Civil attorneys dealing with white-collar crime often find themselves facing cases that straddle the line between civil and criminal jurisdiction. Lies, fraud and deceit are what separate a white-collar crime from a bad business deal, but these differences are not always clear.
Because of this thin line between a white-collar case appropriate for criminal prosecution and a toxic business deal having civil litigation as its only recourse, civil attorneys need to know what options their clients have in the criminal justice system and how to navigate it properly.
1. Why does the client want to file a criminal complaint? In Texas, criminal complaints can be filed against individuals and corporate entities (more on how to do so in a moment). But before filing a criminal complaint, a civil attorney should clarify the client’s intentions. A client may want to pursue prosecution to punish, isolate, fine or even rehabilitate the offender. A common goal for victims is to prevent the defendant from inflicting the behavior on someone else. These are all appropriate reasons to ask the state to take criminal action against a suspect.
However, a civil lawyer should not assist a client in filing a criminal complaint for the sole purpose of obtaining restitution or gaining leverage in a civil suit. Texas Disciplinary Rule of Professional Conduct 4.04 forbids presentation of criminal charges to gain such an advantage. Prosecutors often dismiss cases filed for such reasons.
2. What are the different ways of prosecuting white-collar crime? There are three main types of statutes under which prosecutors typically charge white-collar cases in state courts: theft, misapplication of property by a fiduciary, or securing the execution of a document by deception.
In Texas, prosecutors can charge a theft in two ways: theft without consent and theft by deception. Theft without consent happens when a defendant takes money or property without the victim’s knowledge and permission. This is usually used in employee-embezzlement cases. Theft by deception occurs when the defendant tricks the victim into giving him money or property through fraud.
Misapplication of property by a fiduciary occurs when the defendant exercises rightful control over another’s assets — such as when serving as a trustee, a guardian or an attorney — but uses that money in a way that creates a “substantial risk of loss to the owner.”
Finally, securing the execution of a document by deception takes place when a defendant uses fraud to convince the victim to give him a document (common examples are a deed, a check or a title) that the victim normally would not sign over to the defendant.
3. What are the ways to file a criminal complaint? There are two routes to seek prosecution of a suspect. The most common is to call a local or federal police agency. Larger police departments will have specialized units to investigate financial crimes and forgeries. Once a person or entity files a complaint with the police, an investigation begins. If the police find probable cause for the case, they generate a police report and arrest warrant and submit them to the district attorney’s office for evaluation by an intake attorney. If the case passes assessment, the DA’s office will submit an indictment to the grand jury for presentation at a grand jury hearing. During the hearing, the grand jury can ask questions of the prosecutor and call witnesses to determine whether an indictment should issue. The grand jury can also conduct its own investigation, without a prosecutor submitting an indictment, to bring charges against a suspect.
The second way to file a criminal complaint is through the DA’s office. This is called a direct file. These are more common in larger counties like Harris, Dallas, Bexar and Tarrant. Victims use direct files for financial crimes, as well as crimes that may take some time to discover.
With a direct file, the victim fills out an application that goes directly to the DA’s office. In a way, the client is applying to be treated as a victim. The application will ask for the victim’s information, the defendant’s information and a narrative of the crime. The victim needs to submit with the application all of the evidence and documents associated with the crime.
Such evidence can include any records, correspondence and contracts. Spreadsheets of possible fraudulent transactions that explain when the transactions took place and at what amount are also very helpful. The biggest defense to a white-collar case is that the defendant had permission for his actions, so producing evidence to the contrary is critical.
Once the victim submits the application and supporting documents, a prosecutor may conduct a follow-up interview. If the DA’s office accepts the application, the case will be assigned to an assistant district attorney (ADA) for full investigation. The investigation will include searching for a money trail, looking into how the suspect used the funds and delving into his business practices. If the prosecutor finds that the collected evidence merits criminal charges, then the ADA will submit an indictment and present it to the grand jury. Some DA’s offices post the direct-file application on their websites.
4. What is the proper way to follow up with the prosecutor? Once a grand jury has indicted a suspect in a case, the civil attorney should meet the prosecutor on the case, provide contact information and offer to help the state’s case in any way possible.
However, to prevent the appearance of impropriety, the civil litigator should not get too involved with the prosecution of the case. It is acceptable to call or e-mail the prosecutor to ask for a status update on a case. The ADA should explain to the civil attorney and the victim what he believes is the appropriate punishment and the different options for disposing of the case, through plea or trial.
There are times when civil remedies may not be enough to punish a defendant properly. When that’s the case, a civil litigator should know how to guide a client to and through the criminal-prosecution process. By working together, the civil attorney and criminal prosecutor can help make sure that justice is properly served.