Fifth Amendment

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					         RELATED CRIMINAL AND CIVIL SECURITIES PROCEEDINGS:

              PARALLEL PROCEEDINGS – CIVIL ACTIONS, CRIMINAL CASES
                          AND THE FIFTH AMENDMENT

                                             John R. Teakell
                                             Milner & Finn
                                               April 2006


I.       The Fifth Amendment Privilege Application

A.      Generally
        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
       embarrassment.
      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.—
         Beaumont, 2005).
             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).

C.       Immunity
        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).

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            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.

D.       Dismissal
        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.
                        art. 32.02.
                     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
                        establish immunity.‖
                     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

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                        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
                        U.S. 974.
                      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.

E.       Compulsion
        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

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                    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.
            App. 1972)).
                 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.—
                    Dallas, 1984)).
                 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
            Cir. 1952)).
                 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

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                       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
                       incriminate.
            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
                      civil case).

            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
                    case).
                 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
         differently.
                       Harrell v. DCS Equip. Leasing Corp., 951 F.2d 1453 (5th Cir. 1992)

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                  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
         events?).
              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
                                         case.
                             o In re CFS Sec. Fraud Litig., 256 F.Supp.2d 1227 (N.D. Okla.
                                 2003).
                                      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

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                              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
    investigation.
          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).



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                                              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
                                               privilege "costly."
                                  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
                                      Antonio, 2002).
                                           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
                                               witness.

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.



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               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).


     III.      Waiver

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.


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                           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
        proceeding.‖
            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
                       including:
                    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
                  incriminating.
               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).

                                      10
                 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
                  prosecute.‖‘

B. Production is not testimonial when…
       Fisher v. United States, 425 U.S. 391 (1976).


                                11
                                 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
                  Act‖);
                 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.

          B. Investigations

1.        Informal Investigations




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    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
formal investigations.

    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
take ―testimony.‖

             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-
incrimination:

     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.



                                             13
   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
      affidavits.

   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
criminal prosecution.

    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
investigation.




                                            14
VIII. CONCLUSION

    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.




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