In March, Zachary Warren, a former client manager at Dewey & LeBoeuf experienced firsthand the effects of the increasing frequency of cooperation between government agencies. Warren was indicted in New York state court for alleged fraud leading to the demise of Dewey & LeBoeuf in 2012. He had consented to be interviewed by the Securities and Exchange Commission (SEC) as a witness related to the SEC’s civil investigation into the firm’s collapse. Only after it was too late did Warren learn that his own testimony was going to be used against him as a partial basis for his ultimate indictment.
Warren’s case illustrates the extent to which government agencies of all shapes and sizes are increasingly turning to each other to cooperate in the civil enforcement and criminal prosecution of financial fraud and other suspected wrongdoing. In cases where dual investigations are headed by separate federal agencies—such as the SEC and the U.S. Attorney’s Office—questions regarding the cooperation and identity between the agencies are particularly important when it comes to issues of admission of out-of-court statements under the hearsay exception for prior testimony. Indeed, an effective defense may involve turning the tables on the agencies and using exculpatory transcripts of other witnesses the agencies have taken testimony from but are ultimately unavailable to be called at trial by the defense.
The federal courts are divided on this issue. We explore here the circuit split, and suggest the Seventh Circuit approach has much to recommend it.