November 29, 2021

Volume XI, Number 333

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DOJ Announces Major Changes to Corporate Criminal Enforcement Policies

In a keynote address to the American Bar Association’s 2021 National Institute on White Collar Crime, Deputy Attorney General (DAG) Lisa O. Monaco outlined major changes to the U.S. Department of Justice’s (DOJ) priorities for white collar enforcement. Monaco focused her presentation on four themes that encapsulate DOJ’s tougher approach.

EMPHASIS ON PROSECUTION OF INDIVIDUALS

In a return to an Obama-era policy, DAG Monaco announced that in order to obtain corporate cooperation credit, companies must now “identify all individuals involved in the misconduct—not just those substantially involved—and produce all non-privileged information about those individuals’ involvement.” This move reinstates the policy outlined by then-DAG Sally Yates in the so-called “Yates Memo” of 2015 stating that companies which seek cooperation credit face an all-or-nothing choice: They can identify everyone, from executives to low-level employees, involved in the conduct, or they can forego the substantial benefits of cooperation. DAG Monaco argued that distinctions between substantial and tangential involvement in corporate criminal misconduct are “confusing” and that they “afford companies too much discretion in deciding who should and should not be disclosed to the government.” This new requirement to identify all persons involved, however tangentially, in misconduct is also part of a broader push by DOJ to ramp up prosecutions of individuals, including corporate executives. DAG Monaco conceded that “cases against corporate executives are among some of the most difficult that the department brings,” but she expressed a desire to forge ahead with such cases, contending that “the fear of losing” should not deter prosecutions “as long as we act consistent with the Principles of Federal Prosecution.” She added that it is “unambiguously this department’s first priority in corporate criminal matters to prosecute the individuals who commit and profit from corporate malfeasance.”

COMPREHENSIVE EXAMINATION OF ALL CONDUCT—CRIMINAL, CIVIL, AND REGULATORY

DAG Monaco announced that for companies facing investigations involving corporate misconduct, “as of today, the department will review their whole criminal, civil, and regulatory record—not just a sliver of that record.” That means, for example, that a company’s prior misconduct with respect to environmental compliance or taxes will be evaluated when determining the appropriateness of a resolution to a Foreign Corrupt Practices Act investigation. DAG Monaco contended that a company’s “record of misconduct”—even if unrelated to the present investigation—“speaks directly to a company’s overall commitment to compliance programs and the appropriate culture to disincentivize criminal activity.”

This move is sure to change the calculus for companies engaged in government litigation or investigations. In particular, the new guidance increases the need to consider collateral consequences when resolving cases. It also emphasizes the importance of companies taking an across-the-board review of compliance policies and procedures, even in areas that are not part of their core business.

NO PRESUMPTION AGAINST MONITORSHIPS

Corporate compliance monitors continue to loom large. DAG Monaco explained that for companies negotiating resolutions, “there is no default presumption against corporate monitors.” To the extent that prior DOJ guidance “suggested that monitors would be the exception and not the rule,” DAG Monaco rescinded that guidance.

This renewed focus on monitorships emphasizes that a company’s obligations do not end when a settlement is inked. Instead, all companies, and in particular those with compliance monitors, should implement comprehensive safeguards to protect against future violations. DAG Monaco added that DOJ has “no tolerance for companies that take advantage of pre-trial diversion by going on to continue to commit crimes, particularly if they then compound their wrongdoing by knowingly hiding it from the government.”

TOUGHER STANDARDS FOR NPAS AND DPAS

Many companies facing criminal investigations choose to accept responsibility and enter into non-prosecution agreements (NPAs) or deferred prosecution agreements (DPAs) with the government. Noting that “somewhere between 10% and 20% of all significant corporate criminal resolutions involve companies who have previously entered into a resolution with the department,” DAG Monaco questioned whether recidivist corporations should continue to get a “break.” She noted that DOJ will be “studying” that question in coming months and looking to determine whether “the opportunity to receive multiple NPAs and DPAs” creates a sense that “these resolutions and the attendant fines are just the cost of doing business.”

Like the holistic focus on a company’s record, this announcement underscores the need to take a global approach to compliance and to carefully evaluate the potential for collateral consequences. Because companies that do not receive NPAs or DPAs could instead face a full panoply of criminal penalties, the need to avoid being a repeat player is even more acute.

Taken together, these announcements foreshadow a broader focus by DOJ on the role of corporate compliance programs to prevent misconduct from occurring and, where such violations have already occurred, to implement changes to prevent and punish recidivism. 

Copyright 2021 K & L GatesNational Law Review, Volume XI, Number 306
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About this Author

Brian Saulnier, KL Gates Law Firm, Government Enforcement Attorney
Partner

Mr. Saulnier’s practice focuses on corruption-related matters and internal corporate investigations, including matters involving the Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act of 2010 (UKBA). Mr. Saulnier has conducted internal investigations in the United States, South America, Europe, Africa, the Middle East, and Asia. In connection with this aspect of Mr. Saulnier’s practice, he conducts investigations into alleged misconduct, as well as into prospective and existing foreign agents, commercial advisers and business partners. Further, Mr. Saulnier...

412-355-6504
Mark A. Rush, KL Gates, False Claims Act defense attorney, complex commercial litigation lawyer
Partner

Mr. Rush is a partner with the firm and concentrates his practice on litigation as a trial lawyer, with emphasis on internal investigations, corporate criminal defense, Bank Secrecy Act and AML issues, False Claims Act defense and complex commercial litigation. Mr. Rush has defended public and private corporations, financial institutions, public officials, government contractors, hospitals and healthcare systems who are subjects of federal and state grand jury investigations and investigations by various federal and state agencies. His representations also include...

412-355-8333
Andrew M. Wright Public Policy & Law K&L Gates Washington DC
Partner

Andrew Wright is a partner at the firm’s Washington, D.C. office and is a member of the public policy and law practice group. He guides clients through congressional oversight and investigations-related matters, executive branch compliance, and government enforcement actions.

Mr. Wright previously served as Associate Counsel to United States President Barack Obama and Assistant Counsel to Vice President Al Gore. In those roles, he represented and advised the White House on a variety of legal matters, with an emphasis on litigation, congressional oversight, investigations, compliance...

202.778.9387
Partner

David Rybicki is a partner in the firm’s Washington, D.C. office. He is a member of the investigations, enforcement, and white collar practice group.

Mr. Rybicki recently served in the Criminal Division of the United States Department of Justice in Washington, D.C., as Acting Principal Deputy Assistant Attorney General (2017) and Deputy Assistant Attorney General (2017-2020), the second- and third-highest ranking positions in the division. In these roles, Mr. Rybicki supervised some of the nation’s most significant investigations and prosecutions involving white collar crime, money...

202.778.9370
Associate

Rob Silverblatt is an associate in the firm’s Investigations, Enforcement, and White Collar practice group. A former Department of Justice trial attorney, Rob has substantial experience serving as lead counsel on legally and factually complex cases.

Rob began his career in 2013 as an associate in the firm’s Government Enforcement practice group. He represented individuals and companies in front of the Securities and Exchange Commission, the Federal Energy Regulatory Commission, the Commodity Futures Trading Commission, and the Financial Industry Regulatory Authority.

Between...

202-778-9132
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