Phone and Laptop Searches at the Border

Did CBP ask to search your phone or laptop when entering the United States?  There’s a pretty good chance federal law enforcement is investigating you or your employer.

For FY2024, the U.S. Department of Homeland Security's U.S. Customs and Border Protection processed 420 million travelers at ports of entry.

3% (just over 12.6 million travelers) were referred to secondary inspection (i.e. given additional scrutiny by officers).

.01% (47,047 travelers) had their electronic devices searched.

Border searches usually don’t happen at random. 

And the law governing border searches of electronic devices is complicated and still developing.  Some circuits require reasonable suspicion.  Others no suspicion. In all cases, the search has to be reasonable under the Fourth Amendment.  

Internal DHS policies govern how the search is to be conducted, the timeline for getting your devices back, and other issues like whether a taint team is required to screen for attorney-client privileged materials.

So what should you do if CBP asks to search your phone or laptop at the border?  The answer will vary based on circumstances.  Are you a U.S. Citizen returning home?  A foreign national seeking admission?  An attorney carrying sensitive client information?

In all cases, you will want to be cooperative while also exercising your rights.  For example, you don’t have to provide your password, but if you don’t CBP can and likely will exclude or detain your device.  If you are a foreign national seeking admission, they might deny admission and send you home.  

If you or your employee’s phone or laptop are detained at the border, you will need sound counsel with experience in border searches and DHS policies and procedures.  If you are an employer sending employees abroad, it makes sense to think through and implement internal policies and procedures governing the carrying of electronic devices containing sensitive corporate information.

Before joining C+H, C+H Dallas Partner Rob Dunikoski spent years advising Homeland Security Investigation (HSI) special agents on these and other complicated customs law issues.  For more information on his background and experience, please visit https://ch-llp.com/about-rob-dunikoski.

Non-Profit 101: Protecting Your Non-Profit in Challenging Times

Five Steps to Prepare for Uncertainty

“Paperwork saves lives” – it was a frequent refrain in the back-office of the international non-profit where I served as General Counsel. It reminded us that our paperwork, ensuring finances, governance filings, and policies were in order, was critical to enabling our organization to achieve its mission, impacting—even saving—real human lives.

In a climate where the charity sector is facing increased uncertainty and scrutiny coupled with the potential loss of key funding, this has never been more true. Having paperwork in order is a key way you can protect your non-profit and help it stay focused on mission.

I’ve seen this in action many times. Sometimes it is invisible—as when an organization quietly provides timely and accurate government filings year after year, never drawing scrutiny. Sometimes it is louder—like an allegation of improper spending and sweetheart deals that is quickly put to rest by immediate production of Board minutes, conflict policy and disclosures, and contract terms. For a charity working in an environment of increased scrutiny on civil society, something I witnessed many times with international partners, survival could depend on taking care to avoid providing any non-compliance hook to hang an investigation or review hat on. For all charities, ensuring paperwork ducks are in a row before scrutiny comes is just smart risk management.

Guidance from a recent training on helping nonprofits navigate evolving issues in the sector, by the Office of the Attorney General of New York State, rang true to what I’ve seen in practice. I’ve simplified the guidance to five key steps nonprofits can take now to be prepared.

1. Know which federal actions apply to your organization 

   Does it impact funding? Beneficiaries? Programs? Is the action in question legally binding and in effect? This may require you to assign someone to monitor federal actions, as they’re changing at a dizzying pace. (Hint: The Council on Non-Profits has a good tracker to help follow relevant executive orders and legal challenges in effect, as well as other practical resources.)

2. Do a risk assessment

   Once you know which executive orders in effect may impact you, assess whether anything within your organization is at odds with them. Review federal grants and contracts—what are the terms related to cancellation and any remedies you have? Review your organization’s policies and governance practices. Ensure Board and committee meetings are documented. (Hint: Form 990 Part 6 provides a good outline of basic good governance practices to check for.)

3. Make sure your documents and practice line up—with each other, and with the law

   Are your purposes as documented in your tax exemption application (1023), governing documents (bylaws, articles of incorporation), annual reporting (990), and other communication materials (website, annual report) actually charitable in nature? Do they reflect what you are actually doing? (Hint: Don’t forget to complete any required Form 990 schedules; a missing schedule can be a red flag for reviewers attracting unwanted attention.)

4. Avoid unnecessary red flags 

   Don’t inadvertently create cause for concern by making missteps in common areas. (Hint: This covers a wide range of compliance concerns!) For example:

   • Ensure you are properly characterizing employees and contractors.

   • If you’re earning revenue, evaluate whether it is triggers UBIT (the “unrelated business income tax”) and report it if so.

   • Stay charitable: Don’t cross the line from an Advocacy organization (permitted) to Action organization (not permitted). Don’t control in any joint venture to the for-profit partner.

   • Don’t permit private benefit: Ensure you have reasonable compensation. Ensure you have a conflict policy, expense reimbursement policy, travel policy and appropriate review processes. If you provide grants or scholarships, ensure you have the right processes and criteria.

   • Report overseas activity as required and exert appropriate oversight to ensure it is all for your charitable purposes and no impermissible purposes (e.g., financing terrorism).

5. Don’t Lie

   Making any kind of misstatement regarding a federal matter (for example, on your Form 990) could open you to investigation, and even potential criminal action. Make sure your government filings are accurate. In the event you’re subject to any kind of government inquiry, take care not to make any kind of false statement, however innocuous it may seem—just ask for the reason behind the inquiry and state that you need to speak with counsel. (Hint: If you receive an examination letter from the government, seek professional advice to ensure you learn as much as possible about what is being sought and why, and don’t volunteer documents beyond the request made.) 

   This can be a lot of work—and paperwork may be (unfairly, in my opinion!) shorthand for ‘boring,’ but taking care of these kinds of documents could be the critical preparation that allows your organization to continue serving your community in challenging times. The good news is it is all doable, and you’re not alone. If you’re ready to dive in, reach out to request a compliance checklist to guide you, with key areas to review and questions to ask.

   We’re here to help! To schedule a free 30 minute consultation, contact non-profit law expert Jeannie Rose Barksdale – jeannierose@ch-llp.com 

The Top 4 Issues to Be Aware of When Doing an Internal Investigation

“So you are the great lawyer I’ve been told about! But, you are so young! I was expecting an old lawyer.”

With those words, the silver-haired senior-level executive of the customs broker I was investigating for bribery let me know that his guard was down. In fact, he

seemed relieved and almost eager to help me, a young lawyer that reminded him of his nephew.

This was exactly the reaction I wanted. We exchanged pleasantries in Spanish over a cup of coffee and proceeded to have a friendly free-flowing conversation. That conversation revealed that his company was bribing government officials in Latin America, he was a liar, and he had no idea that he had just given me the evidence I needed when I went up the chain to confront his boss. He never saw it coming.

There are many articles on best practices for conducting internal investigations related to bribery or fraud. However, at the core of any internal investigation— whether it be domestic or cross-border is—people. The people at the center of the investigation (employees, former employees, third party vendors, government officials or lawyers) are the key to unlocking the real story behind what has really happened. Faced with a whistleblower tip of bribery or fraud, a company will undoubtedly look at the underlying documents that paint a scattered picture of events, but it is the people that weave the documents together to tell the story. 

Here are some tips on the best ways to set-up witnesses interviews during an internal investigation for optimal effect.

 1. Start with the Low-Hanging Fruit.

Any good investigation looks like a pyramid. Ideally, start your internal interviews on the ground floor with lower-level personnel. Why? First, they will most likely be further removed from the fraud being perpetrated by senior management and thus, more forthcoming about facts.

Second, the ground troops may be actual witnesses to executive-level fraud and more than willing to blow the whistle on management if given an opportunity.

 Third, line employees possess great real-time information of the daily happenings within the company, where data is located, as well as a more accurate view of the “real” heirarcy in a company. Interviewing these witnesses will be useful in recreating who may be behind the fraud, the centers of power within a company that could have known of the fraud, and where the web of deceit extends.

2. Pick a Location that Puts Them at Ease.

If you are going to interview any company employee (be it lower-level personnel or senior executive), find a location that will put them at ease. If it makes sense, talk to them at their workplace in a discrete conference room or set-up a meeting at a neutral location. Do not conduct the interview at a lawyer’s office. Pick a location that is open, bright and pleasant to be in. Aside from location, be a good host.

Coordinate logistics (via phone, not email) so that food, refreshments and ample parking are available.

While it may seem trite: environment matters. You do not want your potential key witness to arrive at a location and feel instantly uncomfortable by the set-up.

Instead, you want to prime your witness from the start to feel good about what he or she is walking into and who they are meeting. Your interview and information will flow more freely if the witness is at ease.

For example, the interview that was conducted in the opening scene was held in a United States border town with Mexico, but in a beautiful Spanish style office adorned with Mexican art work, a friendly receptionist and plenty of food and coffee as hospitality. It set the tone for the “warm” conversation that took place thereafter.

3. The Interviewer Should Bring the Element of Surprise.

Let’s be honest, lawyers often think that the best way to get anything done is to be the loudest dog in the block. That may be the case in an adversarial proceeding with a person that can be easily intimidated to cave or in a cross-examination at trial. However, in most internal investigations, lawyers are dealing with witnesses from whom the lawyer wants information.

In such a scenario, the old adage is true: “you catch more flies with honey than you do with vinegar.” Thus, to get optimal information from a witness in an internal investigation, the interviewing lawyer should be non-threatening, friendly, and good with people.

As in the opening scenario, the senior executive that I was interviewing came with his guard up fully expecting to go toe-to-toe with a hardened lawyer. Instead, he found himself with a young friendly lawyer who treated him with respect. As a result, his apprehensions, anxiety and defensiveness melted away. In his mind, he had nothing to fear and information flowed my way. Information that was key for my later interviews and which confirmed to me that this friendly avuncular executive was lying.

4. Know Your Facts Cold.

Based on outward appearances, the attorney conducting your internal investigation interview should be pleasant and non-combative. However, behind the scenes, your interviewer should be prepared for anything. The single best way of preparing for the unexpected is to know the key facts cold.

In depth preparing would include:

• Collecting all key documents (especially emails and personnel files)

• Creating a list of key players

• Reviewing and analyzing prior interviews

• Diagramming organizational charts and hierarchy structure

• Compiling a chronology of events

• Mapping pertinent locations

• Charting key processes and relevant products related to the fraud

• Compiling a vocabulary list of key business terms

• Researching U.S. and foreign laws related to privacy, attorney-client privilege, and the myriad of legal issues touching on the proported fraud

• Creating an investigation plan that tracks key witnesses, issues, potential offenses, documents, and questions that need to be answered

Why prepare? Plain and simple, thorough preparation and knowledge of the universe of facts is the single best way for the interviewer to spot an inconsistency, contradiction or bold-faced lie. Moreover, preparation creates confidence. A prepared investigating lawyer will not be spending his or her time making sense of basic information, but will be thoroughly present to connect with the witness.

Before joining C+H, San Diego Partner Juan Castañeda spent years in Big Law and with the Department of Justice.  For more information on his background and experience, please visit https://ch-llp.com/about-juan-castaneda.

Non-Profit 101: Turning Your Non-Profit Vision into Reality

Five Questions to Ask Before Starting a Non-Profit

1. Have I actually thought through what kind of organization I want to start? 

   Deciding to “start a non-profit” presumes you have already answered a host of questions—and assumes a non-profit is the right approach for you. But is it? The legal form should be a tool to further your goals. Make sure you’ve thought through the implications before you start something new. The answers could change what you actually start!  

2. What am I trying to accomplish?

   To decide what kind of organization to start, get clarity on your goal. Just because you want to do good doesn’t necessarily mean you should be a non-profit, just like the desire to sell goods or services doesn’t necessarily make you a company. There are many ways to pursue mission, for example: non-profit, LLC with a social purpose, LLC owned by an existing charity, B Corporation (a form of entity signaling a company’s commitment to a financial and social bottom line), B Corp certification (which certifies a company meets certain social good standards).   

   What is your overall mission, the north star that will guide you long-term —and what are the tactics that may change over time? How will you fund your dream? Who will call the shots? Who do you hope to engage?  

   The more you flesh out your vision, the more you can answer . . .  

3. What advantages and disadvantages matter to me? 

   A quick search will give you the main advantages of being a tax-exempt non-profit: 

   • Tax benefits for the entity: it usually is not taxed on revenue, and may be exempt from tax in other areas, like property, sales, or hotel. 

   • Tax benefits for donors: people are often incentivized to make contributions because of the personal benefit they receive on contributions. 

   • Halo effect: non-profits may enjoy a reputational boost. People feel good about them. 

   But only you can decide how and when these matter to you, in light of your actual goals. For example, how important are the tax considerations for your donors if they don’t itemize taxes, or if your primary income isn’t from donations? 

   The main restriction is about what happens to the money: in a tax-exempt entity, profit goes back to the mission, and cannot be used for private benefit. Are you willing to forego personal profit and put all funds back into your mission? 

   Tax-exempt organizations are also subject to greater oversight and have less flexibility. For many, the trade-offs are worth it. Before you start, make sure they are worth it for you. 

4. Should I form something or join something? 

   Even if you want to do charitable work, is starting a new non-profit the best way to accomplish your mission? Forming a tax-exempt entity takes time and paperwork. There are avenues for accelerating launching charitable programs that might be a better fit, such as a fiscal sponsorship arrangement. 

5. Do I need help thinking through these questions?

   Getting clear, thoughtful answers to these questions will set the tone for whatever you launch. It may feel like a lot of pressure. But you’re not alone. All of these questions can be helpful to discuss with a trusted advisor who has walked through these questions before.  

   We’re here to help! To schedule a free 30 minute consultation, contact non-profit law expert Jeannie Rose Barksdale – jeannierose@ch-llp.com