What to Do If You’re Under Investigation for Fraud or White-Collar Crime in Texas

Being under investigation for fraud or a white-collar crime is one of the most disorienting situations a person or business can face. Unlike a traffic stop or an arrest, fraud investigations rarely announce themselves clearly. They develop quietly — through subpoenas, document requests, agent interviews, and financial institution inquiries — often long before any formal charge is filed or any official notice is received.

Many people first learn they are under investigation not through official notification, but through a call from a business associate who has been questioned, a letter from a bank flagging account activity, or — in more advanced cases — the execution of a search warrant. By the time the investigation becomes visible, significant groundwork has typically already been laid.

Understanding how fraud investigations develop, what the warning signs look like, and — most critically — what to do and what not to do in the early stages can make a decisive difference in how your case unfolds. This guide is written for individuals and business owners who believe they may be under investigation and want to understand their situation and their options.

What Is Fraud or White-Collar Crime in Texas?

Fraud and white-collar crimes are non-violent offenses typically involving financial deception, misrepresentation, or the abuse of a position of trust. They are prosecuted at both the state and federal levels, and the same underlying conduct may give rise to charges under both systems. Common categories include:

Because many of these offenses involve interstate commerce, federally regulated institutions, or federal programs, the majority of significant fraud cases are handled in federal court — where prosecution resources are substantial and the penalties are often more severe.

How Fraud Investigations Typically Begin

Fraud investigations rarely begin with a dramatic moment. They typically develop over months or years through a combination of the following:

• Complaints from individuals, former employees, business partners, or competitors
• Referrals from financial institutions required to file Suspicious Activity Reports (SARs) when unusual transaction patterns are identified
• Data analysis and anomaly detection by federal agencies reviewing financial records, tax filings, or program data
• Tips from confidential informants or cooperating witnesses within a business or industry
• Referrals from civil regulatory agencies — such as the SEC, FTC, or a state financial regulator — following an audit or civil enforcement action
• Parallel investigations into co-defendants or business associates that expand to include additional targets

A critical feature of fraud investigations is that they are typically well advanced by the time the target becomes aware of them. Investigators have often reviewed financial records, interviewed witnesses, and developed a significant evidentiary record before making any contact with the person under scrutiny.

Warning Signs That You May Be Under Investigation

Because investigators do not always announce their activities, recognizing the early warning signs of an investigation is essential. You may be under investigation if:

• You or your business have received a grand jury subpoena for documents, records, or testimony
• You have been contacted directly by a special agent from the FBI, IRS Criminal Investigation, Postal Inspection Service, or another federal or state investigative agency
• Your bank or financial institution has informed you that your records have been subpoenaed or that your account has been flagged
• A current or former employee, business associate, or colleague has told you they were contacted or interviewed by investigators
• You have received a civil investigative demand or administrative subpoena from a regulatory agency
• A search warrant has been executed at your home, business, or the premises of an associate
• You have received a “target letter” from the Department of Justice notifying you that you are the focus of a grand jury investigation

Any one of these developments warrants immediate consultation with a criminal defense attorney. The absence of formal notice does not mean an investigation is not underway.

Witness, Subject, or Target: Understanding Your Status

In federal investigations, prosecutors use three designations to characterize individuals in relation to a grand jury proceeding. Understanding these distinctions — and their limitations — is critical.

These designations are not permanent and should never be relied upon as assurances of safety. Prosecutors are not obligated to notify a subject or witness when their status changes — and often do not. An individual who is told they are “just a witness” may find themselves indicted months later.

What to Do — and What to Avoid — If You Are Under Investigation

The actions you take — and avoid — in the early stages of a fraud investigation can be among the most consequential of the entire case. The following table summarizes the most important dos and don’ts:

The single most dangerous mistake a person under investigation can make is speaking to investigators without counsel. Even if every statement made is truthful, the risk of misinterpretation, selective use, or § 1001 false statement exposure is real. The right to remain silent exists precisely for situations like this — and exercising it is neither an admission of guilt nor a provocation.

How Fraud Investigations Expand and Escalate

One of the most important features of fraud and white-collar investigations is their tendency to expand. What begins as a civil regulatory inquiry can evolve into a criminal investigation. An investigation focused on one individual may expand to include business partners, associates, or family members. A state-level inquiry may attract federal attention when it involves interstate commerce or federally regulated institutions.

Several factors commonly drive expansion:

• Cooperating witnesses or co-defendants who provide information about other individuals in exchange for favorable treatment
• Financial records that reveal transactions involving additional parties not originally under scrutiny
• Parallel civil investigations that uncover evidence prompting a criminal referral
• Voluntary statements by subjects that inadvertently implicate others or reveal additional offenses

Understanding that an investigation may not stay contained to its original scope is one of the most important reasons to engage defense counsel immediately — before the scope is defined in a way that is difficult to challenge.

Why Early Legal Representation Makes a Decisive Difference

The period before formal charges are filed is often the most strategically important in a white-collar case — and it is the period during which experienced defense counsel provides the most value. Early representation allows your attorney to:

• Conduct an independent assessment of your legal exposure before the government’s narrative is established
• Respond to subpoenas and document requests strategically — complying with legal obligations while protecting privileged materials and asserting applicable rights
• Engage prosecutors and investigators directly to present exculpatory information, correct factual misunderstandings, and in some cases persuade the government to decline prosecution
• Advise you on conduct that preserves your legal position — including record preservation, communications practices, and interactions with associates
• Identify and retain forensic accounting experts, industry experts, and other specialists whose analysis may prove essential to the defense
• Develop a defense strategy from the ground up, rather than inheriting a record that was built without a defense perspective

Whalen Law Office has represented individuals and businesses facing fraud and white-collar investigations in Frisco, Sherman, Tyler, and across Texas and the nation for nearly three decades. James Whalen is board-certified in both criminal law and criminal appellate law by the Texas Board of Legal Specialization and has the depth of experience that complex, high-stakes fraud cases demand. The firm’s attorneys are admitted to all four Texas federal districts and to the Fifth Circuit Court of Appeals.

Frequently Asked Questions: Fraud Investigations in Texas

What are the most common signs that I am under investigation for fraud in Texas?

Federal and state fraud investigations often proceed for months before a target is formally notified. Common early warning signs include: receiving a subpoena for financial records, business documents, emails, or testimony; being contacted directly by a special agent from the FBI, IRS Criminal Investigation, or another federal or state agency; receiving a civil investigative demand or administrative subpoena from a regulatory agency such as the SEC or FTC; learning from your bank or financial institution that your accounts have been flagged or that account records have been subpoenaed; discovering that colleagues, employees, or business associates have been questioned by investigators; or receiving a “target letter” from the Department of Justice. Any of these developments should be treated as a serious indicator requiring immediate legal attention.

Should I speak to investigators if I have nothing to hide?

No — and this is one of the most important pieces of advice any criminal defense attorney will give. The belief that cooperating voluntarily will demonstrate innocence and cause investigators to lose interest is a dangerous misconception. Federal and state investigators are trained interviewers whose goal is to gather evidence. Statements made during an informal conversation — even accurate, well-intentioned ones — can be taken out of context, misinterpreted, or used to establish elements of the offense you did not intend to admit. Under 18 U.S.C. § 1001, making any materially false statement to a federal agent, even voluntarily and outside of court, is itself a federal crime. You should decline to speak with investigators and immediately contact a defense attorney.

What is the difference between being a witness, a subject, and a target of a federal investigation?

Federal prosecutors and investigators use specific terminology to characterize individuals involved in a grand jury investigation. A “witness” is someone who has information relevant to the investigation but is not currently considered personally culpable. A “subject” is someone whose conduct falls within the scope of the investigation — meaning the government is looking at their activities but has not yet determined they are the focus of a prosecution. A “target” is someone as to whom the government has substantial evidence of criminal conduct and is considering indicting. These designations can change as investigations develop. Importantly, being told you are a “witness” does not mean you are safe — witness status can shift to subject or target status as new information emerges.

What should I do — and not do — if I believe I am under investigation?

If you believe you are under investigation for fraud or a white-collar offense, the most important immediate steps are: do not speak to investigators, agents, or prosecutors without a defense attorney present; do not discuss the matter with colleagues, employees, or associates who may themselves be interviewed; do not attempt to delete, alter, or destroy documents, records, or communications — this can constitute obstruction of justice and is a serious independent federal crime; do not contact potential witnesses or co-targets; preserve all potentially relevant records, communications, and financial documents; and contact an experienced federal or state criminal defense attorney as soon as possible. Early legal intervention allows counsel to assess your exposure, manage investigative contacts, and engage the government before the situation escalates.

Can a civil or regulatory investigation become a criminal one?

Yes — and this is one of the most significant risks in fraud and white-collar matters. What begins as a civil regulatory inquiry by the SEC, IRS, FTC, or another agency can be referred to the Department of Justice for criminal prosecution if investigators uncover evidence of knowing and willful misconduct. State-level regulatory investigations can similarly generate criminal referrals. The transition from civil to criminal jeopardy can happen quickly and without advance warning. Individuals who cooperate freely with a civil investigation — providing documents and testimony without the protection of counsel — may inadvertently produce the very evidence that supports a subsequent criminal case against them.

What is a grand jury subpoena, and what should I do if I receive one?

A grand jury subpoena is a formal legal demand issued in connection with a federal grand jury investigation. It may require you to produce documents, records, or other materials, or to appear and testify before the grand jury. Receiving a grand jury subpoena is a serious development that requires immediate legal attention. You should not ignore a subpoena, but you also should not respond to it or produce any materials without consulting a defense attorney. Your attorney can review the scope of the subpoena, assert applicable privileges (including the Fifth Amendment privilege against self-incrimination and attorney-client privilege), negotiate the scope of production with prosecutors, and advise you on whether and how to comply. Testifying before a grand jury without counsel reviewing your situation first is rarely advisable.

Does hiring a defense attorney make me look guilty?

No — and this concern should never deter someone under investigation from retaining counsel. The right to an attorney is a fundamental constitutional protection, and exercising it is prudent — not incriminating. Investigators and prosecutors are experienced professionals who do not draw adverse inferences from the fact that a subject or target has retained counsel. In fact, having experienced defense counsel communicate on your behalf often results in a more orderly and professional engagement with the investigation, which can benefit the outcome. The only person who benefits from a suspect declining to hire counsel is the government.

What happens if charges are formally filed?

If a prosecutor decides to proceed, charges may be brought through a grand jury indictment (in federal cases) or a criminal information or complaint. Once charged, the case enters the formal criminal court process, which typically includes an initial appearance and arraignment, bail or detention proceedings, discovery and evidence review, pretrial motions (including motions to suppress evidence and dismiss charges), plea negotiations, and — if no resolution is reached — trial. The penalties for fraud and white-collar convictions can be severe, including significant prison sentences, fines, restitution, and forfeiture of assets. Having experienced defense counsel in place before charges are filed — rather than scrambling to find representation at the indictment stage — is almost always the more effective and less expensive path.

Why does it matter whether my case is federal or state?

Federal and state fraud prosecutions involve different court systems, different procedural rules, different sentencing frameworks, and often different stakes. Federal cases are prosecuted by the U.S. Attorney’s Office, tried in federal district court, and sentenced under the U.S. Sentencing Guidelines — a structured system that can produce significant prison sentences based on factors such as the loss amount, the number of victims, and the defendant’s role. Federal prosecutors typically have more resources and longer timelines than their state counterparts, and federal conviction rates are high. State fraud cases in Texas are prosecuted by district attorney’s offices and tried in state district courts under the Texas Penal Code. Defense counsel with specific experience in the relevant court system — federal or state — is essential.

Speak With a Federal Fraud Defense Attorney Today

If you believe you are under investigation for fraud or a white-collar offense — or if you have received a subpoena, a target letter, or contact from a federal agent — do not wait. The earlier you engage experienced defense counsel, the more options you have and the more effectively your rights can be protected.

Whalen Law Office represents individuals and businesses under investigation for fraud and white-collar crimes in Frisco, Sherman, Tyler, and across Texas and the United States. Contact our office immediately to schedule a confidential consultation.