Strategies for Avoiding Publicity During a Federal Tax Fraud Investigation
December 22, 2023
If you are facing a federal tax fraud investigation, keeping the investigation out of the public eye can be important for multiple reasons. Not only is it important to protect your personal and professional reputation, but if the investigation is made public, this may give the investigating authorities even more incentive to move forward with seeking an indictment and taking their case to trial. Publicity can also negatively impact settlement negotiations, as the agents and prosecutors leading the negotiations will know that the reputational costs of their investigation will continue to increase the longer it stays open.
When we represent high-profile clients during federal tax fraud investigations, keeping our clients’ investigations out of the public eye is always top of mind. To protect our clients, we communicate proactively with the investigating authorities, engage outside strategic communications experts as necessary, and take other steps designed specifically to keep the situation at hand under wraps.
5 Strategies for Maintaining Confidentiality During a Federal Investigation
Here are just some of the ways that we work to maintain the confidentiality of our clients’ federal tax fraud investigations:
1. Working Proactively with the Investigating Authorities
In many cases, the best approach will be to work with the investigating authorities. While this is still an adversarial process—and while the focus always remains on securing the best possible outcome—working cooperatively with special agents at the U.S. Department of Justice (DOJ), Internal Revenue Service Criminal Investigation (IRS CI), and other federal agencies can facilitate keeping the investigation under wraps. While there are no guarantees, if federal authorities know that a target is willing to assist with uncovering the truth and accept responsibility (if there is any responsibility to be accepted), they will generally be more willing to assist with protecting the target’s reputational interests as well.
For example, in one case we represented a billionaire who was under investigation for allegedly underpaying $60 million in gift tax. It was the largest case of its kind ever pursued by the government and one that the DOJ and IRS would be happy to publicize. By allowing federal agents full access to our client’s records (after determining that doing so would pose no risk to our client), we were able to keep the investigation confidential—and ultimately convince the DOJ and IRS to close the investigation without prosecution.
2. Developing and Executing a Defense Strategy Focused on Securing a Pre-Charge Resolution
Another key to maintaining the confidentiality of a federal tax fraud investigation is to develop and execute a defense strategy focused on securing a pre-charge resolution. Once a case goes to court, the options for maintaining confidentiality become more limited, and there is always a chance that a grand juror will speak publicly or serve as a confidential source for reporters—even if instructed not to.
In many cases, it will be possible to convince federal authorities to close an investigation without charges and without a settlement. High-stakes federal tax fraud cases tend to be extraordinarily complex, both in terms of the facts and the law. If we can show that the government lacks sufficient evidence to pursue charges, or if we can show that nuances in the federal tax laws shield our client (or raise questions that will prevent the DOJ from proving our client’s guilt beyond a reasonable doubt), then we should be able to have the investigation closed without publicity or further consequence.
Of course, in some cases, entering into settlement negotiations will be necessary. If the facts and law are not on the target’s side, then avoiding publicity and minimizing the consequences of any mistakes that were made will generally involve settling with the government.
3. Limiting Access to Information About the Investigation Within Our Client’s Sphere or Organization
During a federal tax fraud investigation, publicity by the government isn’t the only concern. Targets must work to ensure that all individuals within their sphere or organization maintain strict confidentiality as well. This generally involves limiting access to information on a need-to-know basis and ensuring that any personnel who have knowledge of the investigation are aware of their confidentiality obligations.
4. Working with Strategic Communications Experts as Necessary
Preserving the confidentiality of a federal tax fraud investigation often requires active management. When necessary, we engage public relations consultants and strategic communications experts to help protect our clients’ reputations. Strategic communications are a core aspect of our practice when representing high-profile clients, and we have extensive experience protecting these clients from premature judgment in the court of public opinion.
When some amount of publicity is likely due to circumstances beyond our control, we work proactively to prepare a strategic communications plan that we can deploy should it become necessary. Our strategic communications plans involve a multi-faceted approach, with protective measures ranging from steering the public narrative to directly addressing clients, shareholders, lenders, business partners and others. While our goal is always to avoid the need for this type of strategic communication, it is crucial that we are prepared to act immediately if necessary.
5. Working Under the Umbrella of the Attorney-Client Privilege
Working under the umbrella of the attorney-client privilege is also key to maintaining the confidentiality of a federal tax fraud investigation. While our communications with our clients are always protected (as long as our clients protect themselves as well), it takes additional effort to bring public relations firms and other outside entities and individuals under the umbrella. But, this additional effort can be well worth it, and we have years of experience working with public relations firms and strategic communications firms that understand their role in protecting our clients’ confidentiality.
Contact Brown Tax, P.C. for More Information
If you would like to know more about our approach to representing high-profile clients in federal tax fraud investigations, we invite you to get in touch. To request a confidential consultation with an attorney at Brown Tax, P.C., please call 888-870-0025 or tell us how we can reach you online today.