Advice from a convicted felon: How the government investigates and prosecutes white collar criminal cases

I am often asked by people attending my many free fraud presentations about the conduct of government white collar crime investigations. In almost every securities fraud, there is a hierarchy of criminals, which I will call:

• The big fish (usually the CEO)
• The middle fish (usually middle managers)
• The smallest fish (usually non management personnel)
• The government works its way up the criminal hierarchy to get to the biggest fish

The government attempts to flip the smallest fish to get to the biggest fish. The investigators usually attempt to use the testimony of the smallest fish to work their way up the ladder to the middle fish and than use the middle fish to catch the biggest fish. The government uses the smallest fish to turn in the middle fish and the middle fish to turn in the biggest fish. Each level of fish is used as bait by the government to reel in the next higher level of fish.

The government would much rather deep fry the biggest fish than either the middle fish or the smallest fish. The government usually considers the smallest fish, small fry. The government expends enormous time and economic resources to investigate and prosecute white collar crimes. As the government works hard, its hunger grows. After so much work by the government, the smallest fish and the middle fish will hardly fill their appetite. The government wants to deep fry the biggest fish.

The Smallest Fish

The smallest fish have to worry about both the middle fish and the biggest fish distancing itself from them. In turn, the middle fish have to worry about the biggest fish distancing itself from both the smallest fish and the middle fish. The smallest fish need to worry about both the middle fish and the biggest fish leaving them hanging out to dry, all alone in the government's net. The smallest fish should look for any subtle changes in the behavior of both the middle fish and the biggest fish for clues as to whether those other fish (the middle fish and the biggest fish) will let the smallest fish fry. After all, if the government cannot eat one big fish or several middle fish, it can fill its appetite by eating plenty of small fish. As a result, the smallest fish become paranoid as their fears grow about the threat from each level of fish above them and the government right in front of them.

The Middle Fish

The middle fish have the biggest problem. The government usually flips the smallest fish to get to the middle fish that is closest to the biggest fish. The middle fish have to worry that the smallest fish do not turn them in to the government to fry. The middle fish also have to worry that the biggest fish may distance itself from the middle fish and leave them hanging out to dry. The middle fish should be alert for any subtle changes in behavior from both the smallest fish and the biggest fish. If the government cannot eat the biggest fish, it can always fill its appetite with plenty of small fish and several middle fish. It's particularly tough being the middle fish. As a result, the middle fish often becomes paranoid as they worry about the threat from the smallest fish under it, the biggest fish over it, and the government right in the middle.

The Biggest Fish

The government loves to feast on the biggest fish. After so much hard work and effort, the government's hunger can best be filled by eating the biggest fish. The biggest fish has to keep both the middle fish and the smallest fish in line, while distancing itself from the other fish. It is quite a balancing act. If the biggest fish stays too close to the other fish, it risks being cast too early into the government's net. Rather, the biggest fish hopes that the governments hunger is satisfied by eating only the smallest fish and/or the middle fish.

If the biggest fish distances itself from the either the smallest fish or the middle fish, it risks alienating the other fish who do not want to fry instead of the biggest fish. The biggest fish must remain alert for any subtle changes in the behavior of both the smallest fish and the middle fish. The biggest fish knows that the first one of the other smaller fish (the smallest fish and the middle fish) to cooperate with the government usually gets the best deal and does not become part of the festive meal. It is often called a race to the prosecutor's office to be the first fish in, so the winner may be able to cut the best deal with the government and avoid being fried. As a result, the biggest fish often becomes paranoid, as it fears the threat of the smallest fish and the middle fish below it and the government bearing down on it.

The Government

The government often casts a wide net in its investigation of white collar crime. The government investigators use the smallest fish from its net as bait to catch the middle fish and they use the middle fish as bait to catch the big fish. The government prosecutors feed on the paranoia of the little fish, the middle fish, and the biggest fish as they scramble to avoid becoming part of the government's festive meal.

As I said, the government's wants to fry the big fish to satisfy its strong appetite. However, if the biggest fish does not fry, the other fish will fry, instead of the biggest fish. Both the smallest fish and the middle fish would much rather be eaten raw by the government, than to be cooked deep fried.

After all, how many times have you heard criminals refer to government investigations as "fishing expeditions."

Written by:

Sam E. Antar (former Crazy Eddie CFO & convicted felon)

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