19 - 00;23;22;17
Gregg Sofer
Clearly. And also getting yourself right and admitting to your own needs, which is what this guy had to do and the government was going to make you do. By the way, in the process, practically speaking, the system does give tremendous benefits to people who cooperate and penalizes. If you want if you want to say, you know, put it in these terms, it penalizes people who don't because there is no out.
00;23;22;17 - 00;23;48;14
Gregg Sofer
The sentencing guidelines are very tough. The federal sentencing scheme can be very draconian and the fact of the matter is you don't cooperate. There's not a lot of escape bells for you. And so on both sides of that calculation, cooperation is often the correct thing to do. It has to be done the right way. Well, Catherine, thanks so much for sharing your perspectives on self-disclosure and cooperation.
00;23;48;14 - 00;24;14;25
Gregg Sofer
And thanks to our listeners for tuning in to this discussion. Thanks for joining us on The Justice Insiders. We hope you enjoyed this episode. Please go to Apple Podcasts or wherever you listen to podcasts. Subscribe, rate and review the Justice Insiders. I'm your host, Gregg Sofer, and until next time, be well.