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Most people are familiar with the offense of perjury, which is a crime that prohibits lying under oath. Typically people envision that perjury cases arise out of some sort of court proceeding or trial. That is usually the case. However, under federal law there are separate offenses that outlaw lying in certain particular situations. These are specific statutes that outlaw deception in various federally-related inquiries. This class of offenses, typically referred to as Federal False Statements, is especially significant for persons who encounter federal law enforcement agents.
The most common offense prosecuted for making false statements in a federal matter is found under 18 USC 1001. Specifically, the statute allows for the prosecution of any person that “falsifies, conceals, or covers up by any trick… a material fact” relating to “any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States.” This statute also outlaws the use of any false writing. Persons found guilty of this offense “shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism… imprisoned not more than 8 years.”
On its face, this prohibition does not seem to apply criminal investigations; however, such investigations are considered executive branch inquiries. That is, federal agencies that prosecute crimes, such as the IRS, FBI, DEA, Homeland Security/U.S. Customs and Border Patrol, U.S. Postal Inspection Service, and a myriad of other federal law enforcement agencies, are all considered to be part of the Executive Branch of the U.S. Government. That means that any statement considered to be deceptive that is made to an agent of these entities could be prosecuted under section 1001.
There are many other offenses similar to section 1001. It is also illegal to possess false papers to defraud the U.S. (Section 1002), issue notes of the Federal Reserve Bank without authorization (Section 1005), make false entries in any report or statement of the Federal Reserve Bank, make a false statement regarding naturalization or citizenship (Section 1015),engage in a scheme to steal TARP related funds (Section 1031), or make false representations related to federal land banks, HUD, insurance companies, ERISA accounts, and even crop insurance. All of these activities carry potential prison time and federal fines.
These crimes give federal agents extraordinary power while conducting their investigations. For example, if a business owner such as a CPA or practicing physician, is encountered by FBI agents who conduct a “knock and talk” where the agents visit the business, they will assuredly request to interview the owner. [Sometimes agents visit businesses with a warrant or some sort of administrative privilege to allow for the collection of business records. For example, doctors with authority to bill Medicaid or Medicare are subject to such collections by virtue of their privilege to do such billing. In these circumstances it is not uncommon for owners and employees to receive requests for interview by agents.]
If the owner, or an employee, agrees to be interviewed that person may or may not be warned that any false statement to the agent could subject that person to prosecution for a separate criminal offense under section 1001. Regardless of the warning, that possibility remains true.
This is significant because it provides an independent concern for the owner or employee. Typically, when requested for an interview the person needs to worry about whether he or she may incriminate himself related to the original charge the agents are investigation. Now, however, because of section 1001 that person needs to also be concerned that he or she is opening himself up for additional charges under 1001.
This is additional justification for persons to be careful when considering whether to undergo an interview with federal agents. These agents are adept at interrogation and use phrases designed to build rapport and disarm target. Oftentimes they’ll encourage targets to participate in an interview so the target can “clarify things” or “give his side of the story.” These statements are technically true, however, they ignore the fact that typically agents are already suspicious of the target or even have their minds made up that a crime has occurred.
Put simply, a belief in one’s own innocence and the capacity to communicate calmly and rationally with agents in good faith may not be enough to stem an investigation. In fact, it is more common that the investigation will proceed regardless of how well the target performs in the interview.
Defense attorneys who are contacted with clients in this position need to take steps to reach out to investigators to try to understand the scope of the investigation and just how agents feel targets fit into the investigation before advising clients/targets to participate. Further, attorneys need to take steps to speak extensively with the target and, if possible, other employees or subcontractors related to the client’s business before making such a recommendation. Finally, it is imperative that such an attorney has the experience, relationships, and subject matter expertise regarding the underlying offense that is being investigated, to attempt to discuss the matter with Assistant United States Attorneys to attempt to clarify any misunderstanding the agents may have. It is critically important for attorneys to try to stem the investigation on the front end before it gains too much momentum. Like most other things in life, it is easier to stop a slow rolling train than one that has reached full speed.
Under the guidelines, Section 1001 violations are dealt with under 2B1.1. This means that the offense is driven by intended or actual loss amount of any scheme. These offenses typically begin with a base offense level of 6 and then can be enhanced on the basis of loss. Other enhancements relating number of victims, sophisticated means, position of trust, and the causation of substantial financial hardship can also come into play. These enhancements are only a few of the myriad of factors that can greatly increase a sentence.
Ultimately, federal false statements statutes provide prosecutors with a powerful tool to go after business owners and other individuals. They also provide a great backup prosecution if the underlying investigation does not bear fruit.
If you have been contacted by a federal agent for a statement regarding federal false statements in Fort Worth, call our legal team today for assistance.