Understanding the Civil Investigative Demand (CID) process is crucial. It's a legal tool used by government agencies to gather information during investigations into potential law violations. Receiving a CID can be daunting, especially for those unfamiliar with the process. These demands are typically issued in cases involving antitrust issues, consumer protection violations, or allegations of fraud.
At its core, a CID serves as a formal request for documents, testimony, or other evidence to help determine if legal action or enforcement is necessary.
Simply put, a Civil Investigative Demand is an administrative subpoena that allows federal government agencies to request extraordinary amounts of information from private entities without going through any formal court procedures.
When federal law enforcement agencies serve civil investigative demands, it's crucial to respond promptly and appropriately. This is to avoid unnecessary (and potentially severe) consequences, underlining the seriousness and urgency of the situation.
Various agencies use CIDs to gather information during law enforcement investigations, such as the U.S. Department of Justice (DOJ), the U.S. Attorney's Office, the Federal Trade Commission (FTC), and the Consumer Financial Protection Bureau (CFPB).
Although these agencies issue CIDs in connection with civil investigations, a finding of civil liability can result in substantial financial penalties, and the discovery of evidence of intent can quickly turn into a criminal investigation.
Unlike subpoenas, which are often connected to active lawsuits, CIDs are typically used during the investigative phase of a case (whether it's you or someone else being investigated). If your company receives a CID, here are some key points to be aware of.
Not Subject to Court Approval
Since these are considered administrative subpoenas, civil investigative demands are not subject to court approval. The DOJ, FTC, CFPB, and other agencies can issue civil investigative demands at their discretion before initiating formal litigation proceedings.
The legal grounds for challenging civil investigative demands are limited. Therefore, individuals and business organizations often face civil investigative demands that require extraordinary compliance obligations for such documentary material, while having little information about what the federal government is investigating.
Often, civil investigative demands require the production of numerous documents. In fact, for civil investigative demands targeting businesses, it's common for thousands of paper and electronic records to be requested.
Since response deadlines are measured in days and weeks, CID recipients must start work immediately to identify, collect, and prepare such material.
Government Agencies Issue CIDs
CIDs are most commonly issued by federal or state agencies, including the Department of Justice (DOJ), the Federal Trade Commission (FTC), and state attorneys general. These agencies use CIDs to investigate potential violations of antitrust laws, consumer protection statutes, healthcare fraud, or other regulatory issues. Their goal is to collect evidence and assess whether enforcement or litigation is warranted.
CIDs Can Request a Broad Range of Information
A CID often demands several types of information, such as documents, written answers to specific questions (interrogatories), or oral testimony under oath during a deposition. The scope of the request will vary based on the agency issuing it and the nature of the investigation. Details of what is required are written explicitly within the CID.
The Scope of a CID Is Not Unlimited
The breadth of a CID often makes it more expansive compared to subpoenas. However, a CID must remain relevant to the investigation. Agencies are not permitted to make overly burdensome, irrelevant, or vague demands.
Suppose you believe the scope of the CID exceeds its legal limits. In that case, you may seek to narrow or challenge it through appropriate legal procedures, although you should always seek legal counsel before doing so, as it may not actually be in your best interests.
Compliance Is Mandatory
Compliance with a CID is not optional. Failing to respond can lead to enforcement actions, including fines or additional legal consequences. Non-compliance signals a lack of cooperation, which can lead to increased scrutiny from the issuing agency. Responding thoroughly and on time is essential to avoid compounding risks.
Deadlines Must Be Taken Seriously
CIDs generally include strict deadlines, often ranging from 20 to 30 days. Missing these deadlines can result in legal repercussions, including court-ordered compliance or financial penalties. If you require more time to comply, agencies may grant extensions, but these are not guaranteed. Acting swiftly upon receipt of a CID is crucial.
Responses Must Be Complete and Accurate
When answering a CID, accuracy and thoroughness are non-negotiable. Providing incomplete or false information can lead to further investigation, enforcement actions, or even prosecution. Agencies often scrutinize every detail to ensure compliance.
Consulting an attorney to review your response is highly advisable to ensure it meets legal standards and requirements.
You Have Legal Rights and Protections
Recipients of a CID have rights under the law. For example, certain information may be protected by privileges, such as attorney-client privilege. Agencies cannot compel you to produce privileged materials. Additionally, you may challenge aspects of the CID, such as overly broad or irrelevant demands, through legal channels.
You Must Protect All Requested Information with a "Legal Hold."
Suppose any information requested by the CID is destroyed, even inadvertently. In that case, it can raise significant red flags with investigators and make you a criminally suspect because it gives the appearance of obstruction.
For your own sake and that of your company, you should call for a company-wide "legal hold" on all documentation until the terms of the CID are met. Preserve all potentially relevant materials and ensure nothing is destroyed or altered. Working with your legal team to compile and deliver the required materials in a well-documented manner demonstrates good faith and helps avoid further complications.
The Investigation May Extend Beyond the Initial CID
Even after you respond to a CID, the investigation itself may continue. Agencies may issue follow-up requests or seek further cooperation if the evidence gathered points to additional areas of inquiry. Remaining cooperative and fully documenting your compliance efforts can help you manage any ongoing investigation.
What You Need to Do to Respond to a CID
All efforts to respond appropriately to a CID must be prompt and undertaken with the advice of experienced federal defense attorneys. Our law firm represents clients nationwide who are facing federal investigations as witnesses, suspects, or targets. We will assist you with all aspects of your CID response, such as the following:
- Deadlines. We will note all deadlines and structure a response plan to ensure that you meet your federal obligations.
- Legal Hold. Instituting a legal hold ensures that all responsive documents are preserved. Failing to preserve responsive documents can lead to a finding of contempt, and it may be viewed as an attempt to conceal information.
- Preparing to Meet. If your CID has a deadline to "meet and confer" with agents from the issuing agency, we will schedule the appointment and prepare to meet with them on your behalf.
- Responsive Documents. We will meet with you to gather all responsive documents. Depending on the volume of records requested, gathering such material can be an extremely time-consuming process.
- Challenges and Strategies. We will also assess all relevant grounds for challenging the CID. While it limits the grounds, it is sometimes possible to significantly reduce the scope of a CID.
- Negotiating or Filing a Motion. Often, negotiating with the issuing agency can be the most effective way to limit compliance obligations. If the CID exceeds the issuing agency's authority, we can formally challenge it in federal district court.
- Submitting Response. We will prepare your response and submit it to the issuing agency on your behalf. Next, we will represent you in any follow-up and additional proceedings related to the government's investigation.
Engaging Experienced Legal Counsel Is Critical
A CID does not necessarily mean you are under federal investigation, but it also might. Either way, navigating the CID process is rarely straightforward. Agencies have significant experience with these investigations, and seeking guidance from an attorney versed in handling CIDs can level the playing field.
Legal counsel can offer critical insights, negotiate with the agency if necessary, and ensure your rights and interests are protected throughout the response process. Suppose the CID itself suggests you or your company might be under a criminal investigation. In that case, your attorney can also begin taking proactive steps toward creating a defense strategy should it become necessary.
A Civil Investigative Demand (CID) is a tool used by the government to collect information during investigations about possible violations of federal law. For more information, contact our federal criminal defense law firm, Eisner Gorin LLP, based in Los Angeles, CA.
Related Content:
