Justice Department Reports Strengthened Corporate Law Enforcement for White Collar Crime | Pillsbury Winthrop Shaw Pittman LLP

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Increased focus on individual responsibility

Restoring a 2015 policy, the DOJ announced that companies must now identify and disclose the identity of all individuals involved or responsible for misconduct if they wish to receive cooperation credit from the Department, regardless of the individual’s position, status, seniority or affiliation with the company. This is a significant change from the Trump-era Justice Department policy, which gave co-operation credit to companies that disclosed people who were “”substantially involved in or responsible for »misconduct, which gives companies a broad voice in which individuals would be held individually accountable. Under the new (reinstated) policy, decisions regarding the relative culpability of those involved in the misconduct will be left to DOJ lawyers.

DAG Monaco further underlined that the Department’s first priority is to “prosecute individuals who commit and profit from corporate embezzlement”. While acknowledging the difficulty of trying cases against such people, DAG Monaco made it clear that prosecutors must “be bold in holding accountable those who commit criminal behavior”.

Consideration of all previous cases of professional misconduct

When deciding whether to charge or resolve allegations of corporate misconduct, DOJ policy previously limited prosecutors to consider only related or similar past faults. DAG Monaco, however, announced that prosecutors should now consider all instances of misconduct in a company’s history, as identified in any criminal, civil or regulatory enforcement action against it or its related entities, including such actions taken by enforcement authorities other than the DOJ. While not all cases of prior misconduct are considered relevant, prosecutors should assume that “all prior misconduct is potentially relevant ”when it comes to assessing a company’s likelihood of reoffending and its culture of compliance (or lack thereof). For example, a prosecutor developing a case relating to the Overseas Corrupt Practices Act must now consider a company’s previous tax offenses, environmental law violations, etc., in addition to its previous violations. of the FCPA.

Increased use of the company’s external monitors

DAG Monaco also reaffirmed the DOJ’s commitment to impose independent corporate auditors in corporate criminal cases, where appropriate. When deciding whether the assignment of a monitor is appropriate, prosecutors should consider: “(1) the potential benefits that the employment of a monitor can have for the business and the public, and (2 ) the cost of a controller and its impact on the operations of a company. Specifically, a monitoring program should be considered when “a company’s program and compliance controls are untested, ineffective, under-resourced, or not fully implemented upon resolution.” .

Formation of the Corporate Crime Advisory Group

In addition to these policy changes, DAG Monaco also announced the formation of a Corporate Crime Advisory Group which will be invited to recommend further guidance and reforms to strengthen the Department’s approach to law enforcement. corporate offenses. Specifically, the group will focus on topics such as cooperative credit, corporate recidivism, standardization of the instructor selection process, and factors to consider in determining whether to offer a deferred prosecution agreement ( DPA), a non-prosecution agreement (NPA), or a plea agreement. While the Monaco DAG does not rule out the possibility that repeat or non-violating companies may receive additional DPAs or NPAs for future misconduct, this is an issue under consideration by the Department.

Key takeaways and lessons for the future

DAG Monaco summarized these announcements with the following five points:

  • Businesses need to actively review their compliance programs to ensure they are adequately monitoring and correcting malpractice, otherwise it will end up costing them dearly.
  • For businesses under investigation, starting today, the Department will review all of their criminal, civil and regulatory records, not just part of that record.
  • In order to receive credit for their cooperation with the government, companies will need to identify all those involved in the misconduct – not just those who are substantively involved – and produce all non-privileged information on the involvement of those people.
  • For companies negotiating resolutions on corporate charges, there is no presumption against corporate monitors. The decision whether or not to impose a monitor will be made based on the facts and circumstances of each case.
  • Looking to the future, this is a beginning – not the end – of this administration’s actions to more aggressively pursue malpractice.

As companies respond to this shift in enforcement policies, they should focus on the following best practices:

  • Review and invest in internal compliance programs that serve both training and monitoring. Employees must be informed of their obligations under the law and systems must be in place to eliminate and prevent misconduct before they occur.
  • Increase the company’s focus on creating a culture of compliance and accountability across the organization, supported by documented efforts to achieve compliance at all levels.
  • Evaluate the history of the company’s criminal, civil and regulatory law enforcement actions and ensure compliance with the terms of any pending APM or APD. If there is a significant history of violations, companies should reassess their internal controls and develop justifications why these past actions are not indicative of the company’s current and future commitment to compliance.
  • Evaluate company policies on defense expense compensation and review directors ‘and officers’ liability insurance policies to ensure officers and employees are protected against financial damage caused by a more in-depth review of roles of individuals in corporate misconduct.

Businesses should be fully aware that failure to meaningfully embrace these prophylactic the measures can be very costly if a fault is discovered later.


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