The FEDS policy pays for legal defense up to $100,000 for any criminal proceeding or investigation into any act, error, or omission committed by a federal employee while rendering a professional service. A federal employee can be investigated criminally for even the most trivial matters and false allegations—and if it happens to you without insurance, you must pay for your own legal representation.

This does happen to good IRS managers and employees and there is very little a federal employee can do wrong in the federal arena and not also have it be a potential violation of Title 18 (the federal criminal code). Some of the most common criminal investigations involving federal IRS managers and employees are due to:

• Conflict of interest statutes where intent is not a prerequisite to prove the crime,
• Misappropriation of federal funds,
• Release of privacy act or other statutorily protected information and/or 
• A situation arising out of an allegation of misuse of position or authority.

For example:

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An IRS employee makes an inadvertent disclosure of tax information and an overzealous TIGTA agent investigates it as a willful 6103 criminal disclosure. If you were a member of FEDS, you would be assigned a criminal defense attorney to represent you throughout the criminal investigation and any resulting prosecution; and the insurance would provide for legal fees up to $100,000.

An IRS manager suspecting a fellow employee of some criminal wrongdoing accesses an IRS-registered Choice Point computer data base to obtain information about the colleague and potential criminal wrongdoing. The matter gets referred to TIGTA and TIGTA conducts a criminal investigation of the IRS manager under the Computer Fraud and Abuse Act. If you were a member of FEDS, you would be assigned a criminal defense attorney to represent you throughout the criminal investigation and any resulting prosecution; and the insurance would provide for legal fees up to $100,000.

Finally, unlike a similar PLI provider, the FEDS program will NOT seek to recover defense fees from the insured if a finding of guilt occurs. The FEDS Master Policy does not have a “claw back” provision that allows us to recover claim expenses or monetary penalties for a criminal proceeding, regardless of the outcome. We call this full criminal coverage versus limited criminal coverage. We at FEDS believe that it defeats the very purpose of the insurance if you are financially liable if we provide a covered defense and you lose.