By John Hinman and Gillian Garrett
This “best practices” post is intended to inform licensees, and their employees, of their basic rights and responsibilities when responding to law enforcement investigations and law enforcement interrogations. While this is not intended to be legal advice, many practical questions have been posed to us asking what to do when the investigator comes calling:
· What can I say?
· What should I say?
· What are my rights?
· What are my obligations?
Cooperation with law enforcement is an important responsibility of all licensees and permittees; and that includes cooperating with TTB and ABC agents when carrying out their duties. Cooperation as a concept, however, is subject to legal rights and responsibilities.
The goal of this post is to identify the basic guardrails of effective and legal cooperation.
Following these basic guidelines allows the licensee to cooperate with the Agency while also protecting itself and its employees from exposure to misunderstandings during communications with Agents. These guidelines are also designed to prevent licensees from inadvertently compromising important legal rights and protections.
Investigations at the Federal Level
The U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau (the “TTB”) continues to focus an unprecedented amount of effort and taxpayer dollars enforcing violations of “unfair trade practices.,” i.e., violations of 27 U.S.C. section 205(a)-(d). Unfair trade practices include exclusive outlets, “tied house” violations, commercial bribery and consignment sales.
The TTB is investigating licensees across all three tiers of the industry, big and small. They are also cooperating with other state and federal law enforcement agencies, including both alcohol and tax-related agencies. The California ABC, The Illinois Liquor Control Commission, the Texas ABC and the New York State Liquor Authority, and other state and federal agencies, are also active in investigating matters within their enforcement purview.
What Licensees and Permittees need to know about responding to inquiries from Agents:
All potential witnesses or defendants being asked questions, including licensees and their employees, have a right to consult counsel – and should consult counsel – before speaking with any law enforcement agent or providing information to the agent and the agency. TTB and other agents do not usually (unlike traditional law enforcement) “Mirandize” or otherwise inform witnesses of their rights. What often starts as a casual conversation may quickly escalate to a formal investigation without the person being examined being aware of it.
The TTB and other agents will not inform a licensee when the casual request for information has evolved into a formal investigation and a probable order to show cause or accusation against the licensee. Early engagement of counsel to handle TTB and other agency communications will help protect the Company, the individual involved, and minimize exposure resulting from miscommunication.
Law enforcement agents perform their investigative duties in many ways: personal visits, letter requests for information, phone calls, emails and so forth. Undercover operations are also common, but they are usually designed to test compliance and are beyond the scope of this post.
Here’s what to do if an enforcement Agent approaches or questions you:
· Don’t provide information without the advice of counsel – you always have the right to counsel before answering questions or being interrogated.
· Be firm but polite and respectful – the Agents are doing their job.
· Ask the Agents for their identification and business cards.
· If you do not understand the question or the request for information and feel compelled or pressured to provide an answer, do not guess or speculate. Many cases start from miscommunication between investigators and industry members.
· Call management and report the contact while the information is fresh.
Circulate this post to your sales and marketing people, and administrative staff. The purpose is education. However, the best advice we ever heard was given by the Sargent on the old Hill Street Blues TV program to his officers every morning – be careful, it’s dangerous out there.
Hinman & Carmichael LLP is available to advise clients of our firm if you have additional questions about the ABC, TTB, or other enforcement agencies, or if you need assistance with an agency request, investigation or order to show cause.