Cornered: Vadim Glozman Advises When Your Business Client Is Subpoenaed

Nothing makes a business owner's stomach drop and blood pressure rise quite like being served a subpoena that seeks documents or testimony. Corporate and commercial attorneys need their clients to confidently reach out for informed guidance at these stressful times. In this episode, Vadim Glozman explores some of the pitfalls you can help your clients avoid.

Vadim Glozman is Principal Attorney of Glozman Law in Chicago. He is the presenter of the IICLE® on-demand resource, Navigating Involvement with the Federal Legal System in Criminal Cases, available now at IICLE.com.

IICLE® is a 501(c)(3) not-for-profit based in Springfield, Illinois. We produce a wide range of practice guidance for Illinois attorneys and other legal professionals in all areas of law with the generous contributions of time and expertise from volunteer attorneys, judges, and other legal professionals.

Chapters

• 0:55 Episode Introduction - Vadim Glozman
• 1:24 What are the critical first steps an attorney should take when their client calls and says federal agents just showed up with a grand jury subpoena?
• 2:35 Could you explain the differences between being a target, a subject and a witness in a grand jury investigation? And why do those distinctions matter?
• 6:12 What are some of the long-term strategies that attorneys need to think about when their client receives a grand jury subpoena?
• 8:05 Wrapping Up - Thank you, Vadim!

Transcript

00:00:01

Oh, you're an attorney. I have a friend who…

00:00:03

I've been meaning to update my will, but I just bought

00:00:06

a new house…

00:00:06

I want to start a business…

00:00:06

So I was wondering…

00:00:08

My brother was fired…

00:00:09

My friend got divorced awhile back. I just don't understand how her ex-...

00:00:14

You've been there at a social function, meeting friends of friends. Word gets out that you're an attorney, and suddenly your night is filled with partygoers asking you “simple” legal questions. The questions are seldom in your area. Some of the stuff you haven't thought about since law school, you're being cornered out of court.

00:00:32

In the cornered out of court podcast from IICLE, you'll hear from fellow attorneys about the questions they get and the responses they give to escape being cornered. Nothing makes a business owner stomach drop and blood pressure rise quite like being served a subpoena that seeks documents or testimony..

00:00:55

Corporate and commercial attorneys need their clients to confidently reach out for their informed guidance at these stressful times. In this episode, Vadim Glozman explores some of the pitfalls you can help your clients avoid.

00:01:10

My name is Vadim Glozman, and I am the principal attorney at Glozman Law. We are a boutique criminal defense firm in downtown Chicago, focusing primarily on federal and white collar criminal defense, forfeiture and appellate issues.

00:01:24

What are the critical first steps an attorney should take when their client calls and says federal agents just showed up with a grand jury subpoena?

00:01:34

The absolute first thing is to tell your client not to speak with the agents, even if the agents seem friendly or they tell you it's just a routine investigation or you have nothing to worry about. And here's why.

00:01:44

Even if it appears to be a civil investigation by an agency like the SEC or the CFTC, there's often a parallel criminal investigation happening simultaneously. And what makes this tricky is that the evidence that's gathered by one agency can be freely shared with others, including the Department of Justice. And I've seen many cases where clients thought they were being helpful by explaining things to agents.

00:02:06

Only to have those statements come back and haunt them in a criminal and.

00:02:09

Right. Even if your client thinks they have nothing to hide, they can unknowingly make statements that prosecutors can use against them later, or worse, they could accidentally make an inaccurate statement that could result in a separate criminal charge for making a false statement to federal agents. That's why it's crucial to get an attorney involved immediately. They understand the nuances of this and.

00:02:29

To help navigate the dangerous waters, whether you decide to talk to them or decide to plead the 5th.

00:02:35

Could you explain the differences between being a target, a subject and a witness in a grand jury investigation? And why do those distinctions matter?

00:02:46

So this is one of the most nuanced aspect of grand jury practice and it's where I see a lot of attorneys get tripped up when someone receives a grand jury subpoena, they typically fall into one of these three categories. But here's the catch. Their status could change at any point, and a lot of times not getting any kind of notice from the government. So a witness is theoretically just someone who has relevant information.

00:03:07

Modern investigation a target is someone the prosecutors believe they have substantial evidence linking to a.

00:03:12

Time and a subject falls somewhere in between that where prosecutors haven't decided if they want to charge them yet, but they think they have some kind of criminal exposure. And here's what makes this so treacherous. Someone might start off as a witness, but based on the documents they produce or their testimony, they could quickly become a subject or a target. And I've seen cases where people thought they were just a witness.

00:03:34

Helping out an investigation only to later find out they've become a target of the investigation.

00:03:39

And in practice, witnesses and targets of investigations are a lot easier to represent than subjects, because if you're just a witness, you know you have very little to worry about if you're a target, you know they want you. So you know how to navigate that. But there's so much Gray area when it comes to subjects that you really need someone who is familiar with investigations to properly advise you.

00:03:59

Because there is no right answer, there is no formula. A lot of it has to do with your experience and kind of the feel of the situation and what you get to know from the government. And this is particularly important because it affects everything from how you handle document production to whether or not your clients should assert their 5th Amendment rights against self incrimination.

00:04:18

And the strategy for handling each of these categories is completely different and getting it wrong could have serious consequences for the client.

00:04:25

When it comes.

00:04:26

To producing documents in response to a grand jury subpoena, what are some of the key pitfalls that attorneys need to watch out for?

00:04:35

This is where things can get a little bit complicated, especially when it comes to dealing.

00:04:38

With business records.

00:04:40

You know, many attorneys don't realize that the mere act of producing the documents can have what we call a testimonial.

00:04:45

Aspect that could incriminate their client by producing documents. You're essentially testifying that these documents exist, that your client has control over them, and that they're authentic.

00:04:56

And similar issues can come up also with production of digital records because the act of decrypting something and producing the contents of a hard drive has a similar 5th amendment implications because it would reveal the clients knowledge and control of the encrypted data.

00:05:11

Now individuals have an absolute right to plead the 5th to this. Businesses do not have the same protections, so it matters if the client is being subpoenaed as an individual or as a custodian of records or representative of a business. And here's an example of how that works.

00:05:27

Let's say your client runs a medical practice as a professional corporation and receives A subpoena for patient records. You know, sometimes attorneys will just gather these records and produce them over to the government, but there's a lot of different things to consider. Does the client have a Fifth Amendment right as a custodian of the corporate records, do the records require the records doctrine to apply? Are there HIPAA implications?

00:05:48

And the analysis is also much different. Whether the client operates a sole.

00:05:52

Airship versus a corporation such as an S Corp or C Corp or an LLC, and courts have drawn very distinct fine lines between these kind of corporations. So if you run a sole proprietorship, there's a lot more constitutional protection. Then if you get the benefits of having an LLC or some kind of other corporation.

00:06:12

Lastly, what are some of the long term strategies that attorneys need to think about when their client receives a grand jury subpoena?

00:06:21

The most important thing to understand is that a grand jury subpoena isn't just about the immediate production of documents or testimony. It's a lot of times part of a much larger investigative puzzle.

00:06:31

And one of the key strategic decisions involves understanding how your client fits into the broader investigation. For example, the government often uses a strategy of working from the outside end, meaning they'll start with what seemed like peripheral witnesses and gradually move towards their primary targets.

00:06:48

So even if the client appears to be a minor player, you really need to think several moves ahead, like what might their documents or testimony reveal about other parties? Or could this exposure create business or reputational issues for your client, even if they're not at criminal risk? Another consideration is a privilege issue, and this gets a little bit complicated when dealing with business records, especially in regulated industries.

00:07:10

You know, with the medical practice you have to navigate the intersection of the required records, doctrine, hip obligations, and 5th Amendment protections for lawyers. You have to deal with attorney-client privilege. And these aren't just academic issues. Getting them wrong can have serious consequences, not only for the criminal investigation, but also for the clients business and professional licenses.

00:07:30

And the final piece of the puzzle really is timing. These grand jury investigations oftentimes move very slowly, sometimes taking years, but they can also accelerate very suddenly. And so you really need to carefully think about how to manage your clients anxiety during these slow periods while staying prepared for sudden development.

00:07:48

And of course, an incredible important aspect of this is making sure your client doesn't do anything to obstruct the investigation. Whether they do it purposefully or not. Because if they do, that can create a whole new slew of criminal liability issues for them.

00:08:05

Thank you, Vadim. Vadim Glozman is Principal

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Attorney of Glozman Law in Chicago, he is also the presenter of the IICLE on demand resource, navigating involvement with the federal legal system in criminal cases available now at IICLE.com

00:08:23

If you have an idea for a topic you would like to hear discussed on the Ircle podcast, we welcome your suggestions by e-mail. Our address is info.thatsinfo@icle.com. IICLE is a 501(c)(3) not-for-profit based in Springfield, IL. We produce a wide range of practice guidance for Illinois attorneys.

00:08:44

And other legal professionals in all areas of the law with the generous contributions of time and expertise from attorneys, judges and other legal.

00:08:52

Professionals. If you are interested in our many authorship and speaking opportunities, please give us a call at 217-787-2080 or visit the Contributor Resource Center at iicle.com/contributors. Thank you for joining us for another edition of cornered out of court brought to you by the Illinois Institute for Continuing Legal Education.