## Facts

- The SEC opened a civil securities-fraud investigation into FLIR Systems, Inc. and its executives J. Kenneth Stringer III, J. Mark Samper, and William N. Martin.
- Within weeks, the SEC met with the U.S. Attorney’s Office and the FBI to coordinate with a potential criminal investigation; DOJ opened a parallel criminal probe that remained covert for an extended period.
- The SEC conducted the visible civil investigation, issued subpoenas, and collected testimony and documents, while sharing materials with DOJ/FBI and coordinating investigative steps.
- SEC subpoenas included Form 1662, which warned that information obtained could be shared with other agencies and used in civil, administrative, or criminal proceedings, and advised witnesses of Fifth Amendment rights.
- Defendants cooperated with the SEC, produced documents, and gave deposition testimony without invoking the Fifth Amendment.
- At Stringer’s deposition, an SEC attorney gave evasive but literally true answers to questions about whether DOJ was also investigating; the SEC did not affirmatively disclose the existence or scope of the criminal investigation.
- After criminal indictments issued, the district court dismissed the indictments and suppressed SEC-derived evidence, finding the civil process had been used as a “stalking horse” in a manner the court deemed deceitful and violative of due process.
- The United States appealed; the Ninth Circuit accepted the district court’s factual findings but reviewed de novo whether those facts constituted constitutional violations or justified supervisory-power sanctions.

## Issues

1. Whether coordinated parallel SEC civil and covert DOJ criminal investigations, without affirmative disclosure of the criminal probe, violated the Fourth or Fifth Amendments or due process.
2. Whether the government’s conduct amounted to deceit or affirmative misrepresentation warranting dismissal of the indictments or suppression of evidence under supervisory powers.

## Decision

- The Ninth Circuit vacated the district court’s dismissal and suppression orders and remanded for further proceedings.
- The court held that, even accepting the district court’s factual findings, the government’s conduct did not violate the Fourth or Fifth Amendments.
- The court found no actionable deceit because Form 1662 disclosed that SEC-obtained information could be shared and used in criminal proceedings.
- The court held that evasive, non-informative responses and nondisclosure of the criminal investigation were not affirmative misrepresentations.
- The court concluded that the “rare” and “drastic” remedies of dismissal and wholesale suppression were not justified on these facts.

## Legal Principles

- Parallel civil and criminal investigations, including inter-agency cooperation and information sharing, are generally permissible.
- Due process concerns arise when the government uses civil processes in bad faith solely as a pretext to obtain criminal evidence through affirmative misrepresentation or coercion.
- Written notice that information may be used in criminal proceedings (such as SEC Form 1662) can defeat claims that cooperation was induced by deception.
- Fifth Amendment violations require improper compulsion; voluntary cooperation after notice of the right to refuse incriminating testimony does not establish compulsion.
- Supervisory-power sanctions like dismissal of an indictment or broad suppression are extraordinary and require egregious government misconduct, typically involving affirmative deception or comparable wrongdoing.

## Conclusion

The Ninth Circuit held that coordinated SEC–DOJ parallel investigations, even with a covert criminal component and limited disclosure beyond Form 1662, did not amount to constitutional misconduct or affirmative deceit justifying dismissal of indictments or suppression of SEC-derived evidence.


United States v. Stringer, 535 F.3d 929 (9th Cir. 2008)