Lexplug logoLexplug

United States v. Stringer

Court of Appeals for the Ninth Circuit
2008 WL 2925032, 535 F.3d 929, 2008 U.S. App. LEXIS 16240 (2008)
ELI5:

Sections

Rule of Law:

The government may conduct parallel civil and criminal investigations and share information between agencies without violating due process, provided the civil investigation is not brought solely to obtain evidence for the criminal prosecution and government agents do not make affirmative misrepresentations to the defendants.


Facts:

  • The Securities and Exchange Commission (SEC) began a civil investigation into FLIR Systems, Inc. and its executives regarding potential securities fraud.
  • The SEC coordinated with the U.S. Attorney's Office (USAO) and the FBI, who opened a parallel criminal investigation but decided not to disclose it to the targets immediately.
  • The SEC issued subpoenas to the defendants accompanied by Form 1662, which explicitly warned that information provided could be shared with federal criminal agencies and used in criminal proceedings.
  • During an SEC deposition, Stringer's attorney asked the SEC Staff Attorney if the SEC was working with the U.S. Attorney; the Staff Attorney responded by citing policy not to answer such questions and directing the attorney to the routine uses listed on Form 1662.
  • The defendants testified during the civil investigation and did not invoke their Fifth Amendment privilege against self-incrimination.
  • Attorney Lois Rosenbaum represented both the company (FLIR) and individual defendant Samper, despite SEC warnings about potential conflicts of interest.
  • To assist the company, Rosenbaum voluntarily provided the SEC with evidence regarding a fraudulent accounting entry known as the 'Swedish Drop Shipment,' which incriminated Samper.

Procedural Posture:

  • A federal grand jury returned an indictment charging Stringer, Samper, and Martin with securities, mail, and wire fraud.
  • The defendants filed motions in the U.S. District Court for the District of Oregon to dismiss the indictments and suppress statements made to the SEC.
  • The District Court granted the motions, dismissing the indictments and suppressing evidence on the grounds of due process violations and interference with the attorney-client relationship.
  • The United States appealed the District Court's dismissal and suppression order to the U.S. Court of Appeals for the Ninth Circuit.

Locked

Premium Content

Subscribe to Lexplug to view the complete brief

You're viewing a preview with Rule of Law, Facts, and Procedural Posture

Issue:

Does the government violate a defendant's Due Process rights or Fourth Amendment protections against unreasonable search and seizure by conducting simultaneous civil and criminal investigations while concealing the existence of the criminal inquiry, provided agents make no affirmative misrepresentations?


Opinions:

Majority - Judge Schroeder

No, the government does not violate constitutional rights by conducting parallel investigations unless it acts in bad faith or employs affirmative deceit. The Court reasoned that the SEC's civil investigation was bona fide and not merely a pretext for the criminal case, as evidenced by the fact that it began first and resulted in civil sanctions. Regarding the alleged deceit, the Court found that the government made no affirmative misrepresentations; the SEC Staff Attorney's refusal to confirm the criminal investigation was evasive but not false. Furthermore, the inclusion of Form 1662 provided sufficient notice to the defendants that their testimony could be shared with criminal prosecutors, effectively waiving their Fifth Amendment privilege when they chose to testify. Finally, the Court held there was no government intrusion into the attorney-client relationship because the government merely accepted information voluntarily provided by a conflicted attorney after previously warning of the conflict.



Analysis:

United States v. Stringer acts as a significant precedent confirming the government's broad latitude to conduct parallel civil and criminal proceedings. It clarifies that 'trickery and deceit' requires affirmative lies, not merely strategic silence or evasion regarding the existence of a criminal probe. This places a heavy burden on defense counsel to heed standard administrative warnings (like SEC Form 1662) and to treat every regulatory investigation as a potential criminal liability. The decision underscores that agencies like the SEC and DOJ are statutorily authorized to cooperate, and defendants cannot expect the government to disclose its full investigative hand voluntarily.

G

Gunnerbot

AI-powered case assistant

Loaded: United States v. Stringer (2008)

Try: "What was the holding?" or "Explain the dissent"