Federal Corporate Investigations: Company vs Individual Defense

Your in a conference room. The company's lawyer sits across from you explaining they're conducting an internal investigation into potential regulatory violations. They hand you a document - an Upjohn warning - explaining they represent the company, not you personally, and that everything you say could be shared with the government. You sign it. You answer there questions. You cooperate fully because you've got nothing to hide and because not cooperating would look suspicious. You just made the catastrophic mistake that destroys careers.

Here's what that lawyer didn't tell you. Under Department of Justice policy - specifically the Yates Memorandum and its successor the Monaco Memorandum - your company only receives cooperation credit by giving prosecutors ALL facts about EVERY individual substantially involved in potential misconduct. Not some facts. Not some individuals. All facts about all individuals, regardless of seniority. Cooperation credit is all or nothing. And nothing means the company faces indictment, massive fines, potential destruction of the business. So when the company decides to seek cooperation credit - and they almost always do - there interests and your interests are in direct, irreconcilable conflict. The lawyer who gave you that Upjohn warning isn't protecting you. Their building the prosecution's case against you and calling it an internal investigation.

Spodek Law Group represents executives and employees in federal corporate investigations. Not companies. Executives. Because the moment an investigation begins, the interests of the entity and the interests of individuals inside that entity diverge in ways most people don't see until its too late. Todd Spodek has represented clients who cooperated with internal investigations before understanding what cooperation actually meant - handing prosecutors a roadmap to indict them using their own words.

The Cooperation Credit System That Requires Companies to Indict There Own Executives

The Department of Justice faced political pressure after the 2008 financial crisis. Too many corporate settlements, not enough executives going to prison. So in September 2015, Deputy Attorney General Sally Yates issued a memorandum titled "Individual Accountability for Corporate Wrongdoing." It fundamentally restructured the incentives in every corporate investigation that followed.

The Yates Memo established six principles, but one mattered most: companies seeking cooperation credit must provide the government with all relevent facts about individual misconduct. Not most facts. ALL facts about ALL individuals substantially involved, irrespective of position or seniority. If the company wants any consideration - any reduction in fines, any deferred prosecution agreement, any possibility of avoiding indictment - they have to give up the individuals. Every single one.

Deputy Attorney General Lisa Monaco reinforced this in October 2021. The Monaco Memo doubled down, making clear that companies must be "swift" in voluntarily disclosing violations, "quick" to point fingers at executives, and must produce potentially damning documents "immediately upon discovery." The message was explicit: your cooperation credit depends on how fast and how completely you build the case against your own people.

Here's what this looks like in practice. The company learns the SEC or DOJ has opened an investigation. The company hires a law firm - usually with former prosecutors on staff - to conduct an "internal investigation." That investigation has one primary goal: figure out what happened, who knew about it, and document everything so the company can present findings to the government in exchange for cooperation credit.

The company doesn't investigate to protect employees. They investigate to satisfy DOJ cooperation requirements. And those requirements are clear: identify every individual substantially involved and provide all facts relating to there culpability. If the company refuses, if they hold back even one piece of evidence - they get zero credit. Cooperation is all or nothing. So the company identifies individuals, documents misconduct, turns over interview notes and emails and timelines. They build the prosecution's case.

And the individuals who cooperated with the internal investigation? They just handed prosecutors everything needed to indict them.

In 2024, DOJ charged three Smartmatic executives alongside the company for allegedly paying more than $1 million in bribes. The company cooperated. The executives still got indicted. In 2020, Joseph Sullivan, Uber's Chief Security Officer, was criminally charged with obstruction for allegedly concealing a data breach. Uber cooperated. Sullivan faced prosecution. The pattern repeats: companies seek cooperation credit by providing facts about individuals, and those individuals face criminal charges even when the company gets favorable treatment.

The National Law Review put it bluntly: "Someone - the right someone - has to go under the bus, or the corporation will suffer." If you don't have personal counsel protecting your interests, your the someone going under.

When You Sign an Upjohn Warning, You're Waiving Privilege You Never Had

The Upjohn warning comes from a 1981 Supreme Court case. The Court ruled that attorney-client privilege in a corporate investigation belongs to the corporation, not to individual employees. So when a company lawyer interviews you, anything you say is privileged - but the privilege belongs to the company. The company can waive that privilege anytime and share your statements with the government. You have no say.

Corporate counsel knows this. That's why they give you an Upjohn warning before the interview. The warning states: (1) the attorney represents the company, not you, (2) the conversation is privileged but the company owns it and can waive it without your consent, and (3) you must keep the interview confidential. You sign it. The interview proceeds. Most executives think its just a formality.

Its not a formality. Its a liability waiver.

When you sit down with company counsel and answer questions, your creating a record that the company can hand to prosecutors. Every explanation you give. Every document you produce. Every timeline you clarify. The lawyer sitting across from you is not YOUR lawyer. There client is the company. And if the company decides that cooperating requires turning over your interview notes to DOJ, they will. Your statements become prosecution exhibits, and you cannot claim attorney-client privilege because you never had it. The company did. And they waived it.

The irony is brutal. The Upjohn warning is supposed to protect you by making clear the lawyer doesn't represent you. But most executives hear it, sign it, and cooperate anyway. Why? Because refusing looks suspicious to your employer. Because you believe cooperating shows good faith. Because you think "I have nothing to hide." Because saying "I want my own lawyer" feels like an admission of guilt.

So you cooperate. And the company lawyer documents everything you say.

A 2021 article from Morvillo Abramowitz explained the risk: "Individual employees remain at risk that the company will waive the privilege and share the results of the investigation, including the potentially incriminating statements from employees, with government investigators. Because the company can share your statements with the government and third parties, you can end up facing significant civil or criminal liability."

The New York City Bar Association issued Formal Opinion 2019-4 addressing "pool counsel" - a single lawyer representing multiple individuals in the same investigation. The opinion notes the principal risk is that "divergence of interests will later require the attorney to withdraw." In other words, the lawyer representing you and the company today might have to withdraw tomorrow when your interests conflict. By then, you've already told them everything.

Corporate counsel isn't trying to trick you. They're doing there job. There job is to represent the company's interests. And the company's interest - under the Yates Memo framework - is to gather facts about individuals and present those facts to the government for cooperation credit. The company lawyer who seems friendly, who tells you "just walk me through what happened," who reassures you that "we're all on the same team" - they mean it. You ARE on the same team. Until your not.

And you won't know when that moment happens until its too late.

The Moment the Company Decides to Cooperate Is the Moment Your Lawyer Stops Being Your Lawyer

The DOJ doesn't investigate the company and independently figure out which individuals were involved. They tell the company: you conduct the investigation, you identify the culpable individuals, you provide us with all the facts, and in exchange we'll consider cooperation credit. The internal investigation IS the criminal investigation. The company just does the work for the government.

The Harvard Law Review published an article titled "The Yates Memo: Looking for 'Individual Accountability' in All the Wrong Places" that states under the Yates Memo, "corporate counsel looks more like an agent of the government than defense counsel." That's not hyperbole. That's what happens.

Think about the incentives. The company faces potential indictment. An indictment could destroy the business - remember Arthur Andersen after Enron. The firm collapsed even though the conviction was later overturned. The board has a fiduciary duty to shareholders. Avoiding indictment is existential.

Your a senior executive. Maybe you made decisions that in hindsight look problematic. Maybe you approved conduct that seemed fine but now looks like a violation. The company is deciding whether to seek cooperation credit. Cooperation requires identifying you and providing all facts about what you did.

What does the company choose? The business or you?

The company chooses the business. If that means giving your name to prosecutors along with emails showing your involvement, that's what happens. The Yates Memo makes cooperation all or nothing. Partial cooperation gets you nothing.

The moment the company decides to seek cooperation credit, your interests and the company's interests are irreconcilable. The company lawyer stops representing you - if they ever did - and starts gathering evidence against you. Documenting your involvement. Packaging everything for prosecutors.

And you might not know this decision has been made. The company doesn't email you saying "we've decided to cooperate and we're turning you in." You find out when DOJ sends you a target letter. Or when you get indicted. Or when your personal lawyer reviews the government's evidence and sees your own statements to company counsel being used against you.

Todd Spodek has seen this in case after case. Executives who thought they were cooperating with there employer's investigation. Executives who believed the company was protecting everyone. By the time they hire personal counsel, the company has already turned over interview notes, documents, and a detailed chronology. The lawyer can mitigate the damage, but mitigation is different than prevention.

Increasingly, boards of directors are hiring independent counsel separate from the company's lawyers. Why? Because the board recognizes there interests might conflict with management's interests. If identifying executives for prosecution protects the company, the board wants legal advice that isn't conflicted. An article from Epstein Becker Green notes boards "may find it worthwhile to engage their own counsel as they consider potential action possibly adverse to the personal interests of company executives."