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The Perils of Blowing the Whistle

We have met with many potential new clients who know about a crime or fraud and are interested in blowing the whistle. Sometimes the client is motivated by a genuine desire to right a perceived wrong, sometimes the client is motivated by the desire to collect an award, and sometimes the client is motivated by the desire to “get ahead of the problem.”

A common misconception these clients have is that if they blow the whistle they will be protected from criminal prosecution. The purpose of this article is to briefly explain how some common whistleblower statutes work, what protections they afford, and a suggested framework for protecting those clients who decide to blow the whistle from criminal prosecution.

Please note that this article is written from the perspective of a criminal defense attorney, not a plaintiff’s attorney. Our interest is in making sure our clients don’t receive their monetary award while sitting in a prison cell.

Overview of Whistleblower Laws

At the federal level, Congress has enacted various whistleblower laws. The main programs for whistleblowers are the False Claims Act (FCA), the SEC Whistleblower Program, IRS Whistleblower Program, and the Whistleblower Protection Act. The FCA, SEC Whistleblower Program, and IRS Whistleblower Program reward individuals who expose fraud and abuse and protect them from retaliation by their employers. The Whistleblower Protection Act protects federal employees who report crimes, fraud, or abuse in their agencies.

In Texas, the main whistleblower laws are the Texas Whistleblower Act and the Texas Medicaid Fraud Prevention Act. The Texas Whistleblower Act protects public employees from retaliation if they blow the whistle on the government agency that employs them. The Texas Medicaid Fraud Prevention Act targets Medicaid fraud and has provisions that allow whistleblowers to expose Medicaid fraud by filing qui tam lawsuits. That law protects whistleblowers and rewards them if Medicaid funds are recovered as a result of their information and assistance.

Whistleblowers often face employer retaliation for reporting their concerns. This retaliation can take many forms—demotion, being fired or sidelined, being blackballed, etc. Most whistleblower laws, both state and federal, contain some sort of anti-retaliation provision. Both Congress and our state legislature recognized that whistleblowers need job protection from the subject of their whistleblower complaint as some may lose their jobs, be demoted, or be blackballed from working in their industry.

Sadly, whistleblowers receive no similar protection from prosecution. Our jails are filled with individuals waiting to be released so they can collect their whistleblower awards. Often these same individuals believed that they would be protected, and that if they “got ahead of the problem” they could avoid prosecution.

Obtaining Immunity for Your Client

The only way to protect your clients from getting themselves indicted is to carefully negotiate an immunity agreement with the Government. Immunity agreements both formal and informal can be of two varieties.

First, a prosecutor can promise “use immunity.” “Use and derivative use immunity” protects the witness from the government’s use of the witness’ testimony and any leads or fruits that may be derived from it.

Second, a prosecutor can promise “transactional immunity.” Transactional immunity is broader than use immunity. It gives full immunity from prosecution for the offense to which the testimony relates.

Statutory immunity, also known as formal immunity, should be distinguished from informal immunity. The latter term, often referred to as “pocket immunity” or “letter immunity,” is immunity conferred by agreement with the witness. For example, the government and a cooperating witness might enter into a non-prosecution agreement if the defendant or witness agrees to cooperate. Testimony given under informal immunity is not compelled testimony, but is testimony pursuant to an agreement and thus voluntary. The principles of contract law apply in determining the scope of informal immunity. United States v. Plummer, 941 F.2d 799, 802 (9th Cir. 1991); United States v. Britt, 917 F.2d 353 (8th Cir. 1990), cert. denied, 498 U.S. 1090; United States v. Camp, 72 F.3d 759 (9th Cir. 1996) [replacing 58 F.3d 491 (9th Cir. 1996)].

Grants of informal immunity that do not expressly prohibit the government’s derivative use of the witness’ testimony will be construed to prohibit such derivative use. Plummer, supra. But a grant of informal immunity that expressly provides for derivative use of the testimony by the government will be upheld. United States v. Lyons, 670 F.2d 77, 80 (7th Cir. 1982), cert. denied, 457 U.S. 1136.

An important difference between statutory/formal immunity and informal immunity is that the latter is not binding upon non-signatories. This follows from the fact that the local prosecutor representing the state is normally not a party to the agreement between the witness and the Federal prosecutor, and thus cannot be contractually bound by the Federal prosecutor’s agreements—and vice versa.

The Attorney Proffer

One method we have found to be effective in representing individuals who have knowledge of criminal activity is the attorney proffer. An attorney proffer is nothing more than an off-the-record discussion between the lawyer and the government in which the attorney tells the government what he believes his client would be able to testify to. The point of the discussion is for the government to get some sense of the information being offered and the role played by the client so that it may make an informed choice to grant or withhold immunity. The advantage of the attorney proffer is that the information given to the government by the attorney cannot be used directly against the client as it is the defense attorney’s opinion as to what his client may know. Obviously some level of trust must exist between the criminal defense attorney and the prosecutor for this to work, and this is where the attorney’s previous relationship with the prosecutor becomes very important. But notwithstanding this trust, the defense attorney should consider not identifying his client or speaking in more than hypothetical terms until an agreement is reached.

Stats Show Racial Inequities for Organized Retail Theft Arrests Statewide

Let’s say I wanted to steal an Xbox from Fry’s (or any other retail store). Maybe it’s for a thrill, a dare, voices in my head, or maybe I just want to eat Cheetos all day and play video games on my sofa. Whatever the reason, it is unimportant.

I have committed theft—this is obvious. But, were you aware I also committed Organized Retail Theft (“ORT”)? TEX. PEN. C. 31.16(b) provides:

A person commits an offense if the person intentionally conducts, promotes, or facilitates an activity in which the person receives, possesses, conceals, stores, barters, sells or disposal of . . . (1) stolen retail merchandise.

Arrests for ORT under these circumstances aren’t theoretical, either. Dr. Michael Braun is a statistics professor from SMU’s Cox School of Business. He recently completed a comprehensive study published in the Journal of Empirical Legal Studies (JELS) which found not only were there thousands and thousands of arrests made for organized retail theft where the amount stolen was consistent with ordinary shoplifting—but also racial minorities are bearing a disproportional share of the arrests.

Dr. Braun studied over 110,000 organized retail theft arrests and ordinary thefts through open records from police agencies around the state. He found an African American is twice as likely as a white person to be arrested for ORT. His research found that African-American females are 160% as likely as a white person to be arrested for ORT. At least 30 police agencies showed racial disparities in their arrests based on Dr. Braun’s statistics and research.

There were unsuccessful attempts made this past session in the Texas House and Senate to make the Penal Code consistent with other states’ treatment of Organized Retail Theft. State Representative Jessica Gonzalez (D–Dallas) and State Senator Royce West (D–Dallas) filed bills in the House and Senate to amend the definition of ORT. However, Lieutenant Governor Patrick did not allow Senator West’s bill to reach the Senate Floor, thereby effectively killing it for this session. The proposed fix would install a $2,500 threshold to ORT amounts and would also require the stolen property to be possessed with the intent for the property to be re-distributed.

The Court of Criminal Appeals has weighed in on the issue, too, holding ordinary shoplifting, in and of itself, cannot be organized retail theft even with the bizarre language under 31.16(b). See Lang v. State, 561 S.W.3d 174 (Tex. Crim. App. 11/22/2018). This opinion expounds the need for the statute to be fixed.

Dr. Braun’s full article can be read at the following link: shorturl.at/iuET5.

Voting Rights of Felons

A felony conviction may result in the loss of voting rights in Texas… But not forever.

A person who is convicted of a felony in the State of Texas is not eligible to register to vote—or to vote in an election if already registered—until he or she has successfully completed his or her felony sentence.

This includes any term of incarceration, parole, supervision, period of probation, or pardon.1 He or she must also register to vote at least 30 days prior to an election date to be eligible.2 Voting illegally in Texas is a second-degree felony punishable by up to 20 years in prison.3

Can some persons adjudicated of or charged with a felony vote?

Yes. A qualified registered voter without a “final felony conviction” or adjudication of guilt may vote under certain circumstances:

A conviction on appeal is not considered a final felony conviction. A person confined in jail “pending trial or an appeal of a conviction after denial of bail or without bail, or where release on bail before election day is unlikely” may apply for a ballot by mail.4

“Deferred adjudication” is not considered a final felony conviction.5

“Mere prosecution, indictment, or other criminal procedures leading up to, but not yet resulting in the final conviction, are not final felony convictions.”6

In 1997, George W. Bush, as Governor of Texas, also restored voting rights to ex-offenders upon completing their felony sentences when he signed legislation that eliminated the two-year waiting period for felons, after conclusion of their parole, to vote.

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