Quick Summary
Suppose that the Securities and Exchange Commission (SEC) charges a defendant with a financial violation. Suppose further that the Department of Justice (DOJ) is also currently investigating the matter for potential white-collar criminal prosecution. Often, in scenarios such as this one, without direct evidence of a future criminal proceeding, a district court judge will deny a defendant’s motion to stay the civil proceeding until after the disposition of a potential criminal proceeding surrounding the same facts. Forced to continue the civil proceeding, the defendant must respond to various informational requests, including interrogatories and subpoenas. However, if the defendant refuses to comply with the requests, a judge or jury may draw an adverse inference against them. Defendants who face potential parallel civil and criminal proceedings (hereafter “parallel proceedings”) tied to the same actions often face a difficult question: “Should I invoke my Fifth Amendment privilege against self-incrimination?” However, if they choose not to invoke their Fifth Amendment privilege, they will be barred from doing so should the criminal action get filed. The defendant is forced into a double-bind: they must choose between potentially incriminating themself and potentially losing or raising the costs of their civil case. Although some judges, acknowledging the impossibility of this double-bind, will not enforce an adverse inference finding, many will.
This Essay does not take a position on the ethics or constitutionality of parallel proceedings. Instead, it proposes using the dilemma defendants face in parallel proceedings as a way to measure the Value of Statistical Freedom (VSF). The VSF (sometimes called the Value of Liberty) can be thought of as an individual’s willingness to pay to not be in prison.
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