Internal and Independent Investigations

An internal investigation exists to answer one question, what actually happened, before someone else answers it for you. It is a governance instrument, not a legal filing, and its value depends almost entirely on decisions taken in the first few days: who commissions it, who conducts it, how privilege is structured, and what is preserved. Those decisions are difficult to revisit later, which is why the sequence matters more than the speed.

Waxman Litigation conducts and advises on investigations for companies and their boards. Seth B. Waxman spent 13 years as an Assistant United States Attorney in the District of Columbia, roughly eight of them on fraud and public corruption, the same work an internal investigation does, from the other side of the table.

When does a board actually need one?

Not every complaint requires an investigation, and treating every complaint as one is its own failure. An independent investigation earns its cost when the answer will drive a decision the board must defend, a termination, a disclosure, a restatement, a self-report, or a response to a regulator. Where the allegation touches the people who would ordinarily investigate it, independence stops being optional.

The decisions that must be taken before the first interview

Decision	Why it is hard to reverse
Who commissions it — board, audit committee, or management	Determines independence, and who the investigator’s client is
Who conducts it	In-house counsel investigating conduct in their own reporting line is a structural problem
Privilege structure	Set at the outset or not at all; it cannot be retrofitted
Scope	Too narrow looks like a cover-up; unbounded never ends
Preservation	18 U.S.C. § 1519 reaches destruction in contemplation of a federal matter — up to 20 years

The first four are governance decisions. The fifth is a criminal-exposure decision.

Preservation comes first, always

Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both. (Added Pub. L. 107–204, title VIII, § 802(a) , July 30, 2002 , 116 Stat. 800 .) U.S. Code Toolbox Law about… Articles from Wex Table of Popular Names Parallel Table of Authorities How current is this? Accessibility About LII Contact us Advertise here Help Terms of use Privacy

18 U.S.C. § 1519

Note “in relation to or contemplation of“. The obligation can attach before any investigator is appointed, and routine automated deletion is the usual failure.

Interviews are where investigations go wrong

Employees must understand who the lawyer acts for: the company, not them. Getting that wrong contaminates the investigation and exposes individuals. And there is a hard line on what may be said to a witness:

(b) Whoever knowingly uses intimidation, threatens, or corruptly persuades another person, or attempts to do so, or engages in misleading conduct toward another person, with intent to— (1) influence, delay, or prevent the testimony of any person in an official proceeding; (2) cause or induce any person to— (A) withhold testimony, or withhold a record, document, or other object, from an official proceeding; (B) alter, destroy, mutilate, or conceal an object with intent to impair the object’s integrity or availability for use in an official proceeding; (C) evade legal process summoning that person to appear as a witness, or to produce a record, document, or other object, in an official proceeding; or (D) be absent from an official proceeding to which such person has been summoned by legal process; or (3) hinder, delay, or prevent the communication to a law enforcement officer or judge of t

18 U.S.C. § 1512

Employees may be told they are free to seek their own counsel. Telling them what to say is a different matter entirely.

Government and Regulatory Investigations of Organizations

Not every investigation begins inside the organization. A regulator or a government attorney can open one first, and the organization is then running its own inquiry alongside an external one it does not control, on a timetable it did not set. In the District this reaches nonprofit boards directly: under D.C. Code § 29–412.20 the Office of the Attorney General (“OAG”) can issue subpoenas while it is still deciding whether to sue, and the Superior Court can dissolve the corporation, place it in receivership, or impose a constructive trust on compensation already paid to a director or officer. We set out how that statute works, and what the first document demand actually signals, in when the D.C. Attorney General sues a nonprofit.

The practical consequence is that independence stops being a matter of good practice and becomes evidentiary. Where an outside authority will read the resulting report, who commissioned it and how privilege was structured determine whether it is worth anything at all. Related: regulatory and compliance violations and government subpoenas and investigative demands.

What happens with the answer

An investigation that produces a finding no one is prepared to act on has failed. Before it begins, the board should know what decisions the answer will feed: remediation, discipline, disclosure, self-reporting, or defense. Where a government matter is already live, the two must be run together. See parallel criminal and civil proceedings.

Frequently asked questions

Can our general counsel run it?

General counsel can run some investigations. But where the conduct sits in or near their reporting line, independence becomes the issue a regulator or a court will focus on.

Is the investigation privileged?

Privilege depends on how the engagement is structured at the outset — who instructed the investigator and for what purpose. It cannot be added afterwards.

Do we have to self-report what we find?

That is a separate decision with significant consequences either way, and it should be taken deliberately once the facts are known — not assumed at the start.

What if the complaint came from an employee?

Then retaliation risk attaches immediately and independently of the merits. See whistleblower complaints and retaliation risk.

How long should it take?

Long enough to be credible and short enough to be useful. Scope, not speed, is what usually determines that.

Who besides the Attorney General can bring a proceeding against a nonprofit?

Members and directors can, not only a regulator. A proceeding may be brought by 50 members, or by members holding at least 5% of the voting power, whichever is less, or by a director or a member of a designated body. An internal disagreement can therefore reach court without any government office becoming involved. See D.C. Code § 29-412.20(a)(2).

Why does the order of steps matter more than how fast the work is done?

The decisions taken in the first few days are the ones that are hardest to undo later. Who commissions the investigation, who is interviewed first, and whether a document hold is in place before anyone is told are all settled before the first real fact is known. A board that gets that order wrong usually has to do the work again.

Where does a District nonprofit’s exposure actually sit?

In the Superior Court of the District of Columbia, and the remedies available there are wider than most boards expect. The court can dissolve the corporation, place it in receivership, impose a constructive trust on compensation that was paid to a director, officer or manager, or grant other injunctive or equitable relief. See D.C. Code § 29-412.20(a).

How should interviews be handled so the findings hold up later?

Give the warning at the start, keep contemporaneous notes, and never suggest the answer. Federal law reaches a person who corruptly persuades another with intent to influence their testimony in an official proceeding, so coaching a witness — or appearing to — turns a fact-finding exercise into a second problem. See 18 U.S.C. § 1512(b).

What penalties can attach to the way an investigation was run?

They are often heavier than anything the underlying issue carries. Altering, destroying or concealing a record with intent to impede a federal matter carries up to 20 years, and obstructing a proceeding already pending before a federal department or agency carries up to 5. See 18 U.S.C. §§ 1519 and 1505.

Sources and legal authorities

General information, not legal advice. How an investigation should be scoped, who should conduct it, and how privilege is handled are decisions that turn on the specific facts and should be taken with counsel before the first interview.