The hardest problem in white-collar work is rarely a single case. It is three proceedings about the same facts, on different timetables, with different rules. A criminal investigation, a civil action (often a False Claims Act case under 31 U.S.C. § 3729), and a regulatory or administrative process can all run at once. Testimony and documents produced in one are generally available in the others, so a decision made for good reasons in the civil case can be the worst decision in the criminal one.
Waxman Litigation acts 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.
Why the tracks cannot be run separately
| Track | Typical driver | What it produces |
|---|---|---|
| Criminal | Department of Justice; grand jury | Subpoenas, interviews, potential charges |
| Civil | Private party or the United States; 31 U.S.C. § 3729 | Discovery, depositions, damages exposure |
| Regulatory / administrative | Agency | Information demands, licensing or debarment consequences |
The interaction, not any one track, is what has to be managed.
Where the risk concentrates
Statements are the common exposure across all three. 18 U.S.C. § 1001 applies to statements in any matter within federal jurisdiction, and document handling carries exposure under § 1519 regardless of which proceeding prompted it.
(a) Except as otherwise provided in this section, whoever, in any matter within the jurisdiction of the executive, legislative, or judicial branch of the Government of the United States, knowingly and willfully— (1) falsifies, conceals, or covers up by any trick, scheme, or device a material fact; (2) makes any materially false, fictitious, or fraudulent statement or representation; or (3) makes or uses any false writing or document knowing the same to contain any materially false, fictitious, or fraudulent statement or entry; shall be fined under this title, imprisoned not more than 5 years or, if the offense involves international or domestic terrorism (as defined in section 2331 ), imprisoned not more than 8 years, or both. If the matter relates to an offense under chapter 109A, 109B, 110, or 117, or section 1591, then the term of imprisonment imposed under this section shall be not m
Company and individual interests diverge
Employees may need their own counsel, and the point of divergence is often reached before anyone notices it. Getting that right early protects the company, the individuals, and the integrity of any internal investigation.
Frequently asked questions
Should we settle the civil case quickly?
That decision has consequences in the criminal track and should not be taken in isolation.
Can we be compelled to give evidence in the civil case while a criminal inquiry is open?
This is one of the central problems in parallel proceedings and is handled case by case.
Do the same lawyers handle all three?
The tracks must be coordinated. Whether individuals need separate representation is a distinct question that often arises early.
What is the most common mistake?
Treating the three as separate problems and letting a decision in one create an avoidable difficulty in another.
Whose criminal outcome carries into the civil case?
The defendant’s own, and a plea counts. Under 31 U.S.C. § 3731(e) a final judgment for the United States in a criminal proceeding charging fraud or false statements — whether on a verdict after trial or on a plea of guilty or nolo contendere — estops that defendant from denying the essential elements in a False Claims Act action on the same transaction.
When does a company usually find out a civil case exists?
Often long after it was filed. 31 U.S.C. § 3730(b)(2) keeps a qui tam complaint under seal for at least 60 days, and § 3730(b)(3) allows the Government to move, for good cause, for extensions of that seal — so the criminal inquiry can be well advanced before the civil claim surfaces.
How does the court keep the two tracks from colliding?
By controlling who may participate. Under 31 U.S.C. § 3730(c)(2)(C), on a showing that unrestricted participation by the person who brought the action would interfere with or unduly delay the Government’s prosecution, the court may limit that participation — including the witnesses called and the scope of cross-examination.
How much does waiting to self-report cost?
The chance of halving the damages. The reduced-damages provision in 31 U.S.C. § 3729(a)(2) requires disclosure within 30 days of first obtaining the information, full cooperation, and that no criminal, civil or administrative action had yet commenced — so once anything has started, that route is closed.
Sources and legal authorities
General information about federal law, not legal advice, and not a prediction of any outcome. Federal criminal exposure turns on facts this page cannot assess. If your company has been contacted by investigators or has received a subpoena, take advice before gathering documents or interviewing staff.
Related: White-Collar Defense · False Claims Act Defense · Government Subpoenas · Internal Investigations. Call (301) 901-3109 or use the contact page.