The nation’s top white-collar criminal defense practices are receiving a steady flow of inquiries from clients embroiled in the ongoing credit crisis.

The calls range from an executive at a financial services firm who has been subpoenaed by a state attorney general to a client who received a letter from the U.S. Securities and Exchange Commission (SEC) about a matter that had seemed dormant for many months.

The callers are nervous, attorneys say, and with good reason.

“Seven hundred billion dollars can’t go out the door without someone going to jail,” said Abbe Lowell, head of the white- collar criminal defense practice in McDermott Will & Emery’s Washington office, referring to the massive bailout that has the federal government buying substantial stakes in the banking and mortgage industries.

Actions coming

“There are going to be criminal cases made as a result of this crisis,” Lowell said. “Somewhere buried in the complexities of these transactions you will find people who took advantage.”

News in recent weeks seems to have persuaded many executives and corporations of Lowell’s assessment. Executives at Lehman Brothers Holdings Inc., for generations one of Wall Street’s sturdiest investment banks until filing for bankruptcy on Sept. 15, have received federal subpoenas.

The offices of New York Attorney General Andrew Cuomo and U.S. Attorney Michael J. Garcia of the Southern District of New York will pool resources for a broad investigation into the market for credit-default swaps, which many believe encouraged risky credit practices by allowing investors to receive a payment if a borrower defaulted, even if the investor was not owed the debt.

Raymond Banoun, managing partner of Cadwalader, Wickersham & Taft’s Washington office and chief of the firm’s business fraud practice, said whomever President-elect Barack Obama appoints to head the U.S. Department of Justice (DOJ) and the SEC is likely to concentrate more on holding accountable individual executives and less on corporations in which taxpayers are now part owner through the $700 billion bailout.

“If somebody did something illegal, the government will take action to set an example, but whether they say so or not, the U.S. government is not going to invest billions [of dollars] to keep a struggling company afloat, then prosecute the company, forcing it to spend millions of dollars on legal defense and focus on the investigation instead of getting their house in order,” Banoun said. “I think you will have some people who are fairly senior in institutions who made disclosures to the public or analysts who will get investigated. The SEC will inquire into people at companies that are not necessarily in the news right now.”

Attorneys report hearing from clients who are either already in receipt of subpoenas from federal and state investigators or who are worried about what the mail will soon bring. Every lawyer interviewed agreed that their clients — including those confident they kept within the law — would be wise to anticipate that the government will cast a very wide net.

“There will be prosecutions, that is absolutely certain,” said Charles Sklarsky, a former assistant U.S. attorney in the Northern District of Illinois and now co-chairman of the white-collar criminal defense and counseling practice at Jenner & Block in Chicago.

He and his colleagues are telling clients who were active in esoteric debt instruments that have plummeted in value — draining trillions of dollars from individual retirement accounts and pension funds — to anticipate being investigated.

“We are reaching out to clients, reminding them of what you do when you get a grand jury subpoena, what you do to preserve documents and to make certain they don’t stumble into obstruction of justice,” Sklarsky said.

The typical suspect prosecuted by DOJ for misleading investors into risky deals, personified by former Enron Chief Financial Officer Andrew Fastow, made huge fortunes, said Steve Huggard, a partner in the white-collar defense practice at Edwards Angell Palmer & Dodge in Boston. He expects a broader net as the credit crisis is investigated.

“The [DOJ's] focus will be the harm to the economy and the investors,” said Huggard, who was chief of the public corruption and special prosecutions unit at the U.S. attorney’s office in Boston during a 17-year career as a federal prosecutor prior to entering private practice in January 2005.

“Prosecutions often follow public sentiment and there is a lot of anger in the country,” Huggard said.