Federal Trade Commission Comment To the Colorado Supreme Court Supporting Amending Colorado's Rules Governing Professional Conduct To Clarify That Attorneys May Advise or Supervise Law Enforcement Officers & Others Engaged In Lawful Undercover Activities

Before the
COLORADO SUPREME COURT
Denver, Colorado 80203
In the Matter of Rules Governing Professional Conduct, Rule 8.4
COMMENT OF THE FEDERAL TRADE COMMISSION
September 5, 2017
The Federal Trade Commission (“FTC” or “Commission”) submits this comment in
support of the Colorado Supreme Court’s proposed revision to the state’s Rules of Professional
Conduct, which would clarify that it is not a violation of those Rules for an attorney to advise or
supervise law enforcement officers and others engaged in lawful undercover activities.1 The
proposed revision, which is consistent with the approach taken by the majority of jurisdictions
that have considered the issue, implicitly recognizes the importance of evidence collected
through such methods and the attorney’s responsibility to ensure its legality and integrity.
A. Federal Trade Commission’s Interest and Expertise
The Commission, as the nation’s primary consumer protection agency, is charged with
stopping unfair and deceptive practices that harm consumers. The Commission is responsible for
implementing and enforcing the Federal Trade Commission Act and other consumer protection
statutes and regulations.2 The Commission accomplishes its mission in many ways, including
collecting consumer complaints, conducting investigations, and bringing law enforcement
actions. One of the FTC’s core missions is to combat fraud. Since the 1980s, pursuant to its
authority under Sections 5 and 13(b) of the Federal Trade Commission Act, 15 U.S.C. §§ 45 and
53(b), the Commission has obtained hundreds of injunctions in federal district courts against
fraudulent businesses and returned billions of dollars to harmed consumers.
B. Undercover Investigations Provide Valuable and Credible Evidence
The Commission’s experience in investigating and enforcing consumer protection laws
for many decades unequivocally demonstrates that fraudsters do not operate in the light of day.
Instead, they typically attempt to avoid detection by operating through a confusing web of shell
companies and different websites, phone numbers, and payment processors. When fraudsters get
1 The revision would amend RPC 8.4(c) as indicated: “It is professional misconduct for a lawyer
to: . . . (c) engage in conduct involving dishonesty, fraud, deceit or misrepresentation, except
that a lawyer may advise, direct, or supervise others, including clients, law enforcement officers,
or investigators, who participate in lawful investigative activities.”
2 See, e.g., the Telemarketing Sales Rule, 16 CFR Part 310, and the Mortgage Assistance Relief
Services Rule, 16 CFR Part 322 (rules targeting fraudulent practices).

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wind of a law enforcement action, they move quickly to destroy evidence and hide their ill-
gotten gains. The Commission has documented these evasive tactics in affidavits filed in
hundreds of federal court actions.
The Commission has developed and utilized a variety of techniques to investigate and
prosecute consumer fraud cases, as well as to obtain redress and other relief for injured
consumers. For example, FTC staff investigators sometimes pose as consumers and purchase a
product on a website or sign up for a service promoted by a telemarketer. The investigator
stands in the shoes of consumers, observes the conduct consumers observe, and gathers evidence
of possible law violations.
The interactions captured by FTC investigators often provide the most probative evidence
of how a business actually treats consumers, exposing deceptive and unfair practices that might
otherwise go undetected or unprosecuted. Courts have recognized and relied on this evidence.
For example, in FTC v. E.M.A. Nationwide, Inc., 767 F.3d 611, 635 (6th Cir. 2014), a panel of
the Sixth Circuit affirmed summary judgment in the FTC’s favor based in part on evidence that a
sales agent failed to make required disclosures to an undercover investigator. Similarly, in FTC
v. IAB Mktg. Assocs., 746 F.3d 1228, 1231 (11th Cir. 2014), the Eleventh Circuit held that the
district court did not err in entering a preliminary injunction against a company where its
representatives falsely “assured the investigators that IAB’s medical-discount plans were
functionally equivalent to major medical insurance.” Investigators also provided critical
evidence based on undercover work in FTC v. Washington Data Res., 856 F. Supp. 2d 1247,
1268 (M.D. Fla. 2012), aff’d, 704 F.3d 1323 (11th Cir. 2013) (telephone calls recorded by
undercover investigators confirmed defendants’ use of deceptive telemarketing scripts); FTC v.
RCA Credit Servs., LLC, 727 F. Supp. 2d 1320, 1326 (M.D. Fla. 2010) (undercover
investigator’s account confirmed that company told consumers that it would lower their credit
scores); and FTC v. Neiswonger, 494 F. Supp. 2d 1067, 1073 (E.D. Mo. 2007) (recorded phone
calls between FTC investigators posing as consumers and sales agents confirmed deceptive sales
claims).
In these and other cases, the evidence obtained by investigators corroborated consumer
testimony. Often, an investigator’s careful account of a series of transactions provides the most
accurate information about a disputed business practice. See, e.g., FTC v. Direct Benefits Grp.,
LLC, No. 6:11-CV-1186-ORL-28, 2013 WL 3771322, at *8 (M.D. Fla. July 18, 2013)
(investigator’s testimony largely tracked that of consumer witnesses, but investigator testified to
receiving disclosure email that consumers did not recall). In other instances, undercover work
may fail to corroborate consumer complaints, leading the Commission to close an investigation.
Whether inculpatory or exculpatory, the information obtained in undercover investigations is
highly probative.
This Court, in the criminal context, has recognized the necessity of undercover work in
law enforcement:
It is common knowledge that the nature of illicit drug traffic is such that the laws could
not be enforced without undercover agents. The drug laws have forced the market place
for illicit drugs underground, where sales are effected by stealth by those who reap

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financial gain at the cost of the drug victim and society. Without undercover agents, it
would be virtually impossible to prosecute those who cause the sale and distribution of
illicit drugs.
People v. Bucher, 182 Colo. 211, 214 (1973). In the civil context, the Tenth Circuit has similarly
recognized the importance of undercover investigations, noting “[i]t would be difficult indeed to
prove discrimination in housing without [using a tester for] gathering evidence.” Hamilton v.
Miller, 477 F.2d 908, 909 n.1 (10th Cir. 1973); see also United States v. Centennial Builders,
Inc., 747 F.2d 678, 683 (11th Cir. 1984) (“Undercover work is a legitimate method of
discovering violations of civil as well as criminal law.”)
C. Attorney Oversight Helps to Ensure the Integrity of Undercover Investigations and
Adds to Existing Protections
Attorneys play an important oversight role in the collection of evidence from undercover
operations by, for example, advising investigators not to cross the line between capturing and
instigating a law violation. See, e.g., Bucher, 182 Colo. at 214 (acknowledging defense of
entrapment). Similarly, attorneys can advise investigators about the relevant state and federal
statutes governing the recording of telephone or live interactions.3 Such legal advice is
particularly important because illegal operations often cross state lines, and it is not always clear
which jurisdictions’ law will govern the investigation. As recent experiences in Colorado
illustrate, attorney oversight appears preferable to the alternatives – foregoing law enforcement
activities4 or cordoning off investigators from their supervising attorneys.5 Attorney engagement
in the process increases accountability. If, as the revised rule contemplates, attorneys oversee
this aspect of gathering evidence, then they also are responsible for any problems, potentially
facing discipline for any misconduct related to the investigation. Permitting attorney supervision
of “lawful investigative activities,” as this Court has proposed, helps to ensure that the
investigative activities are, in fact, lawful.
3 Recordings of telephone calls made by FTC investigators comply with the federal wiretap
statute, 18 U.S.C. §§ 2510-2522, which permits recordings made by a party to a telephone call.
18 U.S.C. § 2511(2)(c). Evidence of intercepted communications that conforms to this provision
is admissible in federal court proceedings without regard to state law. United States v. Adams,
694 F.2d 200, 201 (9th Cir. 1982).
4 See Pet. for Original Writ at 1, 3, In Re: Cynthia H. Coffman v. Office of Attorney Regulation
Counsel, No. 2017SA92 (May 5, 2017) (Attorney General abandoned all of her pending
undercover investigations because of fear that her attorneys would be subject to ethics
complaints for supervising them).
5 See Pet. for Original Writ, supra note 3, at 2-3 & Ex. 3 (Jefferson County’s Child Sex Offender
Internet Investigations team was dissolved and reconstituted in a sheriff’s office in response to
ethics complaint).

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FTC investigators, whose work is critical to effective enforcement of the FTC Act and
other statutes that protect consumers, conduct their undercover investigations with skill,
integrity, and professionalism. Neither FTC investigators nor the attorneys who supervise them,
however, operate without constraint. FTC attorneys are subject to the Rules of Professional
Conduct of their licensing state and the choice of law provisions therein (pre-complaint) and the
conduct rules and choice of law provisions in which the case is filed (post-complaint). The
Rules of Professional Conduct also reach attorneys’ supervision of investigators and other staff.
See, e.g., Colo. RPC 5.3. As FTC employees, investigators as well as attorneys must comply
with the agency’s own procedures as well as federal ethics laws and regulations. Persons injured
by illegal acts of government employees may seek remedies through Bivens actions in
appropriate cases or against the United States under the Federal Tort Claims Act, and litigants
may raise relevant defenses such as unclean hands. All of these restrictions and remedies protect
citizens from improper investigatory practices and limit the risk of harm, if any, that might be
caused by the proposed revision of Rule 8.4.
The Court’s proposed revision appears to be a limited clarification; it is not a license to
engage in abusive investigative tactics. For example, had the proposed revision been in place at
the time of In re Pautler, 47 P.3d 1175 (Colo. 2002), it would not have altered the outcome, in
which this Court affirmed sanctions against a prosecutor who violated Rule 8.4(c) by
impersonating a public defender to persuade a suspect to surrender to authorities. Indeed, it is
notable that the only other state supreme court to approve sanctions against attorney conduct
similar to what occurred in Pautler permits (through a comment to its rules) attorney supervision
of lawful covert activity in the investigation of criminal activity and other unlawful conduct.
Disciplinary Counsel v. Brockler, 145 Ohio St. 3d 270, 48 N.E.3d 557 (2016) (prosecutor
violated 8.4(c) by creating a fictitious social networking account to contact defendant’s alibi
witnesses). The proposed revision retains the core prohibitions of Rule 8.4 and offers no
protection to attorneys who engage in abusive investigatory practices.
Evidence obtained through undercover investigations is significant to civil and criminal
justice. Attorneys can help protect the legality of evidence gathered. Thus, it is not surprising
that the majority of jurisdictions that have considered the issue have permitted attorney oversight
of undercover investigations, whether through ethics opinions,6 comments,7 or amending the
relevant professional conduct rule itself,8 as this Court has proposed.
6 See, e.g., D.C. Bar Opinion 323 (2004) (attorney is not precluded from misrepresenting identity
or other matters in support of covert activity as part of official duties for government agency);
Va. Legal Ethics Op. 1765 (2003) (attorney employed by the federal government may use lawful
undercover methods without violating 8.4(c)); Utah State Bar Ethics Advisory Op. Comm. Op.
02-05 (2002); D.C. Bar Opinion 229 (1992) (per se rule against attorneys tape recording
conversations is not appropriate); see also Ariz. Bar Op. 99-11 (1999) (private attorney’s
direction to tester to make misrepresentations “solely about their identity or purpose in

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This Court’s proposed revisions to the Colorado Rules of Professional Conduct recognize
the attorney’s unique role as “an officer of the legal system and a public citizen having special
responsibility for the quality of justice.” Colo. RPC Preamble [1]. Moreover, the revision
promotes the continued development of the rules as a “framework for the ethical practical law.”
Id. at [16].
For these reasons, the Commission supports the Colorado Supreme Court’s proposed
revision to the Colorado Rules of Professional Conduct.
By direction of the Commission.
Donald S. Clark
Secretary
contacting the subject of investigation for fact-gathering purposes does not violate any provision
of the model rules.”)
7 See, e.g., Iowa RPC 32:8.4(c), cmt. [6]; N.C. RPC 8.4(c) cmt. [1] (government lawyer may
advise investigatory personnel); Tenn. RPC 8.4(c), cmt. [5] (8.4(c) does not prohibit prosecutors
from directing investigative techniques that may be regarded as deceitful).
8 Ala. RPC 3.8(2) (special provision allowing prosecutor involvement in government undercover
and sting operations); Fla. RPC 4-8.4(c) (“it shall not be professional misconduct for a lawyer for
a criminal law enforcement agency or regulatory agency to advise others about or to supervise
another in an undercover investigation, unless prohibited by law or rule[.])”); Mo. RPC 4-8.4(c)
(2012) (law enforcement undercover investigations are not professional misconduct); Or. RPC
8.4(b) (exception for “lawful covert activity in the investigation of violations of civil or criminal
law or constitutional rights, provided the lawyer's conduct is otherwise in compliance with these
Rules of Professional Conduct.”); Wi. SCR 20:4.1(b) (2013) (lawyer may advise or supervise
others with respect to lawful investigative activities).