RELATED CRIMINAL AND CIVIL SECURITIES PROCEEDINGS:
PARALLEL PROCEEDINGS – CIVIL ACTIONS, CRIMINAL CASES
AND THE FIFTH AMENDMENT
John R. Teakell
Milner & Finn
I. The Fifth Amendment Privilege Application
The Fifth Amendment privilege against self-incrimination prevents a person from having to
incriminate himself in regard to a potential prosecution or other government action. Thus, this
privilege allows a person to refuse to testify or to provide evidence that may tend to incriminate him or
subject him to a fine, penalty, or forfeiture.
The privilege applies when:
Requested testimony actually tends to incriminate the witness, not merely subject him to
If there is no grant of immunity.
The witness is an individual or sole proprietor, not a corporation.
B. Asserting the Fifth Amendment Privilege
Blanket assertions of the privilege against self-incrimination covering all testimony are
generally prohibited, and rather, the privilege must be asserted on a question-by-question basis.
Cited for this point by: In re Edge Capital Group, Inc., 161 S.W.3d 764 (Tex. App.—
o In re Verbois, 10 S.W.3d 825 (Tex. Ct. App.—Waco, 2000) (the privilege against self-
incrimination does not permit a party in a civil proceeding to wholly refuse to answer
any questions he reasonably believes could tend to incriminate him).
A witness is entitled to immunity from a criminal prosecution if he is required to testify despite
his constitutional privilege against self-incrimination.
o Gardner v. Broderick, 392 U.S. 273 (1968).
The privilege against self-incrimination is applicable to state as well as federal
proceedings. U.S. Const. amend V. The privilege may be waived in appropriate
circumstances if the waiver is knowingly and voluntarily made. Answers may be
compelled regardless of the privilege if there is immunity from federal and state
use of the compelled testimony or its fruits in connection with a criminal
prosecution against the person testifying.
o In re Verbois, 10 S.W.3d 825 (Tex. App.—Waco, 2000) (a state may compel a party to
provide incriminating testimony in a civil proceeding if the state offers the party
immunity from the use of the testimony in any subsequent criminal prosecution).
o Baxter v. Palmigiano, 425 U.S. 308 (1976) (prison disciplinary hearings are not
criminal proceedings; but if inmates are compelled in those proceedings to furnish
testimonial evidence that might incriminate them in later criminal proceedings, they
must be offered whatever immunity is required to supplant the privilege and may not be
required to waive such immunity).
o Lefkowitz v. Turley, 414 U.S. 70 (1973).
The object of U.S. Const. amend. V is to insure that a person should not be
compelled, when acting as a witness in any investigation, to give testimony
which might tend to show that he himself had committed a crime. This is the
rule that is now applicable to the states. It must be considered irrelevant that a
person is a witness in a statutory inquiry and not a defendant in a criminal
prosecution, for it has long been settled that the privilege protects witnesses in
similar federal inquiries. In any of these contexts, therefore, a witness protected
by the privilege may rightfully refuse to answer unless and until he is protected
at least against the use of his compelled answers and evidence derived therefrom
in any subsequent criminal case in which he is a defendant. Absent such
protection, if he is nevertheless compelled to answer, his answers are
inadmissible against him in a later criminal prosecution.
The attorney representing the State may, by permission of the court, dismiss a criminal action
at any time upon filing a written statement with the papers in the case setting out his reasons for
such dismissal, which shall be incorporated in the judgment of dismissal. No case shall be
dismissed without the consent of the presiding judge.
o Dismissal by State’s Attorney, Vernon‘s Ann. Texas C. C. P. Art. 32.02
Governs the granting of immunity where there are parallel proceedings.
The District Attorney and the Trial Court where the criminal matters are being
considered are the ones who grant the immunity.
The grant of immunity is statutory, not constitutional, and derives from the
statute that authorizes the dismissal of prosecutions.
A dismissal made by the prosecutor must be approved by the trial court.
o Smith v. State, 70 S.W.3d 848 (Tex. Crim. App. 2002).
The authority to grant immunity derives from the authority of a prosecutor to
dismiss prosecution… [a] grant of immunity from prosecution is, conceptually, a
prosecutorial promise to dismiss a case.
The authority to dismiss a case is governed by the Tex. Code Crim. Pro. Ann.
Article 32.02 directs that a dismissal made by the prosecutor must be approved
by the trial court. Therefore, a District Attorney has no authority to grant
immunity without court approval, for the approval of the court is ‗essential‘ to
The trial court should specifically approve the immunity agreement separately
from its approval of the dismissal.
Tex. Code Crim. Proc. art. 32.02 requires the prosecutor to list in writing his
reasons for dismissing a case, and the judgment of dismissal to incorporate those
reasons. The requirement of judicial approval of a dismissal is mandatory, and
the mandatory nature of that requirement is reflected in the text of art. 32.02.
The second sentence of the statute repeats the requirement of judicial approval
to the exclusion of the other requirements of the first sentence: No case shall be
dismissed without the consent of the presiding judge.
o Graham v. State, 994 S.W.2d 651 (Tex. Crim. App. 1999), cert. denied, 528 U.S. 974.
When a court has not approved a prosecutor's agreement to grant immunity from
prosecution, there is no grant of immunity on which a defendant can rely. The
agreement of the trial judge to such a proceeding is necessary.
Even though a prosecutor's agreement to transactional immunity is not, absent
court approval, binding, a prosecutor has discretion to decide what evidence to
introduce in a trial. Court approval is not required for such matters, and so it
appears that a prosecutor can engage in a binding agreement to refrain from
using particular evidence. That is, he may bind himself to an agreement for use
immunity without court approval.
Distinguished by Smith v. State, 70 S.W.3d 848 (Tex. Crim. App. 2002).
Graham does not tell us what the trial court must know to validly approve a
dismissal. Graham only makes clear that the same requirement of approval that
applies to a dismissal also applies to an immunity agreement that is made
without any charges having been filed.
The grant of immunity is statutory, not constitutional, and derives from the statute that
authorizes the dismissal of prosecutions.
Graham v. State, 994 S.W.2d 651 (Tex. Crim. App. 1999), cert. denied, 528
In Texas, the power to grant immunity from prosecution is statutory rather than
constitutional. The authority to grant immunity is derived from the statutes that
authorize officers of the Judicial Department to dismiss prosecutions.
Conceptually, therefore, a grant of immunity from prosecution should be
thought of as a prosecutorial promise to dismiss the case. The county attorney or
district attorney, who is an officer of the Judicial Department, has the authority
to dismiss a prosecution, but only with the approval of the court. Therefore a
grant of immunity from prosecution also requires the approval of the court.
The trial court cannot compel a witness to answer unless it is perfectly clear, from a careful
consideration of all the circumstances in the case, that the witness is mistaken in asserting the
privilege, and that the answer cannot possibly tend to incriminate the witness.
o Grayson v. State, 684 S.W.2d 691 (Tex. Crim. App. 1984).
In determining whether the witness really apprehends danger in answering a
question, the judge cannot permit himself to be skeptical; rather he must be
acutely aware that in the deviousness of crime and its detection incrimination
may be approached and achieved by obscure and unlikely lines of inquiry.
Even in a criminal prosecution the accused‘s right to compulsory process under
the Sixth Amendment does not override a potential witness‘ Fifth Amendment
privilege against self-incrimination. (citing Ellis v. State, 683 S.W.2d 379 (Tex.
Cr. App. 1984); Cunningham v. State, 500 S.W.2d 820 (Tex. Cr. App. 1973);
Hall v. State, 475 S.W.2d 778 (Tex. Cr. App. 1972); Thompson v. State, 480
S.W.2d 624 (Tex. Crim App. 1972)).
o Hoffman v. United States, 341 U.S. 479 (1951).
To sustain the privilege, it need only be evident from the implications of the
question, in the setting in which it was asked, that a responsive answer to the
question or an explanation of why it cannot be answered might be dangerous
because injurious disclosure could result.
If the witness‘ attorney advises that his client takes the Fifth, then the trial court does not need
to make a separate determination of whether the answer could incriminate the witness.
o Ware v. State, 2004 WL 742738 (Tex. App.—Fort Worth, April 8, 2004) (unpublished
memorandum opinion) (stating that once a trial court learns that a witness has been
advised by his attorney to invoke his Fifth Amendment privilege, it is relieved of the
obligation to inquire further as to whether the assertion of the privilege is valid).
o German v. State, 2003 WL 22096103 (Tex. Ct. App.—Austin, Sept. 11, 2003)
(unpublished memorandum opinion) (citing Ross v. State, 486 S.W.2d 327 (Tex. Crim.
Additional safeguards are guaranteed if an attorney is advising to take the Fifth.
If a witness decides to invoke his Fifth Amendment privilege on advice of
counsel, no further inquiry from the trial court is required. (citing Ross v. State,
486 S.W.2d 327 (Tex. Crim. App. 1972); Suarez v. State, 31 S.W.3d 323 (Tex.
App.—San Antonio, 2000); Chennault v. State, 667 S.W.2d 299 (Tex. App.—
A party‘s attorney is presumed to know which questions may run the risk of
exposing his client to potential criminal liability, and is much better situated to
view all of the facts leading to this presumption (a client‘s attorney will
presumably have all of the facts from his client due to the attorney-client
privilege – the court, wary of overstepping the very privilege the client is
attempting to assert, will only be able to garner as much information as
absolutely necessary to determine the potential criminal liability question).
A defendant‘s constitutional right to compulsory process must yield to a witness‘s
constitutional privilege against self-incrimination.
o Ware v. State, 2004 WL 742738 (Tex. App.—Fort Worth, April 8, 2004) (unpublished
memorandum opinion) (stating that in a criminal prosecution, the accused‘s right to
compulsory process under the Sixth Amendment does not override a witnesses‘ Fifth
Amendment privilege against self-incrimination).
o German v. State, 2003 WL 22096103 (Tex. App.—Austin, Sept. 11, 2003) (unpublished
memorandum opinion) (citing Bridge v. State, 726 S.W.2d 558 (Tex. Crim. App. 1986);
Chandler v. State, 744 S.W.2d 341 (Tex. App.—Austin 1988).
A trial court cannot compel a witness to answer unless it is perfectly clear form
a careful consideration of all the circumstances that the witness is mistaken in
asserting the privilege and that the answer cannot possibly tend to incriminate
the witness. (citing Grayson v. State, 684 S.W.2d 691 (Tex. Crim. App. 1984).
o Malloy v. Hogan, 378 U.S. 1 (1964) (citing Unites States v. Coffey, 198 F.2d 438 (3rd
In determining whether the witness really apprehends danger in answering a
question, the judge cannot permit himself to be skeptical; rather must he be
acutely aware that in the deviousness of crime and its detection incrimination
may be approached and achieve by obscure and unlikely lines of inquiry.
The privilege afforded by U.S. Const. amend. V not only extends to answers that
would in themselves support a conviction but likewise embraces those which
would furnish a link in the chain of evidence needed to prosecute. To sustain the
privilege, it need only be evident from the implications of the question, in the
setting in which it is asked, that a responsive answer to the question or an
explanation of why it cannot be answered might be dangerous because injurious
disclosure could result. In applying this test, the judge must be perfectly clear,
from a careful consideration of all the circumstances in the case, that a witness is
mistaken, and that the answers cannot possibly have such tendency to
o Whitmore v. State, 570 S.W.2d 889 (Tex. Crim. App. 1976).
When looking at a situation where one‘s Constitutional right to compulsory
process is in direct conflict with another‘s Constitutional right against self-
incrimination, ―[t]he weight of authority appears to be that the privilege against
self-incrimination is the superior right.‖ (citing Rodriguez v. State, 513 S.W.2d
594 (Tex. Cr. App. 1974); Glasper v. State, 486 S.W.2d 350 (Tex. Cr. App.
1972); United States v. Roberts, 503 F.2d 598 (9th Cir. 1974), cert. denied, 419
U.S. 1113 (1975); United States v. McKinney, 453 F.2d 1221 (9th Cir. 1972);
Victoria v. State, 522 S.W.2d 919 (Tex. Cr. App. 1975) ).
Superseded on another point.
o Ellis v. State, 646 S.W.2d 554 (Tex. App.—Houston [1st Dist.] 1982), affirmed, 683
S.W.2d 397 (Tex. Crim. App. 1984).
Compared to the right of compulsory process, the privilege against self-
incrimination is the superior right.
F. Adverse Inference
o May be drawn against a party who invokes Fifth Amendment privilege. (Civ.)
In re C.J.F., 134 S.W.3d 343 (Tex. App.—Amarillo, 2003) (refusal to answer
questions by asserting the Fifth Amendment privilege is relevant evidence from
which the finder of fact in a civil action may draw whatever inference is
reasonable under the circumstances).
Baxter v. Palmigiano, 425 U.S. 308 (1976) (U.S. Const. amend. V does not
forbid adverse inferences against parties to civil actions when they refuse to
testify in response to probative evidence offered against them: the Amendment
does not preclude the inference where the privilege is claimed by a party to a
o May not be drawn against a witness invoking the Fifth who is not a party. (Crim.)
Baxter v. Palmigiano, 425 U.S. 308 (1976) (it is a constitutional error under
U.S. Const. amend. V to instruct a jury in a criminal case that it may draw an
inference of guilt from a defendant‘s failure to testify about facts relevant to his
Rodriguez v. State, 513 S.W.2d 594 (Tex. Crim. App. 1974) (when a witness in
a criminal trial, other than the accused, declines to answer a question on the
ground his or her answer would tend to incriminate him or her, that refusal alone
cannot be made the basis of any inference by the jury, either favorable to the
prosecution or favorable to the defendant).
Avoiding Adverse Inference: There is case law that may be interpreted to say that the original
invocation of the Fifth should not be used against a party who later answers the questions
following the outcome of another proceeding. However, some may interpret these cases
Harrell v. DCS Equip. Leasing Corp., 951 F.2d 1453 (5th Cir. 1992)
Farace v. Indep. Fire Ins. Co., 699 F.2d 204 (5th Cir. 1983).
II. Staying a Civil Proceeding
o If indicted = ripe for stay.
o If not indicted = can still be granted a stay if party can show that they are the focus of an
investigation, or that charges are reasonably likely.
A. Who wants a stay?
o Prosecution – prevent defendant from using tools of civil discovery in criminal case.
o Defense – Avoid the ―Hobson‘s choice‖ – decision between (a) giving testimony that
may aid criminal prosecutors, and (b) invoking the Fifth Amendment in the civil case
and risk an adverse outcome as a result.
B. What if one party wants a stay and the other opposes?
o The Court is generally given wide discretion whether to grant a stay, although the main
factor is normally the extent to which issues in the criminal case overlap with those
presented in the civil case (did the focus of either case arise out of the same series of
A non-exclusive list of other factors include:
The status of the case, including whether the defendant has been indicted
(although this is not determinative, the party may show he or she is the
focus of investigation or charges are reasonably likely);
The private interests of the plaintiff in proceeding expeditiously versus
the prejudice to the plaintiff caused by the delay,
The private interests of, and burden on, the defendant;
The interests of the Court; and
The public‘s interest.
o Trustees of the Plumbers & Pipefitters Nat’l Pension Fund v.
Transworld Mech., Inc., 886 F.Supp. 1134 (S.D.N.Y. 1995)
(cited for this point).
o Volmar Distrib., Inc. v. New York Post Co., 152 F.R.D. 36
(S.D.N.Y. 1993) (cited for this point).
The strongest case for granting a stay is where a party
under criminal indictment is required to defend a civil
proceeding involving the same matter. While the
Constitution does not mandate a stay in such
circumstances, denying a stay might undermine a
defendant's Fifth Amendment privilege against self-
incrimination. Refusing to grant a stay might also expand
the rights of criminal discovery beyond the limits of Fed.
R. Crim. P. 16(b), expose the basis of the defense to the
prosecution in advance of trial, or otherwise prejudice the
o In re CFS Sec. Fraud Litig., 256 F.Supp.2d 1227 (N.D. Okla.
Status of the criminal case = the issue of whether a
defendant has been indicted is material. The analysis
centers upon whether the criminal case is: 1) in the
investigation stage, with no indictment; 2) pending
indictment with a set trial date; or 3) where the defendant
has pled guilty and is awaiting sentencing. Courts have
generally declined to impose a stay in the civil
proceedings where a defendant is under criminal
investigation, but has not yet been indicted. The strongest
case for granting a stay is where a party under criminal
indictment is required to defend a civil proceeding
involving the same matter. This is because the likelihood
that a defendant may make incriminating statements is
greatest after an indictment has issued.
Balance of other parties v. defendant = the courts must
consider the private interests of the plaintiffs in
proceeding expeditiously. Both plaintiffs and defendants
are entitled to a speedy discovery process. This is
particularly true in the context of complex litigation
which must proceed in an efficient manner.
Fed. R. Civ. P. 62 = courts have considered whether delay
could impact the plaintiffs' ability to collect on a
judgment and be made whole.
Public‘s interest = the public has an interest in both the
prompt resolution of civil cases as well as the prosecution
of criminal cases. When determining the public's interest,
it is normally a question of what interest the United States
Attorney has in the request for a stay. The United States
Attorney may desire the imposition of a stay to 1)
preserve a defendant's assets, or 2) to make use of
cooperating witnesses. The failure of the State to join in
the request for a stay as a factor in denying the stay.
The key to deciding whether to grant a stay is to balance the interests of the civil
litigant and at the same time protect the rights of a person under criminal
Support for this point.
o Brumfield v. Shelton, 727 F.Supp. 282 (E.D.La. 1989)
Cites Wehling for this point.
―In a case where there is a real and appreciable risk of
self-incrimination, an appropriate remedy would be a
protective order postponing civil discovery until
termination of the criminal action. When the Fifth
Circuit, using a balancing approach, has determined the
appropriate remedy is a stay of discovery that might
expose the party to a risk of self-incrimination.‖
This point may be interpreted from these cases.
o Wehling v. Columbia Broad. Sys., 608 F.2d 1084 (5th Cir. 1979)
(if a party reasonably apprehends a risk of self-incrimination, he
may claim the privilege though no criminal charges are pending
against him, and even if the risk of prosecution is remote).
The United States Supreme Court disapproves of
procedures which require a party to surrender one
constitutional right in order to assert another. Similarly,
the Court emphasizes that a party claiming the Fifth
Amendment privilege should suffer no penalty for his
silence. In this context "penalty" is not restricted to fine or
imprisonment. It means the imposition of any sanction
which makes assertion of the Fifth Amendment privilege
"costly." Dismissing a party's action because he asserts
his Fifth Amendment privilege makes resort to that
o Meyer v. Trunks, 360 S.W.2d 518 (Tex. 1962)
The gist of Tex. Const. art. 1, § 10 is the same as that of
the Fifth Amendment to the United States Constitution,
namely, that the defendant in a criminal case shall not be
compelled to give evidence against himself. The
protection thus afforded is not against the propounding of
the question but is the right to refuse to answer if he
claims that privilege.
Dissent for this point.
o Kugle v. Daimlerchrysler Corp., 88 S.W.3d 355 (Tex. App.—San
A trial court is required to give consideration to the effect
of discovery in a civil case on pending criminal
proceedings. However, the pendency of a criminal matter
does not impair a court's proceeding with a
contemporaneous civil matter involving the same issues
or parties. There is no constitutional prohibition against
both cases going forward simultaneously, and a party's
attempt to develop evidence in a civil case does not lead
to any presumption that a party is trying to develop
evidence for a contemporaneous criminal case.
An individual witness's right to claim protection from
discovery to any particular question in a civil case does
not stop all proceedings in the civil case involving the
C. Hobson’s Choice
In addition to the Fifth Amendment right to silence, a party to a civil action also enjoys a due
process right to a judicial determination of his civil action. A party should suffer no penalty for his
silence. A district court may not follow any procedure that requires a party to surrender one
constitutional right in order to assert another.
o Overlap: Is it significant?
Even if no charges have been filed and the risk of criminal prosecution is
remote, a defendant still has a right to a stay so long as he reasonably
apprehends a risk of self-incrimination.
o Support = A ―mere inconvenience‖ to plaintiffs in a civil suit, even a delay of up to
three years, should not override a defendant‘s right against self-incrimination.
Trustees of the Plumbers & Pipefitters Nat’l Pension Fund v. Transworld Mech.,
Inc., 886 F.Supp. 1134 (S.D.N.Y. 1995).
Supported by the facts of the case.
Volmar Distrib., Inc. v. New York Post Co., 152 F.R.D. 36 (S.D.N.Y. 1993).
Supported by the facts of the case.
o Disagreement = A stay is not guaranteed – as an alternative the court could seal a
deposition pursuant to Fed. R. Civ. P. 30(d), which allows a court to limit the scope and
manner of taking of the deposition provided in Fed. R. Civ. P. 26(c). The Court may
provide that the deposition only be used for impeachment, thereby still protecting the
Constitutional rights of each party.
In re CFS Sec. Fraud Litig., 256 F.Supp. 1227 (N.D.Okla. 2003).
A stay is one of several procedures available to the district court to
balance the interest of the other parties in moving forward with the
litigation against the interests of a defendant asserting Fifth Amendment
rights who faces the choice of being prejudiced in the civil litigation if
those rights are asserted or prejudiced in the criminal litigation if those
rights are waived. Other options may be utilized in lieu of imposing a
stay. These alternate tools include the imposition of protective orders,
sealed interrogatories, a stay for a finite period of time, or a stay limited
to a specific subject matter.
Only one citing decision and one citing statute (but both positive).
A. Proceeding by Proceeding
The witness‘ testimony in one proceeding does not amount to a perpetual waiver of the Fifth
Amendment right of the privilege in all subsequent proceedings.
o The Fifth can be invoked ―proceeding by proceeding,‖ or ―step by step.‖
Parra v. State, 935 S.W.2d 862 (Tex. App.—Texarkana, 1996).
An accused in a criminal proceeding forfeits the privilege to a significant
extent. But a witness, by simply testifying and putting his veracity in
issue, does not waive his privilege with respect to his criminal acts
relevant only to impeach his credibility. A witness who testifies against
a defendant does not waive his privilege against self incrimination with
respect to extraneous activity.
o This case has not been cited for this point.
The State may not call a witness for the sole purpose of getting him to
invoke the Fifth.
Nichols v. Collins, 802 F.Supp. 66 (S.D.Tex. 1992), affirmed in part, reversed in
part (on other grounds) 69 F.3d 1255 (5th Cir. 1995)
A witness‘ testimony in a prior proceeding or other disclosure of
incriminating facts does not amount to a perpetual waiver of the
privilege in all subsequent proceedings.
o Citing United States v. Wilcox, 450 F.2d 1131 (5th Cir. 1971),
cert. denied, 405 U.S. 917 (1972).
o No subsequent cases cite Nichols for this point.
United States v. Cain, 544 F.2d 1113 (1st Cir. 1976).
It is hornbook law that the waiver is limited to the particular proceeding
in which the witness appears.
o Citing United States v. Johnson, 488 F.2d 1206 (1st Cir. 1973).
o Support for there not being a perpetual waiver. No direct support for ―proceeding by
In re Speer, 965 S.W.2d 41 (Tex. App.—Ft. Worth, 1998) (the privilege against
self-incrimination must be asserted selectively in civil litigation and selective
assertion of the privilege does not result in waiver).
Cited in several unpublished decisions in the Texas Court of Appeals
In re Lowe, 151 S.W.3d 739 (Tex. App.—Beaumont, 2004) (blanket
assertions of the privilege in civil cases are impermissible. Rather, the
privilege must be asserted on a question-by-question basis.).
IV. Production of Records
A. The Fifth Amendment protects against production of documents when the act of
production is “testimonial.”
o Goldberg v. State, 95 S.W.3d 345 (Tex. App.—Houston [1st Dist.], 2002), cert. denied,
540 U.S. 1190 (2004).
The Fifth Amendment does not independently proscribe the compelled
production of every sort of incriminating evidence but only applies when the
accused is compelled to make a testimonial communication that is incriminating.
If a party asserting a Fifth Amendment privilege in the contents of a document
has voluntarily compiled the document, no compulsion is present and the
contents of the document are not privileged.
Not cited for this point.
o United States v. Hubbell, 530 U.S. 27 (2000) (compelled testimony that communicates
information that may lead to incriminating evidence is privileged even if the
information itself is not inculpatory).
o Fisher v. United States, 425 U.S. 391 (1976).
U.S. Const. amend. V does not independently proscribe the compelled
production of every sort of incriminating evidence, but applies only when the
accused is compelled to make a testimonial communication that is
The privilege against self-incrimination protects a person only against being
incriminated by his own compelled testimonial communications.
This case is cited extensively.
o Production is testimonial when it amounts to the witness‘ assurance, compelled as an
incident of the process, that the articles produced are the ones demanded (i.e. vouching
for their genuineness, producing the documents would admit the documents existed or
were in defendant‘s possession).
Goldberg v. State, 95 S.W.3d 345 (Tex. App.—Houston [1st Dist.], 2002), cert.
denied, 540 U.S. 1190 (2004).
A party is privileged from producing evidence against him but not from
its production. (citing Johnson v. United States, 228 U.S. 457, 458
(1913)). This principle recognizes that the protection afforded by the
Self-Incrimination Clause of the Fifth Amendment adheres basically to
the person, not to information that may incriminate him. Thus, although
the Fifth Amendment may protect an individual from complying with a
subpoena for the production of his personal records in his possession
because the very act of production may constitute a compulsory
authentication of incriminating information, a seizure of the same
materials by law enforcement officers differs in a crucial respect; the
individual against whom the search is directed is not required to aid in
the discovery, production, or authentication of incriminating evidence.
United States v. Hubbell, 530 U.S. 27 (2000).
The act of producing documents in response to a subpoena may have a
compelled testimonial aspect. The act of production itself may implicitly
communicate statements of fact. By producing documents in compliance
with a subpoena, the witness would admit that the papers existed, were in
his possession or control, and were authentic. Moreover, when the
custodian of documents responds to a subpoena, he may be compelled to
take the witness stand and answer questions designed to determine
whether he has produced everything demanded by the subpoena. The
answers to those questions, as well as the act of production itself, may
certainly communicate information about the existence, custody, and
authenticity of the documents. Whether the constitutional privilege
protects the answers to such questions, or protects the act of production
itself, is a question that is distinct from the question whether the
unprotected contents of the documents themselves are incriminating.
The U.S. Const. amend. V privilege against self-incrimination applies to
acts that imply assertions of fact. In order to be testimonial, an accused's
communication must itself, explicitly or implicitly, relate a factual
assertion or disclose information. Only then is a person compelled to be
a witness against himself.
Frierson v. City of Terrell, 2003 U.S. Dist. LEXIS 26443.
Cites Hubbell as saying: ―The Supreme Court explained that ‗the act of
producing documents in response to a subpoena may have a compelled
testimonial aspect. We have held that ―the act of production‖ itself may
implicitly communicate ―statements of fact.‖ By ―producing documents
in compliance with a subpoena, the witness would admit that the papers
existed, were in his possession or control, and were authentic.‖‘ This
‗act of production‘ doctrine, as it is commonly referred to, clarifies that
the act of responding to a compelled request may have a privileged
testimonial effect if it ‗could provide a prosecutor with a lead to
incriminating evidence, or a ―link in the chain of evidence needed to
B. Production is not testimonial when…
Fisher v. United States, 425 U.S. 391 (1976).
Production is not testimonial if the document was not prepared by the
witness. For example: The accountant's workpapers are not the
taxpayer's. They were not prepared by the taxpayer, and they contain no
testimonial declarations by him. Furthermore, as far as this record
demonstrates, the preparation of all of the papers sought in these cases
was wholly voluntary, and they cannot be said to contain compelled
testimonial evidence, either of the taxpayers or of anyone else. The
taxpayer cannot avoid compliance with the subpoena merely by asserting
that the item of evidence which he is required to produce contains
incriminating writing, whether his own or that of someone else.
V. Thompson Memo
Dilemma faced is cooperation with government helps avoid prosecution, but does not stop
private parties from using the information given through this voluntary disclosure.
o Most important factor: strength of government‘s evidence of criminal conduct.
VI. INVESTIGATIONS BY THE SECURITIES AND EXCHANGE
COMMISSION AND THE TEXAS STATE SECURITIES BOARD
A. Overview - SEC
The U.S. Securities and Exchange Commission (―SEC‖) has broad authority to investigate actual
or potential violations of federal securities laws. The SEC also has broad authority to determine the
scope of its investigations and the persons and entities subject to investigation. The following statutes
authorize the SEC to investigate past, on-going, or prospective violations of federal securities laws,
SEC rules or regulations, and self–regulatory organizations rules:
Section 20(a) of the Securities Act of 1933 (the ―Securities Act‖);
Section 8(e) of the Securities Act;
Section 21(a)(1) of the Securities Exchange Act of 1934 (the ―Exchange Act‖);
Section 21(a)(2) of the Exchange Act;
Section 209(a) of the Investment Advisors Act of 1940 (the ―Advisers Act‖);
Section 42(a) of the Investment Company Act of 1940 (the ―Investment Company
Section 18(a) of the Public Utility Holding Company Act of 1935 (the ―Public Utility
Holding Company Act‖);
Section 321(a) of the Trust Indenture Act of 1939 (the ―Trust Indenture Act‖); and
portions of the Sarbanes-Oxley Act.
1. Informal Investigations
An SEC investigation often begins as an ―informal investigation‖ wherein SEC attorneys and staff
rely on the cooperation of individuals and companies to obtain information, documents, and testimony.
Informal investigations are non-public, and the SEC cannot administer oaths or affirmations as it can in
However, the SEC often conducts interviews with a court reporter and the production of a
transcript. If the witness consents to be placed under oath, resulting false testimony may be subject to
punishment under the federal perjury law, 18 U.S.C. §1621. Also, technically, 18 U.S.C. §1001, false
statements to government officials, applies whether a witness is under oath or not.
2. Formal Investigations
To begin a formal investigation, the SEC will obtain permission from the Commissioners in
Washington, D.C. through the issuance of a formal order of investigation. The formal order describes
the nature of the investigation, and it grants their attorneys and staff the power to issue subpoenas and
to administer oaths. These are generally also non-public. Under a formal investigation, the SEC can
subpoena documents and witness statements, administer oaths, compel production of documents, and
Right to counsel in a formal investigation
Bona fide attorney-client relationship
C. Parallel Proceedings
SEC investigations often occur simultaneously with Department of Justice criminal investigations,
as well as other federal and state agencies. The securities laws contemplate communication between
the SEC and DOJ, and these laws expressly authorize the SEC to transfer evidence of violations to the
U.S. Attorney‘s Office/Department of Justice. Conversely, the SEC at times receives information from
other agencies that is relevant to the investigation.
Federal courts have discretion to stay civil proceedings pending the outcome of parallel criminal
proceedings. Courts usually do not stay a civil proceeding at the request of a defendant, but they
routinely stay the discovery process of parallel civil proceedings at the request of the U.S. Attorney‘s
Office in order to prevent a defendant from using the civil discovery process to obtain discovery that
might not be available in the criminal investigation.
D. Potential Parallel Proceedings Concerns
The following are common procedures or hearings that create potential concerns about parallel
criminal investigations or cases, wherein the defendant/target has to decide whether 1) to provide
testimony/statements and/or records, or 2) to assert the Fifth Amendment privilege against self-
1. Request for voluntary production – target has to decide whether or not to provide testimony and
records and thus cooperate in the hope that he/she will not only get concessions on the SEC
suit, but also that he/she will not be prosecuted as well.
2. Administrative ―testimony‖ – target is subpoenaed to provide statements under oath in direct
response to questions pertaining to the subject matter of the investigation.
3. Administrative subpoena for records – target is subpoenaed to provide records pertaining to the
transactions or area of investigation.
4. Temporary restraining order hearings – defendant/target is sued by the SEC and soon thereafter
a restraining order hearing is held regarding bank accounts and other assets of which the
defendant or his entity have or had control.
5. ―Wells‖ submission – A target is given the opportunity to present information or evidence as to
why the SEC should not sue him/her after an investigation is underway. This submission
involves presenting copies of records or other information, a narrative of events, and possibly
6. Receivership hearings – Hearings regarding the use of funds or other assets that a court-
appointed receiver would attempt to either place into the receivership, repatriate the assets,
and/or inquire into the nature of transactions and source of assets.
7. Depositions – During the litigation of the suit and on the record.
8. Administrative hearings – Administrative actions are often used for lower level violations or
actions to bar an officer or director of a publicly traded company from functioning ever again
as such. Administrative actions are also used for attempts to bar a person from participating in
the industry (e.g., broker-dealer bar).
VII. Overview – Texas State Securities Board
The Texas State Securities Board (―SSB‖) has somewhat similar proceedings to the SEC, but the
SSB is more directly involved in conducting investigations for the purpose of referring those for
The SSB has attorneys dedicated to investigating cases for possible criminal prosecution and those
who are dedicated to representing the State in civil and administrative actions. Although the SSB
creates a ―Chinese wall‖ between these two sets of attorneys, any statements made by a
defendant/target or any records produced by a defendant/target could potentially be u sed in a criminal
A. Whether to assert the Fifth Amendment privilege against self-incrimination, or whether one
will have to do so, is dependent on a variety of factors:
1. Is there indeed a parallel criminal investigation or case to your civil action?
2. If no criminal investigation or case exists, is it likely that it might?
3. Can a stay of the civil proceedings be achieved until the criminal case has run its course?
4. Will asserting the Fifth Amendment privilege create an adverse inference in the civil action that
will be crucial, or is allowing a ruling against your client in the civil matter at-hand worth the
risk of potentially creating admissions if a criminal investigation develops?
5. Recall that the Fifth Amendment privilege applies to individuals and sole proprietorships, not
corporations or collective entities.
6. If a potential or on-going criminal case is based upon solid evidence against your client,
consider a proffer agreement with the prosecutor‘s office with an agreement to effectively stay
the civil matter while negotiating the criminal matter.
B. In summary, always try to avoid providing testimony/statements or potentially harmful
productions of records when a criminal case is either on-going or quite possible. If you cannot avoid
such testimony or productions, then assess whether to assert the Fifth Amendment privilege.
Regardless of the ultimate outcome, ALWAYS KEEP IN MIND THAT THESE TYPES OF
CASES COULD POTENTIALLY BE REFERRED FOR CRIMINAL PROSECUTION.