5-3.1 PRIOR APPROVAL FOR CERTAIN REFERRALS
5-3.1.1 Public Officials and Private Trustees or Their Employees
Where the subject of criminal conduct is a public official, a private trustee, or an employee of a private trustee, the United States Trustee must notify the Deputy Director in writing, with pertinent details on the matter, and provide a copy to the General Counsel and Assistant Director for Review and Oversight. Thereafter, the United States Trustee should furnish copies of all correspondence related to the matter to the Deputy Director, the General Counsel, and the Assistant Director for Review and Oversight. The United States Attorney must also be notified of the existence of any inquiry into the conduct of such individuals.
5-3.1.2 Referrals Outside the Federal System
The General Counsel must be notified prior to any referral being made outside of the federal system.
5-3.2 PRIOR CONSULTATION WITH THE UNITED STATES ATTORNEY
Prior consultation with the United States Attorney regarding the referral process, preferably in the context of a working group or task force, is valuable to the development of an effective working relationship.(See USTM 5.18.) It is important to understand the level of available resources, the types of cases that are of particular interest, and any overriding enforcement policies, such as a threshold dollar loss, that are considered by the United States Attorney. While these considerations should not influence the number and type of referrals made, they can help focus resources on those referrals that are most likely to be prosecuted.
5-3.2.1 Formulating Mutual Policies on Referrals
Under some circumstances, it may be advisable to formalize an understanding with the United States Attorney and other investigative agencies as to what and how matters should be referred. For example, it may be appropriate to prepare a detailed referral package only in cases where the matter meets the minimum enforcement guidelines of the United States Attorney. Cases that fall below that threshold may be sent over with a less detailed referral, as appropriate. Copies of all referrals should normally be sent to the appropriate investigative agency(s) at the same time they are sent to the United States Attorney.
Consideration may be given to establishing different types or classes of referrals, with a description of the type of referral appropriate for each. Some different classes of referrals that might be considered include:
Class 1: The United States Trustee considers the case a priority and has already conducted an extensive civil investigation that has resulted in significant evidence of a federal crime. Class 1 cases may also involve special concerns such as trustee defalcation, misuse of funds by professionals, or other particularly serious law violations. The United States Trustee should request the appropriate investigative agency and the United States Attorney to give the case priority, consistent with resource availability.Class 2: The complaint sets forth sufficient grounds to warrant further investigation and is accompanied by supporting documents and other relevant evidence, but the case does not meet the "highest priority" standard. The United States Trustee should prepare a detailed referral memorandum to the United States Attorney.
Class 3: The complaint either falls below established guidelines or lacks available supporting evidence. The United States Trustee should prepare a summary cover sheet and forward the matter to the United States Attorney and the appropriate investigative agency(s), along with a statement that the matter is furnished for their information and that the United States Trustee will consider the matter declined unless the United States Trustee is notified otherwise.
5-3.2.2 Consultation Regarding a Particular Referral
Where the referral involves a matter of particular concern to the United States Trustee, it may be beneficial to inform the United States Attorney and/or the Federal Bureau of Investigation of the existence of an investigation prior to preparing the referral package. Prior consultation can serve several valuable purposes -- it can determine the level of available investigatory and prosecutorial resources and encourage a reallocation of resources if necessary. It can also stimulate interest in the case by explaining its significance in the context of the bankruptcy system. Finally, if it appears that prosecution is likely, special effort may be devoted to preparation of the referral package.
5-3.3 THE REFERRAL PACKAGE
5-3.3.1 Tailoring the Package
The level of detail in a referral package may vary. The most complete packages should be prepared for those matters that are of high priority to the United States Trustee and are likely to result in prosecution. Other cases may warrant an abbreviated package or simply a cover sheet or form referral. Tailoring the package to the matter may increase the number of referrals, as well as help focus enforcement resources on those that are of the highest priority. The package described in the following paragraphs is appropriate for priority referrals.
5-3.3.2 Introductory Paragraph
The referral should begin with a brief introductory paragraph summarizing the main crimes involved. It is important to get to the crux of the charges right away, reserving a more complete explanation of the complexities and procedural history for the full narrative. Charges should be labeled in criminal terms, such as "concealment of assets" or "false statements," rather than in terms of civil issues such as "multiple filings" or "bad faith filing."
5-3.3.3 The Narrative
The most important part of the referral package is the narrative description of the facts. The narrative should read like a story, weaving the facts with the law to explain not only what happened, but the significance of the acts described. The narrative should address the nature and amount of loss, where appropriate. If no monetary value can be established, the significance of the crime to the bankruptcy process should be explained.
The narrative should identify the proposed defendant(s), as well as relevant witnesses and their relation to the facts, from which their potential testimony and significance to the case can be easily determined. It should also clarify any aggravating factors, such as the abuse of a position of trust or conduct undermining the integrity of the bankruptcy system, that may justify prosecution regardless of the amount of loss.
To prove a bankruptcy crime, the prosecution must show a "knowing and fraudulent" intent; therefore, the narrative should address the specific intent requirements of the alleged violation. A defendant's knowledge and intent may be ascertained from circumstantial evidence, United States v. Martin, 408 F.2d 949, 954 (7th Cir.), cert. denied, 396 U.S. 824 (1969); but, it is important to articulate what factors indicate the subject intended to defraud.
The narrative should also indicate the potential defenses that are likely to be available. Though it is not necessary to resolve an issue or any discrepancy in versions of an event, it is important to fully disclose problems or concerns. The return of a concealed asset or the fact that assets in question were ultimately used to pay creditors is not a defense to a bankruptcy crime, United States v. Klupt, 475 F.2d 1015, 1018 (2d Cir. 1973); however, it is a factor that would be considered in determining whether to bring a criminal prosecution.
5-3.3.4 Summary Information
The narrative portion of the referral should be followed by summary information, that includes:
- A list of proposed defendants, including, if possible, their addresses; telephone numbers; and the names, addresses, and telephone numbers of their respective attorneys.
- A list of potential witnesses, including, if possible, their addresses; telephone numbers; and the names, addresses, and telephone numbers of their respective attorneys, if any.
- An estimate of the amount of loss involved and/or damage to the bankruptcy system, if not covered in the narrative.
- Any information regarding previous investigations, referrals, reconstructions, etc., done in connection with the case by either the United States Trustee or other individuals or agencies.
- Any relevant exhibits, such as copies of the petition and schedules, related correspondence, tapes or transcripts of the section 341 meeting or 2004 examination, etc. Where exhibits are lengthy, may be sufficient to identify what exhibits are available; however, attaching a key exhibit, such as a deposition or witness statement, may be beneficial.
5-3.3.5 General Information
The referral memorandum should conclude by providing the following general information:
- The name, address, and telephone number of the contact person in the United States Trustee's office for the referral. This should be an attorney.
- A request that the United States Attorney and the investigative agency provide the name of the Assistant United States Attorney and agent assigned to the referral.
5-3.3.6 Other Procedural Requirements
All referrals should be personally reviewed and signed by the Assistant United States Trustee in charge of an office. In the absence of an Assistant, the United States Trustee may designate a senior attorney advisor to review and sign referrals.
Where the subject of a criminal referral is a public official, a private trustee, or an employee of a private trustee, or a referral is made outside the federal system, the General Counsel should be consulted.(See USTM 5-3.1.1, 5-3.1.2 , and 5-7.)
A copy of any referral that does not assume an immediate declination (i.e., a class 3 referral) should be provided (without exhibits) simultaneously to the Executive Office for United States Trustees, Attention: General Counsel; and to Special Assistant United States Trustee, Joe B. Brown, in the Nashville, Tennessee, office.