Federal Deposit Insurance Corporation – Investigations & Subpoenas – What You Need to Know

The Federal Deposit Insurance Corporation (FDIC) does much more than insure the funds held by federally-backed banks. It investigates suspected violations of federal banking laws and other federal statutes as well, and it relies on its subpoena power to secure evidence in support of federal allegations.

The Federal Deposit Insurance Corporation (FDIC) serves an important role in the government’s effort to protect consumers against the risks of market manipulation and other forms of financial fraud. But, while the FDIC is perhaps most well-known for insuring bank account holders’ funds, it engages in federal law enforcement efforts as well. Through its Office of Investigations (OI) and Office of Inspector General (OIG), the FDIC conducts investigations into banks, contractors, bank customers, and others, and it works with the U.S. Department of Justice (DOJ) to pursue civil and criminal charges when appropriate.

When conducting investigations, one of the most-potent tools the FDIC has available is its subpoena power. Under Section 308.146 of the Federal Deposit Insurance Act (FDIA) regulations:

“The person designated to conduct [an] investigation shall have the power, among other things, to administer oaths and affirmations, to take and preserve testimony under oath, to issue subpoenas and subpoenas duces tecum and to apply for their enforcement to the United States District Court for the judicial district or the United States court in any territory in which the main office of the bank, institution, or affiliate is located or in which the witness resides or conducts business.”

The federal courts afford substantial deference to administrative subpoenas issued by the FDIC, and FDIC personnel can seek to extract an extraordinary amount of information by leveraging the agency’s subpoena power. As a result, agency personnel rely heavily on this subpoena power during the investigative process, and banks, businesses, and individuals served with FDIC subpoenas must begin preparing their strategic responses immediately.

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Dr. Nick Oberheiden
Dr. Nick Oberheiden

Founder

Attorney-at-Law

John W. Sellers
John W. Sellers

Former Senior Trial Attorney
U.S. Department of Justice

Local Counsel

Joanne Fine DeLena
Joanne Fine DeLena

Former Assistant U.S. Attorney

Local Counsel

Joe Brown
Joe Brown

Former U.S. Attorney & Former District Attorney

Local Trial & Defense Counsel

Amanda Marshall
Amanda Marshall

Former U.S. Attorney

Local Counsel

Aaron L. Wiley
Aaron L. Wiley

Former Federal Prosecutor

Local Counsel

Roger Bach
Roger Bach

Former Special Agent (OIG)

Gamal Abdel-Hafiz
Gamal Abdel-Hafiz

Former Supervisory Special Agent (FBI)

Chris Quick
Chris Quick

Former Special Agent (FBI & IRS-CI)

Kevin M. Sheridan
Kevin M. Sheridan

Former Special Agent (FBI)

Ray Yuen
Ray Yuen

Former Supervisory Special Agent (FBI)

Dennis A. Wichern
Dennis A. Wichern

Former Special Agent-in-Charge (DEA)

Federal Defense Attorneys and Former DOJ Prosecutors for FDIC Investigations

Oberheiden P.C. is a federal compliance and defense law firm that represents businesses, financial institutions, and individuals nationwide in FDIC matters. Our federal defense lawyers, many of whom previously served as white-collar prosecutors with the DOJ, have extensive experience on both sides of federal investigations targeting fraud, waste, and abuse (FWA); bank fraud; securities fraud; and the multitude of other offenses that the FDIC targets in its investigations. We represent clients in a broad range of industries across the country; and, in the majority of cases, we have been successful in resolving our clients’ federal investigations without charges being filed.

Understanding the Scope of the FDIC’s Investigative and Enforcement Authority

The FDIC conducts investigations into a broad range of alleged civil and criminal statutory violations. In the majority of cases, these investigations are managed by the agency’s Office of Investigations or its Office of Inspector General, with OIG investigations being, “concentrated on those cases of most significance or potential impact to the FDIC and its programs.”

While the FDIC has regulatory oversight of federally insured financial institutions, its investigative authority is far broader. For example, Federal Deposit Insurance Corporation investigations can target offenses including, but not limited to:

  • Bank and FDIC employee misconduct
  • Concealment of assets
  • COVID-19 fraud (including fraud under the Paycheck Protection Program (PPP))
  • Fraudulent representations of FDIC insurance
  • Money laundering
  • Obstruction of bank examinations
  • Procurement fraud
  • Securities fraud
  • Theft of government property

In many cases, the FDIC will work in conjunction with other federal agencies to investigate and prosecute these and other offenses. Among other agencies, the FDIC will with the Internal Revenue Service (IRS), Consumer Financial Protection Bureau (CFPB), and Financial Crimes Enforcement Network (FinCEN) as necessary to fully investigate and prosecute cases of suspected fraud, waste, abuse, mismanagement, and other statutory and regulatory violations.

Understanding the Scope of the FDIC’s Subpoena Power

The FDIC is among the limited number of federal agencies that has the power to issue administrative subpoenas in support of its investigative efforts. Administrative subpoenas do not require court approval, and the federal agencies that have subpoena power also receive substantial deference from the courts when it comes to determining the necessary scope of their investigative inquiries.

While an FDIC subpoena is non-judicial in nature, the FDIC can seek judicial enforcement when necessary, and failure to comply following the issuance of an order compelling compliance can result in a finding of contempt. Contempt charges carry criminal sanctions under federal law. As a result, when faced with an FDIC subpoena, it is necessary to promptly assess any grounds for challenging the subpoena while simultaneously beginning to prepare a substantive response.

FDIC subpoenas can request testimony (a subpoena ad testificandum), documents (a subpoena duces tecum), or both, and the FDIC can issue subpoenas to witnesses as well as the targets of its investigations. In order to respond to an FDIC subpoena appropriately, it is necessary to first determine:

  • The nature of the subpoena
  • The response deadline
  • Any grounds to challenge the subpoena
  • The volume of information or records being requested
  • What information and records are protected by the attorney-client privilege
  • What information and records are protected by the privilege against self-incrimination
  • Whether you are a witness or your business or financial institution is the target of the FDIC’s investigation

Understanding the Risks of an FDIC Investigation

The risks of facing an FDIC investigation depend upon the specific allegations involved. FDIC investigations can target both civil and criminal offenses, and penalties can range from civil fines to long-term federal incarceration. Upon receiving a subpoena or any other form of inquiry from the FDIC, it is important to engage experienced federal defense counsel immediately to intervene in the investigation and communicate with the FDIC’s agents and lawyers on your (or your company’s) behalf. While fines and imprisonment are both very real possibilities, with a strategic defense it will also be possible to avoid charges in many cases.

FAQs: Responding to an FDIC Subpoena or Investigation

Q: What are the potential triggers for an FDIC investigation?

 

There are various factors that can trigger an FDIC investigation. In many cases, investigations result from public complaints filed with the FDIC’s OIG or its Consumer Response Center. However, the FDIC also initiates investigations independently, and it often works in conjunction with the IRS, CFPB, FinCEN, and other federal agencies as well.

Q: What should you do upon learning of an FDIC investigation?

 

Upon learning of an FDIC investigation targeting your company or financial institution (or you personally), you need to engage federal defense counsel immediately. Your defense counsel will review your subpoena if you have received one, determine your response obligation, and develop a comprehensive strategy for moving forward. While FDIC investigations can have severe consequences, they can also be resolved favorably with the right approach. Engaging experienced federal defense counsel will afford the greatest opportunity to efficiently achieve a favorable result.

Q: Do you need to hire federal defense counsel if charges have not yet been filed?

 

Engaging federal defense counsel during the investigative stage affords the opportunity to resolve your (or your company’s) FDIC investigation without charges being filed. While there are ways to defend against allegations of bank fraud, securities fraud, money laundering, and the other offenses that fall within the FDIC’s enforcement jurisdiction, avoiding charges avoids the risk of prosecution and sentencing. When facing an FDIC investigation, you do not want to allow the investigation to progress unchecked. By pursuing a favorable pre-charge resolution, you can also keep the investigation from being made public and potentially causing irreparable reputational harm.

Q: What are some potential defenses to common allegations in FDIC investigations?

 

There are many potential defenses to the allegations that are common triggers for FDIC investigations. In order to develop an effective defense strategy, it is first necessary to determine whether the investigation is civil or criminal in nature.

If you are under investigation for money laundering or another crime, for example, you may be able to avoid prosecution by asserting your constitutional protections or demonstrating that you lacked the requisite intent for criminal culpability. In civil cases, however, intent is generally not an element that the government’s attorneys need to prove, and this means that your defense strategy needs to focus on other aspects of the government’s case.

Q: What is the FDIC Electronic Crimes Unit?

 

The FDIC Electronic Crimes Unit (ECU) is a department within the FDIC that provides assistance for investigations targeting computer-related financial crimes. The ECU has substantial resources at its disposal; and, if you or someone within your company has been contacted by FDIC ECU, you will need to speak with your federal defense counsel to determine both (i) what this means for your FDIC investigation, and (ii) what protective measures are necessary.


Discuss Your FDIC Subpoena or Investigation with a Senior Federal Defense Lawyer at Oberheiden P.C.

If you have been contacted by agents or lawyers from the FDIC’s Office of Investigations, Office of Inspector General, or Electronic Crimes Unit, it is imperative that you engage experienced federal defense counsel promptly. For a free and confidential consultation with a senior federal defense lawyer at Oberheiden P.C., call 888-680-1745 or contact us online now.

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