Understanding the power of the federal government when responding to False Claims Act Civil Investigative Demands (CDS) can significantly reduce the chance of exposure to further government claims and further criminal exposure.

False Claims Act Civil Investigative DemandsThe False Claims Act (FCA) arms the Department and other law enforcement agencies with significant power to make demands for testimony and to produce documents without court intervention. One such example is the introduction of False Claims Act Civil Investigative Demands (CID). The federal government’s CID authority stems from 31 USC 3733.  Under this statute, federal prosecutors such as the Department of Justice DOJ may issue a CID “[w]henever” it “has reason to believe that any person may be in possession, custody, or control of any documentary material or information relevant to a false claims law investigation.

The CID statute does not pose a high burden for the government when issuing an administrative subpoena. The federal government can issue a CID whenever it possesses information that—in its own judgment—an FCA violation may have been committed.

 31 USC  3733

Under this statute:
“Whenever the Attorney General, or a designee (for purposes of this section), has reason to believe that any person may be in possession, custody, or control of any documentary material or information relevant to a false claims law investigation, the Attorney General, or a designee, may, before commencing a civil proceeding under section 3730(a) or other false claims law, or making an election under section 3730(b), issue in writing and cause to be served upon such person, a civil investigative demand requiring such person—
(A) to produce such documentary material for inspection and copying,
(B) to answer in writing written interrogatories with respect to such documentary material or information,
(C) to give oral testimony concerning such documentary material or information, or
(D) to furnish any combination of such material, answers, or testimony.

The Attorney General may delegate the authority to issue civil investigative demands under this subsection. Whenever a civil investigative demand is an express demand for any product of discovery, the Attorney General, the Deputy Attorney General, or an Assistant Attorney General shall cause to be served, in any manner authorized by this section, a copy of such demand upon the person from whom the discovery was obtained and shall notify the person to whom such demand is issued of the date on which such copy was served. Any information obtained by the Attorney General or a designee of the Attorney General under this section may be shared with any qui tam relator if the Attorney General or designee determines it is necessary as part of any false claims act  investigation.” See information about target letters vs indictment.

False Claims Act Civil Investigative demands puts government contractors in a tough position. After receiving a CID, they have to figure out what documents to send, whether there are any protected documents, and how to protect the right now to disclose. This is where having government contracting fraud or False Claims Act lawyers on board can help.
Serving Civil Investigative demands often exposes federal contractors to costly litigation and substantial public scrutiny. The commencement of the CID demand usually comes when there is a government investigation for procurement fraud stemming from Buy American Act (BAA) compliance laws, alleged violations of federal procurement regulations, and or SBA small business laws.

Government contractors and small businesses should take False Claims Act civil investigative demands very seriously. When the justice department issues a CID, it is openly communicating to you that it believes that you have committed False Claims Act violations. Note, that the False Claims allegations set up the case for criminal and civil liability.
When the United States government issues a False Claims Act Civil Investigative demand, the US Attorney’s Office oftentimes already has its investigation in place for months to years. See information about How to Avoid Procurement Integrity Act Violations and PIA Penalties 41 USC 2105.

Failure to respond to a CID request can allow more criminal charges to be brought against you. The power of the DOJ and OIG offices is undeniable. However, government contractors and individuals have options. By learning about the limits of the federal government, you can avoid common mistakes and exposure to criminal penalties.

Tips for Responding to False Claims Act Civil Investigative Demands (CID)

Responding to civil investigative demands does have limitations. Whether you are an individual or government contractor, keep in mind that even if you are currently being served for a civil case, the DOJ or other federal law enforcement very easily initiate a criminal case against you. 31 USC 3733 does allow you some leverage and protections when it comes to the government’s CID authority. The government may not:

(1) demand anything that would be protected from disclosure under “the standards applicable to subpoenas . . . to aid in a grand jury investigation” or
(2) “the standards applicable to discovery requests under the Federal Rules of Civil Procedure, to the extent that the application of such standards to any such demand is appropriate and consistent with the provisions and purposes of this section.”

Government contractors and individuals that receive Civil Investigative Demands have some ability to limit their stress and burden when responding to a CID. The government is not entitled to attorney-client information when serving a CID. The federal government cannot obtain access to information protected by the attorney-client privilege or other privileges. Constitutional protections such as the right not to self-incriminate in especially important. Having government procurement fraud lawyers that can interact with the DOJ, SBA OID, VA OIG, CCID or other federal agencies can prove very important.

See What Happens After Government Contractors Receive a Grand Jury Indictment.

Need Help Responding to a Civil Investigative Demand?

If you are involved in a federal investigation that involves a government contract, understand that the government can also bring criminal charges. Call Watson & Associates’ fraud defense attorneys for immediate help. Call Toll-Free at 1.866.601.5518 for a Free Initial Consultation.