New Sheriff in Town: DOJ Announces Strengthened Efforts To Combat White Collar Crime
On October 28, 2021, in a speech before the American Bar Association’s 36th Annual National Institute on White Collar Crime, Deputy Attorney General Lisa Monaco formally announced that the Department of Justice is taking significant actions to strengthen its efforts to combat corporate crime. The announcement comes as little surprise, as Attorney General Merrick Garland had previously identified white collar enforcement as a DOJ priority during his confirmation hearing.
In setting out DOJ’s initiatives to address corporate and executive misconduct, Monaco’s remarks evidence a heightened focus on combatting corporate crime. Companies and executives should take note of DOJ’s prioritization of white collar enforcement, and they should proactively review and revise corporate compliance programs to be better prepared to respond to federal investigations and encourage a culture of compliance that DOJ may credit at both the charging and sentencing stages.
Heightened Focus on White Collar Enforcement
DOJ’s prioritization of the prosecution of corporate misconduct is, in many ways, a return to the policies articulated by former Deputy Attorney General Sally Yates in the 2015 Yates Memorandum. Like the Yates Memo, Monaco’s speech focused on the importance of individual accountability, and she noted specifically that “the priority remains [on] individual accountability,” and “prosecuting the individuals who commit and profit from corporate malfeasance.”
Acknowledging the difficulty of bringing cases against corporate executives, Monaco further noted that she anticipates the government will lose cases seeking to prosecute corporate executives. She emphasized, however, that “the fear of losing should not deter” prosecutors from pursuing white collar enforcement and commencing cases that constitute a federal offense.
In support of DOJ’s renewed commitment to white collar enforcement, Monaco committed “to find ways to surge resources to the department’s prosecutors.” Those resources include embedding FBI agents into DOJ’s Criminal Fraud Section to encourage a team model to prosecution because, as Monaco described, “putting agents and prosecutors in the same foxhole can make all the difference” when prosecuting corporate and executive crimes.
Three Priorities of the DOJ
In her speech, Monaco detailed three principal areas of focus in connection with increasing white collar enforcement — individual accountability, corporate recidivism and the use of corporate monitors. All three will have ramifications for both individuals and companies.
- Individual Accountability
Consistent with DOJ’s previous policy under the Yates Memo, Monaco noted that DOJ will focus on ensuring the accountability of all individuals who are potentially implicated in criminal conduct, noting that “it will no longer be sufficient for companies to limit disclosure to those they assess to be substantially involved in the misconduct.” Rather, to obtain cooperation credit, a company must provide DOJ “with all non-privileged information about individuals involved in or responsible for the misconduct at issue.”
This means that, going forward, targets of DOJ investigations should expect significant scrutiny on all individuals who were involved in or aware of criminal conduct. Moreover, to the extent that a company is seeking cooperation credit from DOJ, it will be expected that the identities of all individuals — regardless of position, level of involvement or relative culpability — will be disclosed to the government.
- Corporate Recidivism
Monaco also directed prosecutors to evaluate a company’s “full criminal, civil and regulatory record when deciding what resolution is appropriate for a company[.]” Rather than consider only the misconduct at issue in their own investigation, prosecutors must now consider the full range of an individual or corporate target’s prior misconduct in an effort to “harmonize the way [DOJ] treat[s] corporate and individual criminal histories.”
Monaco’s directive to consider the full range of a target’s criminal or regulatory compliance record suggests that pretrial diversionary dispositions, like declinations, non-prosecution agreements (NPAs), and deferred prosecution agreements (DPAs), will not only depend on the facts at issue in one investigation, but rather may depend on the target’s past, and possibly utterly unrelated, conduct. It also suggests that these dispositions will be less likely to be available to recidivist targets.
This means that, as they prepare to interact and negotiate with the government, individual and corporate targets of investigations must understand not only the potential bad acts being investigated by DOJ, but also any prior bad acts or noncompliance. This focus will likely help first-time offenders, but will likely result in harsher dispositions for targets who have previously run afoul of criminal or regulatory authorities.
- Corporate Monitorship Use
Finally, Monaco rescinded DOJ’s prior guidance about corporate monitorships. While the previous administration directed that monitorships were disfavored and should be used only in exceptional circumstances, Monaco stressed flexibility to use independent monitors to encourage compliance “whenever it is appropriate to do so in order to satisfy our prosecutors that a company is living up to its compliance and disclosure obligations under the DPA or NPA.” Monaco further encouraged creativity in considering how any potential monitorship is administered or the standards to apply. However, she noted DOJ’s continued commitment to selecting neutral monitors to eliminate “even the perception of favoritism.”
This means that, going forward, companies should anticipate that prosecutors will be more likely to require the imposition of independent monitors as a condition of DPA and NPA agreements. This is significant not only because monitorships are expensive and impose administrative constraints on companies, but also because monitors typically are obliged regularly to interact with and prepare reports for the government — and, in some cases, a judge. To the extent that a monitor’s report is less than favorable, it could result in a longer period of supervision for the company in question.
Key Takeaways
There are several key takeaways from Monaco’s speech which our corporate partners should keep in mind. These are described as follows:
- Companies need to actively review their compliance programs to ensure they adequately monitor for and remediate misconduct.
- Companies and executives facing investigations should expect DOJ to review their whole criminal, civil and regulatory record.
- Companies and executives cooperating with the government need to identify all individuals involved in the misconduct — not just those substantially involved — and produce all non-privileged information about those individuals’ involvement.
- Companies negotiating resolutions may be subject to corporate monitors depending on the facts and circumstances of the case.
While DOJ’s white collar initiatives are consistent with enforcement priorities of previous administrations, Monaco described the initiatives as “only the first steps to reinforce our commitment to combatting corporate crime.” As such, companies and executives should anticipate additional enforcement guidance moving forward. In the meantime, companies should be cognizant of DOJ’s heightened interest in investigating and prosecuting white collar crime; its surge of FBI resources to initiate and support those investigations; the DOJ’s willingness to take an aggressive approach to individual cases; its increased scrutiny of prior misconduct; the requirement of companies to engage in more robust cooperation and prioritization of individual accountability; and the increased use of corporate monitorships in resolving cases.
We will keep you apprised of further developments when they occur. Until such time, please do not hesitate to contact us if you have any questions about this update, how it might impact your business, or how we can provide guidance on corporate compliance issues.
作者
