COVID-19 Corporate Investigations
There are a variety of issues that can potentially trigger the need for an internal corporate investigation during the COVID-19 crisis. We help companies discover the information they need to make informed decisions, and we provide effective defense representation for federal investigations targeting corporate entities.
Companies in all industries have an important role to play during the COVID-19 crisis. They must implement adequate measures to keep their employees and customers safe (and their family and community members by extension), and they must attempt to remain profitable in order to protect their workforces and shareholders while bolstering the nation’s struggling economy.
Companies operating during the COVID-19 crisis also have a number of novel legal obligations. From employment and securities law compliance to preserving their forgiveness eligibility under the Paycheck Protection Program (PPP), companies need to ensure that mistakes and oversights do not create exposure to federal audits and investigations. If mistakes or oversights have been committed, they need to be identified, and they need to be remedied as fully and promptly as possible.
Federal Compliance and Defense Counsel for COVID-19 Corporate Investigations
Our firm represents corporate entities nationwide in internal and external investigations. We serve as both compliance and defense counsel, helping our clients establish policies and protocols that mitigate their risk, and helping them avoid steep penalties in federal inquiries. With this tandem approach to corporate risk mitigation, a significant portion of our practice involves representing companies in investigative procedures, and we have had significant success helping our clients avoid liability through the effective execution of proactive defense strategies.
Conducting Internal Corporate Investigations During the COVID-19 Crisis
Conducting effective internal corporate investigations is a crucial component of a broader risk mitigation strategy. During the COVID-19 crisis, corporate entities face both ordinary and novel internal risks, and it is imperative that they address these risks proactively in order to reduce their chances of being targeted in a civil lawsuit or federal inquiry.
These risks can take many different forms, and they can originate from a variety of different sources. By way of example, some of the types of corporate threats that warrant consideration during the COVID-19 crisis include:
- Paycheck Protection Program (PPP) Non-Compliance – For corporations that received federal loans under the Paycheck Protection Program (PPP), ensuring both initial and ongoing compliance under the program is extremely important. Widespread fraud has resulted in heavy scrutiny of PPP loan recipients, with multiple federal authorities conducting audits and investigations.
- Non-Compliance with Internal COVID-19 Policies and Procedures – All companies should have policies and procedures in place that are designed to prevent the spread of COVID-19 among their employees, customers, and vendors. If an outbreak or potential exposure event occurs, it will be essential to promptly conduct an internal investigation to determine its source and scope.
- Employment and Discrimination Law Issues – The Families First Coronavirus Response Act (FFCRA) and various other statutes have established special protections for employees during the COVID-19 crisis. Companies must take adequate steps to ensure compliance, and they must investigate promptly in the event that an employee alleges that he or she was wrongfully terminated or otherwise subjected to adverse employment action.
- Business, Consumer, and Government Contract Fraud – Companies that sell products and services that are in high demand as a result of the COVID-19 pandemic must ensure that they are not at risk for facing fraud-related allegations. Federal authorities are on high alert for COVID-19 fraud, and corporate entities that are potentially at risk will be well-served to conduct comprehensive internal assessments focused on assessing any potential concerns involving the substantiation of marketing claims, contractual representations, and various other issues.
- Cybersecurity Threats – Cyberattacks targeting consumer and patient data, coronavirus-related research and development (R&D), and other corporate assets are a very real risk for corporate entities during the COVID-19 crisis as well. Companies must ensure that their current data security protocols are adequate; and, in the event of a breach, they must promptly conduct internal investigations in order to determine the source of the attack and what information was compromised.
- Material Risk Disclosures and Other Aspects of Securities Law Compliance – In order to maintain compliance with federal securities laws, public corporations must affirmatively disclose material risks through the U.S. Securities and Exchange Commission’s (SEC) public disclosure system. This includes risks triggered by the health and economic impacts of the COVID-19 crisis. As a result, public corporations should be constantly monitoring for potential risks, and material risks should be further explored through internal investigations.
Defending Against Federal Corporate Investigations During the COVID-19 Crisis
In addition to conducting internal investigations as necessary, corporations also need to be prepared to defend against federal investigations targeting allegations of COVID-19 fraud and other similar types of issues. Our firm provides federal defense representation for companies, company owners, executives, board members, and other individuals facing civil and criminal investigations, including investigations targeting issues specifically related to COVID-19.
Corporations’ acts and omissions during the COVID-19 crisis can potentially trigger liability under an extraordinarily broad range of federal statutes. This includes, but is by no means limited to, the following:
- Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
- Families First Coronavirus Response Act (FFCRA)
- Emergency Paid Sick Leave Act (EPSLA)
- False Claims Act (FCA)
- Securities and Exchange Act of 1934
- Americans with Disabilities Act (ADA)
- Title VII of the Civil Rights Act of 1964
- Health Insurance Portability and Accountability Act (HIPAA)
- Federal Trade Commission Act (FTC Act)
- Food, Drug, and Cosmetic Act (FD&C Act)
- Internal Revenue Code (IRS)
- The federal wire fraud, mail fraud, attempt, and conspiracy statutes (among other provisions of Title 18 of the U.S. Code)
When facing a federal law enforcement investigation, one of the first steps toward executing an effective corporate defense is to conduct an internal inquiry. In order to determine what defenses your company can assert, you first need to know the facts on the ground. Can the allegations that are being targeted in the federal government’s investigation be substantiated? If not, what evidence is available to disprove them? Do any statutory exceptions or safe harbors apply? These are all key questions that need to be answered before your company can assemble a defense strategy.
Corporate Investigations Linked to the COVID-19 Crisis: Q&A with Our Federal Compliance and Defense Lawyers
Q: When is the right time to launch an internal investigation?
During the COVID-19 crisis, companies need to be particularly sensitive to the risk of errors and omissions being made internally. From issues related to employees working remotely to the fact that companies are facing significantly-enhanced compliance burdens, there are several factors that are increasing corporate risk exposure generally during the pandemic. As a result, the prudent approach is to proactively assess internal compliance risks and remedy any issues before they lead to lawsuits or federal scrutiny.
Q: Should internal corporate investigations be conducted covertly or with complete transparency?
This question does not have a single “right” answer. Both covert and fully-transparent internal investigations can be appropriate under varying circumstances. The nature of the issue that needs to be investigated, the personnel involved, the potential risk exposure, and various other factors will all influence the decision as to what type of investigation is most appropriate.
Q: Who should be involved in an internal corporate investigation?
The answer to this question depends on the circumstances involved as well. For coronavirus-related internal investigations, it will most likely be necessary to have the relevant subject matter experts involved, although care also needs to be taken to ensure that anyone who may potentially be implicated in the investigation does not participate in the investigative process. However, in all cases, the investigation should be conducted with the management and oversight of outside counsel in order to prevent bias and preserve the attorney-client privilege.
Q: How likely is it that companies will be targeted for federal offenses related to the COVID-19 pandemic?
The U.S. Department of Justice (DOJ) and many other federal agencies are already conducting widespread audits and investigations targeting offenses related to COVID-19. While any individual company’s risk will depend on the specific nature of its operations and its activities during the pandemic, all company leaders will be well-served to affirmatively assess their company’s risk as opposed to taking a wait-and-see approach.
Q: What are the risks of a company being targeted in a COVID-19 fraud investigation?
For companies targeted in COVID-19 fraud investigations, the risks can be substantial. All of the statutes listed above carry significant penalties, and in some scenarios corporate executives and other insiders can be at risk for individual criminal prosecution. Many federal authorities are closely monitoring companies’ operations during the pandemic in various respects, and they are seeking harsh penalties for companies and individuals that fail to take appropriate precautions and/or attempt to unlawfully profit from the COVID-19 crisis.
Contact the Federal Corporate Investigations Lawyers at Oberheiden P.C.
If you would like more information about our firm’s corporate investigations practice, we encourage you to get in touch. To speak with a senior attorney at Oberheiden P.C. in confidence, call 888-680-1745 or tell us how we can help online now.
Dr. Nick Oberheiden, founder of Oberheiden P.C., focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.