In United States v. Allen (PDF: 511 KB), the Second Circuit held that self-incriminating statements compelled by a foreign sovereign cannot be used, directly or indirectly, in a U.S. prosecution. The opinion thoughtfully analyzes how U.S. constitutional principles apply in cross-border investigations and may have some impact on how such investigations are conducted in the future.
During the well-known investigations of alleged manipulation of the London Interbank Offered Rate (“LIBOR”), U.K. citizens and low-level bank employees Anthony Allen and Anthony Conti were suspected of artificially adjusting exchange rate information to affect LIBOR and benefit their confederates. The U.K. Financial Conduct Authority (“FCA”) compelled Allen and Conti’s testimony under the Financial Services and Markets Act 2000 (“FSMA”). The FSMA provides that the FCA could not use Allen and Conti’s statements against them but could use the “fruits” of any investigation developed on the basis of their statements. The FCA also compelled testimony from Paul Robson, one of Allen and Conti’s co-workers, who provided generally exculpatory information regarding himself, Allen and Conti. Later, the FCA commenced an enforcement action against Robson and provided him with transcripts of Allen’s and Conti’s statements, which Robson carefully reviewed. The FCA ultimately decided not to prosecute Allen, Conti, or Robson.
The U.S. Department of Justice immediately took up the case against all three of them. Robson reached a plea agreement under which he testified against Allen and Conti. A summary of Robson’s allegations against them was introduced before a grand jury, and Robson was a key witness at their trial. Allen and Conti were ultimately convicted of wire fraud and sentenced to prison terms.
In Kastigar v. United States, the Supreme Court held that whenever a defendant has provided evidence over a Fifth Amendment objection and under an award of immunity, the prosecutor must prove that the entire case is “untainted” by the prior testimony – that is, that the evidence used at trial was not based on leads or information obtained under compulsion.
The Allen case raised two questions. First, does the Fifth Amendment apply when a foreign sovereign compels testimony? Second, was the prosecution of Allen and Conti “tainted” because a key witness against them had been given access to their compelled testimony, even though the testimony was not itself presented at trial? The District Court, in a written opinion, did not reach the first question but rejected the defendants’ Kastigar claims based on the second. It concluded that the prosecutor had shown a basis for the prosecution that was “independent” of the defendants’ compelled testimony because Robson affirmed that his testimony was based exclusively on his own recollection.
In a unanimous opinion written by Judge José Cabranes, the Court of Appeals reversed on both issues. On the first question, Judge Cabranes emphasized that the Fifth Amendment exists to ensure a fair trial by protecting against compelled self-incrimination, and therefore mandated exclusion of compelled self-incriminatory evidence irrespective of its source. He sharply distinguished Fifth Amendment remedies from judicially-created exclusionary rules under the Fourth Amendment, which are meant to deter inappropriate police conduct, noting that such exclusionary rules would be unlikely to have any effect on foreign actors. On the second question, the Court found that Robson’s trial testimony was derived from Allen’s and Conti’s compelled testimony, noting in particular that Robson appeared to have significantly changed his story between the time of his own recorded FCA interview and the trial, after he had reviewed the Allen/Conti transcripts. As of this writing, it is not known if the Government will seek en banc review or certiorari from the Supreme Court.
While fascinating, the Allen decision may impact only a narrow set of cases.
First, the opinion does not change the principle that constitutional protections other than the Fifth Amendment do not generally apply to acts committed overseas by non-U.S. actors. Second, the FSMA uniquely set up a fact pattern tailor-made for a Kastigar analysis. The defendants clearly objected to being compelled to provide testimony in the U.K. and did so only under FSMA compulsion, which provided immunity for their testimony. However, relatively few countries recognize a right against self-incrimination and provide a remedy such as an immunity to compel testimony over an objection based on this right. Therefore, the fruits of many foreign investigations will likely not fall afoul of Allen either because of waiver or because the compulsion, while effective, was insufficiently formal.
As the Supreme Court emphasizes (PDF: 162 KB), the protection against compelled self-incrimination must be invoked to be recognized. Few non-U.S. compelled interviews are likely to result in testimony that is procedurally compelled over such an objection. While many countries recognize some form of a right to silence or a right against self-incrimination, the invocation of that right will generally lead to a stand-off where the witness remains silent because very few countries can to force testimony by providing immunity. Individual cases involving abusive situations where authorities engage in some sort of intimidation, physical force or trickery to obtain testimony over an invocation of a right to silence may trigger an Allen analysis. However, most non-U.S. compelled interviews are likely to result from situations where the witness chooses to speak and thus where the Fifth Amendment protection has been waived from a U.S. perspective.
Further, witnesses from outside the United States often choose to testify because their countries permit an inference of culpability to be drawn from the invocation of their right to silence. Since the Supreme Court’s decision in Griffin v. California, an inference of guilt cannot be drawn from a failure to testify or a clearly evoked insistence on a right to silence. However, this is not the case in other countries, like France, and as a result the right to silence is infrequently invoked. If a witness were to answer questions to avoid an adverse inference, Allen would be unlikely to protect the witness against the use of that testimony in a U.S. prosecution.
Finally, Allen may reflect an unusual situation for a practical reason. Most prosecutors use immunity orders to obtain information about “higher ups” by compelling testimony from low-level operatives. They rarely get such orders to compel testimony from those whom they ultimately prosecute. This was not lost on the members of the Allen panel, who in oral argument quite aggressively quizzed the prosecutor about whether it was an appropriate use of resources to pursue U.K. citizens acting outside the United States as low-level employees of a Dutch bank.
Frederick T. Davis is Of Counsel in the Paris and New York offices of Debevoise & Plimpton LLP.
Disclaimer
The views, opinions and positions expressed within all posts are those of the author alone and do not represent those of the Program on Corporate Compliance and Enforcement (PCCE) or of New York University School of Law. PCCE makes no representations as to the accuracy, completeness and validity of any statements made on this site and will not be liable for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with the author.