A proffer agreement is sometimes made in criminal tax cases. It is an agreement, usually written, between a federal prosecutor and an individual who are under criminal investigation. It is designed to give the person some legal protection from criminal prosecution in exchange for giving up information to the government. Basically, it is a sit down with federal prosecutors, and any other attorneys or agents involved in the matter representing agencies involved, for a question and answer session.

That protection, though, is limited. A proffer session is serious business, indeed. The individual deciding to enter into a proffer agreement with a federal prosecutor over income tax issues should always seek experienced criminal tax defense counsel first. In law we are careful to qualify our statements with “sometimes,” “often,” or “it depends.” This is the exception: Individuals should always seek legal counsel prior to deciding to “proffer” with the government.

The U.S. Attorney’s Office usually asks the person under investigation to sign the proffer agreement before the session (interview) starts. The agreement governs the terms of the interview—and when your statements can and cannot be used against you.

There are some possible benefits to proffer agreements (see below). But it is important to know that such agreements do not offer complete immunity. The government typically cannot use the actual statements one makes from a proffer session in the government’s case-in-chief—but it can use the information gleaned to pursue leads, for impeachment purposes (refute a subsequent lie) and other investigations.

  1. When Proffer Statements Can Harm You

Typical proffer agreements may state that if you are (eventually) prosecuted, “no statements made by you during the interview can be used against you in the government’s case-in-chief at trial or for purposes of sentencing, except as provided below” (emphasis added). Notice that last part—“except”. The government builds into the agreement various exceptions where statements used by you can be used against you.

For example, the government typically inserts a clause in the agreement providing that you may be impeached if you make a statement (in a proffer session) that contradicts what you later say in a legal proceeding. It is for this reason that it is important to state your responses very carefully during a proffer session.

The number of exceptions allowing your statements to be used against you varies with each proffer agreement. These agreements are “boiler plate” for the most part because a committee at the Department of Justice crafts them, but there are differences with each jurisdiction. It is important to review the proffer agreement very carefully; this should be done by your lawyer. Each and every word of the agreement has been precisely chosen by the Department of Justice, and when you agree to be bound by the agreement, you certify that you understand each term, and are in agreement with each provision.

  1. Federal Rule of Evidence Section 410

Sometimes clients ask, “Don’t the Federal Rules of Evidence protection me? It’s a plea negotiation, right?” This is a good question. Normally, Federal Rule of Evidence §410 provides a defendant with protections by rendering inadmissible communications made during plea-bargaining. Specifically, that Rule says that, whether it is a civil or criminal case, “evidence [i.e. a statement] . . . is not admissible against [a] defendant who made the plea or participated in the plea discussions” where the “statement [was] made during plea discussions with an attorney for the prosecuting authority if the discussions did not result in a guilty plea or they resulted in a later-withdrawn guilty plea.”

  1. Exception to Section 410—Waiver

However, as an exception, a defendant may waive the protection that Rule § 410 provides. Interestingly, waiver is not one of the exceptions noted in Section 410; rather, that exception was created by case law (i.e. judges).

This was one of main takeaways of U.S. v. Mezzanatto, 513 U.S. 196, 115 S. Ct. 797 (1995). There, the Court ruled that, “[b]ecause the plea-statement Rules were enacted against a background presumption that legal rights generally, and evidentiary provisions specifically, are subject to waiver by voluntary agreement of the parties, we will not interpret Congress’ silence [i.e. Congress’ failure to include a waiver exception in Rule §410] as an implicit rejection of waivability.” The Court then pushed the burden to the defendant to “identify [sic] some affirmative basis for concluding that the plea-statement Rules depart from the presumption of waivability”—which the defendant in that case was unable to do.

There are other times where one’s proffer statements made during plea negotiation are admissible. In one case they were allowed to rebut the defendant’s proffer statements, even where the defendant did not testify at trial. His proffer agreement stated that he waived his right to preclude those statements on cross examination or rebuttal if he testified (or if evidence was offered on his behalf). There were several other witnesses who testified defending him, and his attorney made some other statements that were inconsistent with the proffer statements. Accordingly, the prosecution sought to use those inconsistencies to its benefit and was allowed by the court to do so. See U.S. v. Rebbe, 314 F.3d 402 (9th Cir. 2002).

  1. Benefits of Proffering

One of the benefits of proffering (talking with the government prosecutor) affords you is the possibility that your attorney can persuade the government to see you as a valuable witness against a more culpable participant in the tax evasion rather than a primary target of a criminal investigation.   Through the plea bargaining process at best amnesty and at worst a much lighter sentence can be negotiated in exchange for becoming a cooperating witness.

Where you were the most culpable active participant in a tax crime, it may be advisable to proffer where there is a high likelihood that you will be prosecuted and the government has amassed overwhelmingly persuasive evidence against you based on your attorney’s assessment of the fact pattern.

If you do decide to proffer keep in mind that if you make a false statement, and the prosecutor has information that can prove you are lying, he or she could prosecute you for lying to federal agents in violation of 18 U.S.C. § 1001.

  1. Conclusion

Proffer agreements are tricky things, but one thing is clear: whatever you do, always tell the truth, even if you are embarrassed, desire to deny (or spin) your involvement, or something similar. It is better to state the truth than it be proven that you lied down the road. But keep the truth simple and short; do not elaborate. I cannot stress enough the importance of obtaining competent legal counsel before deciding to speak with the government (proffer) about a criminal tax investigation. Proffer agreements are tricky and very serious business with potentially life altering consequences. Remember that your liberty is at stake.