BROKER RISK MANAGEMENT
WEEKLY PRACTICE TIP
Dealing with Law Enforcement Officers
There are an increasing number of law enforcement actions being taken in the wake of mortgage fraud, short sale fraud, properties purchased with drug or other illegally received money, etc. In many of those situations, law enforcement officers or prosecutors, both state and federal, (collectively referred to as “LEO’s”) seek to obtain real estate brokerage files and to talk to real estate brokers and agents who may have been involved in those files. This is true even when that broker or agent may have been unaware of the illegal activity, or even be on the other side of the transaction.
In such cases, the LEO will often call the broker or agent and start asking questions, or will want to come into the office for an interview.
Regarding broker files, usually the inquiry will come in the form of a phone call from the LEO asking to see the broker file or to obtain access to it. Occasionally, the LEO’s will call to announce that they will be arriving at the broker office with a subpoena for the files. Or, they may even just show up at the broker’s office with the subpoena and demand instant access.
There are a number of precautionary steps that brokers and agents should take in such circumstances:
1. If a LEO phones you, don’t assume this is a legitimate call. Ask for the person’s name, position, organization (District Attorney, FBI, police, etc.) and their phone number. Then, tell them that you will call them back.
2. Check with your broker or manager as to what to do. Your broker or manager should then be on the return call to the LEO. Look up the office number for that organization and call that public number instead of the number given to you as that could be a fake number by a person pretending to be the LEO.
3. Be courteous, but state that you are not allowed to divulge confidential client information. You may disclose that you represented a person on a transaction (as that is likely already non-confidential information in the MLS) and any information that is in the public domain (sale price, date, etc.)
4. Advise the LEO that you are willing to cooperate but that, because of confidentiality requirements, they will need to have a subpoena to review or obtain copies of any file.
5. If you anticipate a subpoena will be served on a particular file, the broker or manager should obtain and review the file to see if there is any attorney-client privileged information in the file. That information should be removed and the LEO should be informed that such information has been deleted and they should talk to your brokerage’s attorney regarding those items if they want to see them. Call your attorney to discuss the impending arrival of the LEO.
6. It is best to make a copy of the file so that if the LEO takes the original file, you will have a copy. It is often difficult to get subpoenaed files returned.
7. If the LEO shows up at the brokerage office asking to see files, they must be referred to the manager or broker. Ask to see their official ID and to see the subpoena. If they want to interview anyone, advise them that they may do so only with legal counsel present. While the target of the investigation may be the other broker or one of the principals, LEO’s are often looking for evidence of a conspiracy to commit the alleged illegal act which they are investigating.
8. Do not authorize a broader search. If the subpoena is for a particular file, that is all that the LEO is entitled to. Authorizing a search beyond the reach of the subpoena could be violating client confidential information.
9. If the LEO arrives unexpectedly, ask for a delay so that the appropriate personnel may be assembled, such as managers, broker and perhaps legal counsel. The LEO doesn’t have to do so, but they may agree to such a delay.
10. Call your litigation defense attorney. Tell the LEO that the attorney is on the way or that the attorney wants to talk to the LEO on the phone.
11. Brokers and managers should train their front desk staff to follow these guidelines if a LEO shows up at the office.
DO NOT FORWARD TO CLIENTS. This Weekly Practice Tip is for the exclusive use of clients of Broker Risk Management and their agents. It may not be reproduced or distributed without the express written consent of Broker Risk Management. The advice and recommendations contained herein are not necessarily indicative of standards of care in the industry, but rather are intended to suggest good risk management practices.
© Copyright Broker Risk Management 2011 11/18/11