Representation of Injured Parties and Asset Recovery for Companies

I. Starting point: white-collar crime as an existential threat

White-collar crimes often hit companies suddenly and with considerable force. Whether fraud, breach of trust, corruption, cyber attacks or complex investment and capital market offences – high losses, shattered trust and the risk of long-term reputational damage are regularly at stake.

For the companies affected, it is therefore not just about “punishing the offender”, but above all about specific damage limitation and the recovery of assets. This is where professional representation of injured parties and structured asset recovery come in.

II. Key challenges in representing injured parties

The investigation and prosecution of the offences committed, which is necessary in this context in order to enforce the resulting claims for damages, often confronts the companies affected with major challenges:

1. The need for swift, structured action

In a corporate context in particular, the situation is often confusing: frequently a large number of people involved, international structures, complex financial flows and internal investigations running in parallel. Without a clear legal and strategic framework, there is a risk of loss of evidence, limitation periods expiring, unused opportunities to secure assets and, ultimately, a criminal conviction without any actual restitution for the company.

a. The time factor / the need for swift intervention

The need to assess and classify suspicious circumstances, to establish a secure documentary and evidential basis and to quantify the losses suffered reliably is at the same time in tension with the urgency of swift intervention and the timely prosecution of the offences that caused the loss.

One of the greatest challenges is often the urgency of legal action. In the vast majority of cases, criminological experience shows that the assets taken through criminal offences have already been spent or moved out of reach by the perpetrators and thus withdrawn from the direct access and recourse of the injured institutions, e.g. through:

• transfers to foreign accounts,
• the use of intermediary and shell company structures,
• conversion into assets that are difficult to access, such as art, precious metals or cryptocurrencies.

The later the company reacts, the lower the chances that assets will still be available or can be traced. Effective representation of injured parties therefore means:

• rapid securing and analysis of internal data,
• early legal assessment of the facts,
• a quick decision on which steps under criminal and civil procedure should be taken.

b. Establishing a sound, robust evidential basis

Injured companies often possess extensive information without it being immediately usable for legal action. A sound evidential basis is of central importance for successful criminal prosecution and the subsequent enforcement of claims for damages under civil law. Key steps and measures include:

• Securing relevant documents (contracts, invoices, accounting records, email correspondence, log files).
• Conducting or supporting internal investigations, forensic audits and employee interviews without overstepping the limits of permissible self-investigation.
• Legal structuring of the facts: identifying the main complexes of offences, items of loss and asset transfers.
• Avoiding legal risks of one’s own (e.g. data protection, duties of care under employment law, compliance issues).

The aim is to establish a factual and evidential situation that enables both law enforcement authorities and civil courts to assess the facts quickly and reliably and to initiate further legal steps.

In this context, injured companies have various options for action, some of which can be pursued in parallel and which interact with each other, namely initiating criminal investigations against the perpetrators and bringing civil claims against them, out of court and/or in court.

This in turn gives rise to further hurdles that must be overcome in order to pursue and enforce claims successfully: in criminal investigations in particular, injured parties are often perceived merely as “peripheral figures”, even though they usually know the facts best. The aim of professional representation of injured parties is to introduce this exclusive in-house knowledge into the investigation in a usable way and at the same time to ensure that the company’s interests are actually given due weight in the proceedings:

The key steps here are:

• The preparation of a comprehensive, clearly structured criminal complaint setting out the relevant criminal offences, together with specific suggestions for comprehensive and “tailor-made” investigative measures, financial investigations and asset freezing orders.
• Ongoing communication with the public prosecutor’s office and investigating authorities, including supplementary information, statements and suggestions.
• Accompanying witness interviews (e.g. employees, compliance officers) in order to avoid contradictions and ensure the quality of testimony.
• Coordination with internal functions (legal, compliance, controlling, IT) to ensure a consistent external picture.

Ideally, investigations can thus be steered towards early asset securing and subsequent compensation of the victims. At the same time, findings from the criminal proceedings, in particular on financial investigations and previously unknown evidence such as the perpetrators’ internal communications, can also be put to use for the pursuit of civil claims.

III. Criminal law instruments for securing and recovering assets

1. Criminal complaint and ongoing support

The criminal complaint is often the first step, but it must not be understood as a mere formality. An effective criminal complaint:

• describes the facts clearly, chronologically and with a legal classification,
• refers to initial evidence and internal investigation documents,
• quantifies the loss as precisely as possible or at least in a comprehensible manner,
• contains suggestions and pointers for further, future securing of evidence and assets (e.g. searches, financial investigations and asset freezing orders).

Subsequent support throughout the proceedings ensures that new findings are continuously fed in and that the investigation does not run “on the back burner”.

Supporting the proceedings also helps the company to gain its own insights from the official investigation (for example through inspection of the files). This makes it possible to shed further light on the facts and strengthen its own evidential position for later claims.

2. Suggesting specific investigative measures

Active representation of injured parties is not limited to leaving the proceedings to the authorities, but suggests specific investigative measures, in particular:

• Searches of residential and business premises in order to secure documents, data carriers and assets.
• Seizure of bank records, IT systems and means of communication.
• Financial investigations to uncover accounts, securities deposits, shareholdings and other assets.

These measures not only serve to clarify the offence, but at the same time create the basis for the subsequent imposition of asset freezing orders under §§ 111e et seq. StPO and confiscation orders under §§ 73 et seq. StGB, which can be used directly for the company’s asset recovery.

3. Asset freezing orders under criminal procedure

One of the most important tools of asset recovery under criminal procedure is the asset freezing order under § 111e StPO. It allows the accused’s assets to be provisionally secured during the investigation stage in order to:

• secure subsequent confiscation under §§ 73 et seq. StGB,
• or enable satisfaction of the injured parties by way of recovery assistance under §§ 459h et seq. StPO.

Although criminal confiscation and recovery assistance have received a boost in recent years, in particular through the 2017 reform of asset recovery under criminal procedure, public prosecutors’ offices are nevertheless often hesitant to actually impose measures for the provisional securing of assets. The challenge for the representation of injured parties lies in

• presenting a sufficiently specific extent of the loss,
• making the link between the offence and the assets plausible, and
• demonstrating the necessity and urgency of securing assets at an early stage.

This requires detailed work on the facts: presenting payment flows, attributing accounts and assets, and linking business records to asset items. A specialised law firm supports the company in drafting the necessary suggestions and applications and in communicating with the law enforcement authorities.

5. Representation of injured parties in the main proceedings and in enforcement proceedings

If, after the investigation has been concluded, the public prosecutor’s office brings charges against the perpetrators, the injured companies must work towards having their claims for damages taken into account and enforced in the main hearing and towards the subsequent distribution of confiscated assets in the enforcement proceedings. This can be achieved in particular through:

• proactively suggesting and promoting applications by the public prosecutor’s office and court decisions on the confiscation of the proceeds of crime, or,
• where provided for by law, the company’s own participation as joint prosecutor in the proceedings under §§ 395 et seq. StPO (e.g. in the case of trademark and patent offences, offences involving the theft of trade secrets and offences relating to unfair competition).

In both cases, the aim of participation is to obtain a comprehensive decision on the confiscation of the proceeds of the offences and then, in the enforcement of the confiscation order, to achieve distribution to the injured company.

Finally, existing civil claims for damages can be asserted directly by the company itself in the criminal proceedings by way of the so-called “adhesion proceedings” under §§ 403 et seq. StPO. In this case, the court decides in the criminal proceedings at the same time on the existence of the civil claims arising from the offences and awards the adhesion claimant a directly enforceable civil law title.

IV. Civil law measures: action and attachment under § 916 ZPO

1. Civil action as a supplementary or independent route

Alongside the criminal proceedings, civil law remains crucial for compensating the economic loss. Typical legal bases for claims are:

• Claims for damages in tort (e.g. § 823 BGB), management liability, breach of contract,
• Restitution claims under unjust enrichment law, e.g. for payments obtained without justification, under §§ 812 et seq. BGB

A civil action can be brought in parallel with the criminal proceedings or after their conclusion. It requires:

• a secure evidential basis, which is often built on the results of the criminal proceedings and internal investigations,
• a careful quantification of the loss, including interest, incidental costs and consequential damage,
• the identification of the right defendants (perpetrators, accomplices, members of corporate bodies, liable companies where applicable).

Translating complex criminal law facts into sound statements of claim under civil law in particular requires specialised expertise.

2. Attachment under civil procedure pursuant to § 916 ZPO

To prevent a later title from coming to nothing, attachment proceedings under § 916 ZPO make it possible to secure assets before the action has been concluded. The requirements are:

• a claim to be secured (e.g. a specific claim for damages),
• and a ground for attachment, i.e. the risk that, without attachment, the debtor could frustrate or impede enforcement (e.g. by moving assets).

Practice shows that the courts require a substantiated account of this risk. Mere assumptions are generally not sufficient. Specific indications of asset transfers, the liquidation of assets or transfers abroad must be presented. This, too, requires close interlinking of legal analysis and asset research.

Findings from parallel criminal investigations can help to establish a robust evidential and factual basis in this respect.

3. Own enforcement: knowledge of the perpetrator’s assets as the key

Even with an enforceable title (judgment, settlement) and an attachment order obtained, the question arises: Where can enforcement take place? Without reliable knowledge of:

• bank accounts,
• shareholdings in companies,
• real estate,
• movable assets,
• claims against third parties,

enforcement measures risk coming to nothing. Tracing assets is therefore not a downstream step, but an integral part of an asset recovery strategy. The results of criminal financial investigations, the company’s own research and – where permissible – information from third parties are used systematically in order to enforce against the “right” assets in a targeted manner.

V. Integrated strategy: criminal law, civil law and asset tracing from a single source

Effective representation of injured parties and asset recovery in the case of white-collar crimes committed against companies require an integrated overall strategy:

• Swift, structured action immediately after the suspicion becomes known.
• Building a robust evidential basis that holds up under both criminal and civil law.
• Actively supporting and steering the investigation, including suggesting specific measures and securing assets.
• Targeted use of attachment instruments under criminal and civil procedure in order to secure assets at an early stage.
• Systematic asset tracing and strategically planned enforcement in order to turn titles into actual liquidity.

As a boutique law firm specialising in commercial criminal law, PRAGAL Rechtsanwälte can support companies as their central point of contact – from the first crisis report through internal investigation to the final securing of assets and compensation for losses. The aim is not only the criminal prosecution of the perpetrators, but above all the maximum economic recovery of the injured companies.

Particular expertise is contributed by attorney Maximilian Koch. Active in commercial and tax criminal law since 2018, he represents injured parties in complex proceedings involving fraud, breach of trust or corruption. His focus is on drafting strategic criminal complaints, joint prosecution (Nebenklage) and adhesion proceedings, as well as advising on compliance and risk issues.

Is your company facing the challenges of white-collar crime? Act early to preserve evidence and recover compromised assets. Contact us for a confidential initial consultation.

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