How an OIG Investigation Becomes a Criminal Investigation

September 26, 2019
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By: Sara Kropf

The following excerpt is from our upcoming e-book, A Guide to OIG Investigations for Federal Employees and Contractors. It’s filled with all sorts of useful information on the OIG investigations.

We chose this excerpt in light of recent news about the criminal prosecution of former Acting FBI Director Andrew McCabe as well as the recently declined prosecution of his predecessor, FBI Director James Comey.

If there is only one thing you take away from this book, it is that an OIG investigation can turn into a criminal investigation. In fact, the OIG agent who interviews you may actually be conducting not only an OIG investigation but a criminal investigation as well. At a minimum, that agent is trying to determine whether you committed a crime, as well as a violation of federal or agency-specific policy.

This may sound confusing and counter-intuitive. How can an employee of a federal agency investigate a criminal case? Isn’t that what the Department of Justice (“DOJ”) and its prosecutors do?

There are many examples of cases that started as OIG investigations and turned into serious criminal cases. Here’s how it works in practice: An OIG opens an investigation into, say, a conflict-of-interest issue. An employee at the agency was in charge of awarding a $5 million contract, and the company that won the contract employs the agency employee’s cousin. The employee never disclosed the family relationship to the agency.

The OIG agent reviews the documents—the records showing who worked on the contract within the agency, documents obtained by request (or subpoena) from the company awarded the contract, the ethics office disclosure records (which may never have existed for this contract) and so forth. The OIG agent also will review the agency employee’s emails sent from his work computer to his cousin at the bidding company about the timing of the contract award. The agent decides that there is sufficient evidence of a conflict of interest under the agency’s ethics policies, which prohibit participating in the award of a contract to any blood relative. The agent also decides that this case is serious, because the employee’s conduct may also violate the federal statute prohibiting conflicts of interest, 18 U.S.C. § 208, which would be prosecuted by DOJ.

The agent likely will discuss the situation with the OIG lawyer overseeing the investigation (if there is a lawyer assigned) and possibly with a higher-level administrator, such as a deputy IG. If he obtains permission to refer the case to the DOJ, then he will do so.

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Referring a case means sending a formal letter to DOJ, or using a less formal means such as a telephone call or email, asking that DOJ look into certain allegations. The referral is usually very short but describes the evidence obtained by the agent so far. It is not a public document, and the employee who is the target of the investigation is not sent a copy of it or told about it.

OIG cases are most often referred to federal prosecutors. Federal prosecutors work both at local U.S. Attorney’s Offices and at the headquarters of the DOJ in Washington, D.C. (colloquially referred to as “Main Justice”). Each state has at least one U.S. Attorney’s Office and perhaps multiple offices, depending on the size of the state. But OIG cases can be referred to other government agencies as well—such as the Securities and Exchange Commission (“SEC”), other agency’s OIGs or local police departments.

For example, if an employee allegedly shared confidential government information with a friend who bought stock based on the information, this could be insider trading. The OIG may refer such a case to the SEC, which investigates insider trading in the civil context, and to DOJ, which investigates insider trading in the criminal context. An OIG that learns that a government employee has been stealing credit card information may refer the case to a U.S. Attorney’s Office or even to a local police department.

If the prosecutor believes there is enough evidence to open a formal criminal investigation, then she could use a grand jury to issue subpoenas and take testimony from witnesses. What’s more likely is that the prosecutor is not sure that there is enough evidence to warrant a grand jury investigation and instead works cooperatively with the OIG to continue investigating the case without a grand jury. The OIG agent will check in with the prosecutor from time to time about the case.

This type of post-referral cooperation is very common, and it puts you in a fair amount of danger. On the one hand, your contact is still the same OIG agent, and you may be lulled into thinking that the investigation is purely an administrative one. You will be far more willing to sit for a voluntary interview and explain what happened, not realizing that there is an informal criminal investigation that parallels the OIG investigation.

Having a lawyer in this situation is extremely helpful. Your lawyer will press the OIG agent as to whether there has been a criminal referral. The agents will often be cagey about the referral but will usually admit that one was made. Your lawyer can then reach out to the prosecutor to find out the status and get a feeling for whether the prosecutor believes the allegations are serious. Your lawyer will also remain your point of contact with the OIG agent and the criminal prosecutor (or FBI agent, if one becomes involved).

A brief aside: some OIGs follow the directive that ALL investigations must be referred for criminal prosecution. This strikes us as a real waste of prosecutors’ time and resources, and some OIG investigators will even privately admit that they would not refer certain cases if it were up to them.

It may seem unfair, but you likely will not be told if the prosecutor has decided not to continue a criminal investigation after a referral. Some prosecutors will let an employee’s lawyer know that the criminal investigation has been closed (or that one was never opened in the first place). But the lack of information flowing between the subject of the investigation (you) and the criminal investigators can be surprising. The prosecutor may not even tell the OIG investigator.

In some cases, the prosecutor will decline the referral with the qualification that if the case were stronger with respect to certain elements, it might be picked up. This could inspire a zealous investigator to attempt to gather additional information and interviews with an eye on making the referral again. Clearly, double jeopardy does not apply in the criminal referral context.

The risks to someone subject to a criminal investigation are serious. In the following chapters we describe the types of investigations and common violations of law investigated by OIGs.  Later, we explain the outcomes of these investigations, whether criminal, administrative and regulatory.

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