A proffer agreement is embodied in written form by a proffer letter. The agreement allows those who may be subject to criminal investigation, either as a witness, or a direct subject of the crime, to “tell their side” of the events, with the (alleged) assurance that what they say will not be used against them later at trial. Usually it is individuals who are directly under investigation that enter into proffer agreements, rather than merely a witness. Typically the witness is the less culpable co-conspirator, a tax return preparer, tax professional (or other advisor), or an employee of a corporation that is under investigation.
The main benefit of making a proffer agreement is the possibility of obtaining an immunity agreement or plea bargain if you are facing an anticipated prosecution. This is (potentially) a big deal—since it might be the only chance you have of avoiding a criminal conviction. The decision whether to proffer is potentially very beneficial—but it should be made after considering all the possible downsides (noted elsewhere in the proffer related Q and A on this website). As mentioned, after a proffer session, the government will often provide you with either (1) a written plea bargain or (2) immunity agreement.
Before entering into a “proffer session”—the actual sit-down with you, your attorney, and the federal prosecutor—you should have carefully planned out exactly what you will proffer, and what the details of the immunity agreement or plea bargain would be. Your “post-proffer game plan” needs to be well thought out for, otherwise, if the prosecutor decides to indict you, you are headed into deep waters.
There are various risks to proffer agreements. We consider four.
(1) To understand the first risk associated with proffer agreements, it is helpful to contrast them with plea bargains and immunity agreements. Unlike these latter agreements, the protection afforded by a proffer agreement is more limited. The government is allowed to use the statements you made during a proffer session “indirectly” or “derivatively”—to conduct subsequent investigations and follow up on leads. Proffer agreements are similar to immunity and plea bargains in the sense that your proffer statements may not (subject to some caveats) be used against you in the government’s “case-in-chief.”
(2) There is another associated risk, but it is more psychological: If you implicate yourself during a proffer session, although you are protected (again—subject to some caveats), the prosecutor’s confidence may be boosted that he is prosecuting the “correct” person—which may lead to more vigorous investigations of you and spur him on.
(3) Usually proffer agreements allow the government to use your statements against you at trial to impeach you, if you testify to something that is inconsistent with your proffer statements—in other words, if you contradict or lie. In fact, not just your inconsistent statement you made from the proffer session, but everything you said will be admitted at trial! This is huge. It is for this reason that it is imperative that your testimony be consistent (and not lie to the prosecutor).
(4) There is a fourth consequence as well (although it is more of a corollary to the last point). Lying during your proffer session can severely hamper a later defense at trial. Suppose you said during your proffer session that you concealed some gross receipts (income); that you failed to report some of it (e.g. you did not report all your income); and suppose also you stated that you did not disclose all your foreign bank accounts overseas (e.g. in a Cayman Islands or a Swiss account), and that you stated (but this time falsely) that you had never visited New York City.
Now suppose further that after the proffer session the matter goes to trial. The situation then becomes very sticky for your defense attorney. Your attorney for example wants to call Susie Q as a witness. But he knows that to do so effectively he must mention that time you and Susie Q were in NYC. He wants to cross-examine one of the government’s witnesses, but that, too, may involve evidence that you visited him in NYC.
What is your attorney to do? On the one hand, he wants to put Susie Q on the stand and cross- examine the government’s witness to provide you with a robust defense. But, on the other hand, he knows that if he does, then the evidence of your NYC visit will come to light—contradicting your proffer statement (!), thus allowing all your proffer statements about your undisclosed gross income and your secret overseas bank account in as evidence at trial. “Bingo!” says the prosecution, “we got him.” Realizing these alternatives, your defense attorney will likely (and wisely) simply refrain from putting Susie Q on the stand and from cross-examining the government’s witness, with the consequence that your defense is weakened.
In summary, the main benefit of entering into a proffer session with the government is that it gives a (likely guilty) taxpayer who committed tax fraud (or some other tax crime) the opportunity to obtain immunity or a plea bargain—and this could be his or her last chance to do so. A taxpayer’s punishment/fine could thereby be drastically reduced by proffering. However, things are not always straightforward, as the decision to proffer needs to be made in light of the potential risks, including: that the government may use statements “indirectly” to conduct further investigations; that it may give the prosecutor newfound motivation to investigate you; that it contains a risk that the government may impeach you using proffer statements which, if successful, would allow all your proffer statements to be admissible (i.e. against you); and it could compromise your legal defense if you are less than truthful during your proffer session. The risks here numerically outweigh the benefits, but the decision whether to proffer should not be made simply on that basis: It is something you and your attorney should discuss.