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A common term in almost any criminal investigation conducted by federal prosecutors is the term “proffer.” As the term is used in everyday language, it suggests “offering” or “telling” some information with the notion that if what is offered is deemed valuable or sufficient by the recipient of the proffered information or proffered items, that the one “offering” or “telling” information or providing an item will receive a benefit. This concept has become a staple in the federal criminal justice system. It may be referred to simply as a “proffer agreement”; a “Queen for A Day Letter”; or simply as a “proffer”. Its essential parameters are generally the same and this is the trap for the unwary and inexperienced. Essentially, an individual agrees to speak with federal prosecutors and/or federal agents with very limited protections. (2)Generally, the government agrees that what is said will not be used in the government’s case-in-chief, however, the government may use the proffered information in several other ways, and ultimately, may be able to use the statement in its case-in-chief. First, the government may use any and all leads derived from the statements. A few examples illustrate some of the potential problems. The person makes a statement to federal prosecutors that he threw the gun in a river at a particular location. The government agents then go to the river and find the gun. Ballistics tests are conducted. The ballistics test indicate that this is the weapon used in the crime and a fingerprint analysis demonstrates the presence of the person’s fingerprints on the gun. All of this information is arguably admissible in the government’s case-in-chief. It is not the person’s statement. It is a lead or information derived from the statement and therefore, from the plain language of the agreement admissible in the government’s case-in-chief. Another example, a person tells federal prosecutors and/or their agents during a proffer session that she or he used a fictitious name, stolen social security number, and friend’s address to open bank accounts to facilitate illegal business transactions or to hide the profits from an illegal enterprise. Although the government will not be able to use the statement in its case-in-chief, it can go the bank, investigate all aspects of the bank account and serve the bank with grand jury subpoenas to obtain the information and documents. This information is derived from the statement and is admissible in the government’s case-in-chief. In addition, the government can contact the friend and use the friend’s testimony in its case-in-chief. Second, the proffer agreements generally contain language indicating that if the person or entity takes a position in any way contrary to the information provided at the proffer, the government is free to use the proffer in its case-in-chief, cross-examination, and rebuttal. This provision is even more expansive than one might imagine. The inexperienced attorney may think that as long as his client does not testify, the statements made in the proffer session will never be heard by the trier of fact. This is false. If in her or his opening statement, defense counsel takes a position contrary to the proffer, the government is on solid ground for the proposition that the statements made in the proffer session with federal prosecutors and/or agents are now admissible in the government’s case-in- chief. As one can imagine, in the course of human experience, we all make statements in good faith which we later discover after subsequently reviewing documents or further reflection are inaccurate. A proffer session allows no margin for error. Any error or change is likely to result in at minimum, impeachment as an inconsistent statement or impeachment by omission, and even worse as an admission by the government in its case-in-chief because defense counsel said something in her or his opening statement which is viewed as contrary to a statement made in the proffer session. I want to emphasize that the language in a proffer agreement indicating that the statements and information obtained or derived from the proffer may be used without restriction by the government should the defendant take a position contrary to the proffer must be approached with the utmost caution. An example will demonstrate the dangerousness of this provision. If in the course of the proffer, a person makes an incriminating statement. Subsequently, she or he is unable to obtain an immunity grant from the government and/or plea negotiations are not fruitful. The defendant and defense counsel review the matter and decide that the defendant will proceed to trial. The defendant and counsel decide that the defendant will not testify at the trial and will argue that she or he is not guilty because of lack of credible evidence. Once defense counsel makes an opening statement asserting the defendant is not guilty, the government will assert that the defendant has taken a position contrary to the proffer and that the government is entitled to utilize the statements in the proffer. Obviously, under these circumstances, the defendant has placed himself or herself in an impossible position. Once the finder of fact hears the proffer session statement from a government agent, the defendant will have suffered a devastating blow to, at minimum, the credibility of the defense. Another example may be helpful. The potential defendant proffers to the government that he or she has a particular defense to potential charges in an effort to stave off indictment. The government decides to pursue indictment. At trial, the defendant changes the defense or expands the defense. The government will take the position that the defendant has taken a position contrary to his proffer. The government will seek to introduce the proffer as an inconsistent false statement or, if the defendant testifies, seek to use the proffer for impeachment purposes arguing that the defendant is not only taking a position contrary to his proffer, but that she or he is lying under oath. This situation could result not only in the defendant suffering devastating cross-examination, but a subsequent indictment for perjury since proffer agreements generally state that if the government believes that the defendant lied, the government may pursue a prosecution for perjury or for making a false statement to a government agent in violation of Title 18 United States Code, Section 1001. In addition, if the defendant is convicted, the government will argue that the defendant lied and should receive a more severe sentence as result of the perjurious trial testimony. Before engaging in a proffer session with the government, an individual should carefully review the details of her or his situation with experienced counsel. 1 The author served as an Assistant United States Attorney in Chicago for seven years and thereafter has represented individuals and entities in federal criminal matters for over thirty years. See his website at www.phillipturnerlaw.com. This brief overview is not intended as legal advice. The author would urge any person to consult with a competent attorney about her or his specific situation. 2 On occasion, federal prosecutors will accept what is commonly called an “attorney proffer”, which essentially means that an attorney speaks to the federal prosecutors on behalf of his client. This proffer by the attorney/agent presents disadvantages and advantages for the both the proffering individual or entity and the government. The advantages and disadvantages are fact specific and should only be undertaken by very experienced counsel under very limited circumstances.

When an individual learns that he or she is the subject of an investigation for the alleged violation of the federal statutes relating to tax matters, the common question is what triggered the investigation. Often times knowing what provoked the investigation will be extremely helpful in preparing a successful defense to future criminal charges. Although there may be many causes, some are very common. In order to understand some of the common situations which trigger investigations, one must understand the basic statutes involved. The most common statutes involved are Title 26 United States Code Sections 7201, 7203 and 7206. Many detailed articles have been written regarding these statutes, but in summary, the statutes prohibit tax evasion, knowingly failing to file a tax return and knowingly filing a false tax return. It is not the purpose of this short article to give a detailed explanation of the law regarding these statutes, but merely to provide some knowledge as to how these matters and related investigations begin. A common scenario is that a civil audit by the Internal Revenue Service of one taxpayer will cause the civil auditor to check a taxpayer’s filing history. This may lead to the detection of the fact that for several years no returns have been filed by the taxpayer or a spouse. A fraud referral may then be made by the civil auditor to the Criminal Investigation Division of the Internal Revenue Service (hereinafter “CID”). A second common scenario is that during a civil audit of a company or corporation, the civil audit may reveal that individuals associated with the company or corporation have not filed tax returns or that monies paid to these individuals have not been reported on the respective tax returns. A third common scenario is that an individual may inform CID that a neighbor, co-worker or former spouse has allegedly violated the statutes. The act of informing may be caused by emotions such as vengeance or jealously or simply by the fact that under certain circumstances defined by law, the government will give the informant a monetary reward. A fourth common scenario is that on occasion the government may monitor debit cards. The debit card may reveal that it is connected to an unreported foreign bank account or a bank account in the name of the third party. A fifth scenario is that an individual may be the subject of an investigation by another law enforcement agency. The other law enforcement agency will alert CID to the possibility of violations. A sixth scenario is that income amounts reported to the Internal Revenue Service by one entity do not appear on an individual’s tax return. The internal Revenue Service has methods for matching various income statements to corresponding tax returns. When information is received by the CID, the information will be evaluated and a determination made whether an initial inquiry should be made. An investigator assigned to the CID will check the individuals filing history and depending on the nature of the matter, request the original tax returns from an Internal Revenue Service Center. Several investigative background inquiries will be made without knowledge of the subject of the inquiry. As an example, an inquiry will be made to see if the individual is the subject of an investigation by another federal law enforcement agency or whether the individual has a prior criminal record. If CID decides to proceed with the investigation, the matter may be pursued by CID itself or a decision may be made to involve the local United States Attorney’s Office at an early stage. At some point, the CID agents either alone or in conjunction with other federal law enforcement agents will approach the subject of the investigation. As stated in my prior article, if this interview is in a noncustodial setting, the agents are generally not required to give “Miranda” warnings. Individuals who are aware of their right not to speak will oftentimes refuse to speak to the agents; refuse to sign any consent forms allowing the agents to search a home or other area; will politely tell the agents that an attorney will contact the agents and will close the door to the home or office or simply walk away. If you have any additional questions about these types of matters, please do not hesitate to contact Phillip A. Turner.

A common scenario in federal criminal investigations is for federal agents to appear at the home of an individual at 6:30 in the morning, late in the evening or on the weekend. No prior warning is given and the agents’ appearance is a complete surprise. The purpose of this tactic is to catch the witness or target by surprise in order to obtain a statement. The tactic is used by agents of the Federal Bureau of Investigation, agents of the Criminal Investigation Division of the Internal Revenue Service as well as other federal law enforcement agencies. The surprised individual will most likely give some sort of statement to the agents. There are always two agents present. One agent will ask questions and the other will take notes of the conversation. If the individual is the target of the investigation, the agents hope to obtain an incriminating statement or a false exculpatory statement. Regrettably, only after the interview, will the individual frantically seek an attorney and ask for representation. Most individuals have no experience with this type of circumstance. If they call an attorney, it will be the attorney who handles their business matters, drafted their will or handled the closing of their home. If the attorney is competent, he or she will not try to handle this matter but will refer the matter to an attorney whose area of concentration is the representation of individuals in federal criminal matters. Frequently, I have been the attorney to whom these types of matters are referred and I often deal with the scenario described in the preceding paragraph. If I am retained, depending upon various factors, I take various actions immediately. In this short article, there is not sufficient time or space to examine and discuss the myriad of hypothetical factors, circumstances and actions to be taken immediately. However, one issue which always arises immediately is the following: the individual who spoke with the agents either alone or accompanied by the referring attorney will come to my office. After some brief initial conversation, the topic of the initial contact with the federal agents will be the focus of the conversation. I will ask what was said by all parties. This information immediately tells me the general nature and scope of the investigation. Also, it gives me some idea of the government’s initial view of the individual who was interviewed by the government agents. Here is where the surprise will occur. After the individual recounts that he or she had just gotten out of bed to answer the door and found two government criminal investigators knocking on the door; that they had just finished that last sip of coffee before heading to the office before answering the door to find two very professional agents wanting to ask “a few questions” or, in the evening, that they had just finished dinner, and “two very nice agents” came to the door, the individual will relate the conversation. After relating the conversation, the individual or the referring lawyer will say something resembling the following: “the government can’t use against me what I said because the agents did not tell me my constitutional rights. They did not say anything about the right to remain silent; they didn’t say that any statement I make can be used against me; they didn’t say that a person has the right to have an attorney present and that if the person cannot afford an attorney, an attorney will be appointed for them.” The referring attorney may chime in and say that he or she remembers from his or her criminal procedure course many years ago in law school that the law enforcement agents must give the so-called Miranda warnings, obtain an acknowledgment of the rights and a waiver of the rights before questioning an individual. The referring attorney may gleefully state that the agents’ failure to follow the above procedure renders the client’s statements inadmissible. Countless times, I have had to teach a short course on the criminal procedure to individuals and attorneys. In Miranda v. Arizona, 384 U.S. 436, 444 (1966), the United States Supreme Court stated, in summary, that the often stated rights must be given before “custodial” interrogation begins. This means that if the person is not in custody, no rights need to be given by the agents and all statements may be introduced at trial against the person or used by the government in any manner the government deems appropriate. The statements may lead the government investigators to other incriminating information which will be admissible at trial. There are many reported cases that have discussed what factual situations constitute “custodial” situations, but generally, a voluntary conversation with federal agents at an individual’s home, office or on the street is not one of them. When I have explained this area of criminal procedure, I have watched the panic and terror which comes across the face of the individual interviewed and the referring attorney. Federal agents are generally well trained and aware of what may constitute “custodial” circumstances. They generally will not try to trick anyone because they do not have to do so. Prior to entering private practice, as an Assistant United States Attorney, I was always amazed at how often sophisticated and educated individuals would speak with federal agents in noncustodial situations. The point of this short article is not to give legal advice, but to emphasize the responsibility of an individual to know his or her rights and to consult with competent counsel. An intelligent person once said, “silence is golden.” Next week, I will discuss some of the various methods by which the government obtains knowledge of alleged violations of federal statutes relating to tax evasion, filing of a false tax return and knowingly and willfully failing to file a tax return.