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Before the First Interview
In a modern-day investigation, the executive alone with a cell phone can be the company’s biggest risk.
BY LANCE A. CLARKE
Heading into 2027, investigations still announce themselves in familiar ways: a subpoena, a whistleblower, a call from a regulator. They are won or lost earlier, and elsewhere: in an executive’s late-night questions to an AI tool, or in a chat that deleted itself before anyone thought to save it. The facts that decide the outcome are formed long before anyone is interviewed. While the government has made it easier to come forward, the evidence has become harder to preserve.
The New Enforcement Bargain
The Department’s first department-wide Corporate Enforcement and Voluntary Self-Disclosure Policy, issued March 10, 2026, covers all corporate criminal matters except antitrust offenses. U.S. Dep’t of Justice, Corporate Enforcement and Voluntary Self-Disclosure Policy (Mar. 10, 2026). The trade it offers:
- What the company gets. A declination, absent aggravating circumstances, with the company paying only disgorgement, forfeiture, and restitution.
- What it takes. Self-disclosure, remediation, and cooperation that discloses all facts and non-privileged evidence about the individuals involved in the misconduct.
- How long it has. A whistleblower who reports internally and then goes to the Department does not by itself cost the company its declination, but the company must self-report as soon as reasonably practicable, and in no event more than 120 days after that internal report, while meeting the policy’s other conditions, including reporting before an imminent threat of disclosure or government investigation. The 120 days is a ceiling, not a grace period.
- Who it has to tell. The report has to go to the Department of Justice. Telling a federal regulator, a state or local government, or a civil enforcement agency generally does not count.
On July 29, 2026, the Department’s new National Fraud Enforcement Division declined to prosecute Campus Eye Management, a management services organization for an eye care practice, over a Medicare testing and kickback scheme, the Department’s first health care declination under the policy. The company self-disclosed, cooperated, revised certain billing, payment, and compensation policies, improved its compliance program, and agreed to pay $1 million back to victims. The same day, the Department announced a seven-count indictment of the founder, who had become chief executive. Press Release, U.S. Dep’t of Justice, Fraud Division Resolves Fraud Investigation of Eye Care Group Under New Corporate Enforcement Policy; Health Care Executive Charged for Alleged Fraud and Kickbacks (July 29, 2026). The company walked away; its founder did not.
Before Anyone Thought to Save It
Much of the business now happens where the company cannot see it: messaging apps set to delete themselves and personal phones that never touch a company server. Courts have begun treating a change to the deletion setting as a choice made at a moment that can be dated.
In May 2026, the Delaware Court of Chancery found that spoliation occurred when WWE’s controlling stockholder, Vince McMahon, and senior officers changed Signal’s auto-delete settings for individual chats to periods measured in hours or less, after litigation holds had already been issued. It found they acted recklessly at a minimum and presumed a limited set of facts about the conduct and motivations of two of them to be true, rebuttable only by clear and convincing evidence. In re World Wrestling Entm’t, Inc. Merger Litig., Consol. C.A. No. 2023-1166-JTL (Del. Ch. May 26, 2026). The case settled for $147.5 million, subject to court approval.
Where that leaves the general counsel:
- The duty to preserve can attach before any notice is sent.
- Once the duty attaches, a convenience-based setting can become the fact against which everything else is read.
- Once the messages are gone, the company argues about what they said, with no way to show it.
- In federal court, intent to deprive an opponent of the information’s use in the litigation allows a judge to instruct the jury that it may or must presume the lost messages were unfavorable. In Chancery, without a jury, the court may impose the presumption itself, on recklessness as well as intent. Fed. R. Civ. P. 37(e)(2)(B); Del. Ct. Ch. R. 37(e)(2).
Few general counsel thought of asking what deletion settings their employees could turn on. Now they must. The Department has been telling prosecutors to ask for at least two years. U.S. Dep’t of Justice, Evaluation of Corporate Compliance Programs (updated Sept. 2024).
Alone With the Phone
Alone with a phone, an executive can help build the government’s case against the company and against themselves. Company counsel opens with the Upjohn warning: counsel represents the company, not the executive; the privilege is the company’s to control, and the company may waive it and hand the government everything said, without the executive’s consent. See Upjohn Co. v. United States, 449 U.S. 383 (1981); Commodity Futures Trading Comm’n v. Weintraub, 471 U.S. 343 (1985) (waiver rests with management). The executive may have done nothing wrong but has no counsel of their own, only part of the picture, and does what worried people do. Late at night, unable to sleep, they put the worst-case questions to an AI chatbot, one after another. Was this a crime? Was that?
So far, courts have not protected the executive who uses a consumer chatbot alone. In February 2026, Judge Jed S. Rakoff considered a former executive who had retained counsel but, on his own initiative, used a consumer AI platform to develop his defense after a grand jury subpoena. Neither privilege nor work product applied, even though he later shared the output with his lawyers: the tool was not his lawyer, the provider’s privacy policy permitted disclosure, and counsel had not directed the work. United States v. Heppner, No. 25 Cr. 503 (JSR), 2026 WL 436479 (S.D.N.Y. Feb. 17, 2026). A jury has since convicted him.
An innocent question, once typed, can read like consciousness of guilt to a prosecutor who has already begun to form a theory.
When a subpoena arrives, when the company issues a hold notice, or when it issues an Upjohn warning, tell people in plain terms:
- Do not use public AI tools to work through the matter.
- Do not delete anything.
- Nothing here limits your right to speak with the government.
Then decide early which executives need separate counsel and whether indemnification and advancement will cover the cost. Moving an exposed executive to separate counsel early is not a concession. It is how the company takes control of its own record.
The Same Facts Can Tell a Different Story
What the facts mean often depends on who is viewing them. A company’s job is not to tell a better story; it is to make sure the true story is heard first.
The mayor of Portage, Indiana, took $13,000 from a truck dealership that had won $1.1 million in city contracts the year before. The government called it a corrupt reward; he called it a consulting fee. For years, two versions of the same payment ran side by side, and the government’s version prevailed at trial twice. The Supreme Court reversed without choosing between them, holding that 18 U.S.C. § 666 reaches bribes to state and local officials but not gratuities they accept for past acts. Snyder v. United States, 603 U.S. 1 (2024). Ten years after the check, nothing had turned on his account of the payment. Most competing accounts are decided long before a court sees them, without the context that makes an ordinary decision look ordinary.
Supplying that context means a chronology built from documents rather than memory, an early explanation of how the business actually operates, and the hard facts on the table before the government finds them. Cooperation credit turns on disclosing facts, not on waiving privilege or work product. U.S. Dep’t of Justice, Justice Manual § 9-28.720. What the company shares, though, can waive privilege as to the civil plaintiffs who follow. Prosecutors discount advocacy; they credit context they can verify.
What to Watch
- AI and privilege. Protection turns on two questions. Was the use in anticipation of litigation? Work counsel directs has the strongest claim; work the executive does alone has the weakest. Did the tool’s terms keep it confidential? Enterprise terms can; the consumer terms in Heppner did not. Protective orders have begun to restrict the use of public AI tools in discovery. See Jeffries v. Harcros Chems., Inc., No. 2:25-cv-02352 (D. Kan. 2026) (extending the bar to all discovery material, not only confidential); Morgan v. V2X, Inc., No. 1:25-cv-01991 (D. Colo. Mar. 30, 2026) (conditioning use of confidential material on the provider’s contractual limits).
- A new federal fraud division. The National Fraud Enforcement Division is being built to include roughly 500 attorneys and staff and says it will use data analysis to target fraud schemes. Its priorities range from public trust and health care to internal revenue, global trade, and corporate misconduct. Memorandum from Colin M. McDonald, Assistant Att’y Gen., to Nat’l Fraud Enf’t Div. Personnel (Aug. 13, 2026). A company that receives federal funds, bills federal health programs, or moves goods across the border falls within three of those priorities.
- A lower bar in New York. Under General Business Law § 349, the Attorney General used to have to prove deception. Since February 17, 2026, the FAIR Business Practices Act has made unfair and abusive practices independent grounds. A fee that appears late in a purchase flow, or a subscription that is easy to start and hard to cancel, can now be challenged by the Attorney General as unfair without any showing of customer deception. A March 2026 amendment repealed the provision that had eliminated the consumer-oriented requirement. N.Y. Gen. Bus. Law § 349 (McKinney 2026), as amended by 2025 N.Y. Laws ch. 708 and 2026 N.Y. Laws ch. 94.
Prepare for Trial to Avoid One
The standard advice to disclose early, cooperate fully, and remediate is sound. It also applies after the decisions that matter most have already been made. Every document is written once and read later by an adversary seeking the worst version of it. The company’s lawyers have to anticipate that reading while the record is still being made.
The subpoena is no longer the start of the matter; it is the moment the company learns whether it was ready. The record is being built right now, in the ordinary course, before anyone knows it matters. The company that builds the record first controls the narrative. The one that waits answers someone else’s.
Lance A. Clarke is the Managing Partner of Hamilton Clarke, LLP, and a trial lawyer whose practice includes white-collar defense, government investigations, and complex litigation. (212) 729-0952. This article is general commentary on public developments, prepared for informational purposes only. It is not legal advice and does not create an attorney-client relationship. The matters described are public; the firm was not involved in them. In some jurisdictions, this publication may be considered attorney advertising. © 2026 Hamilton Clarke, LLP.