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DOJ Announces a New FCPA Corporate Enforcement Policy

On November 27, 2017, at the 34th International Conference on the Foreign Corrupt Practices Act (FCPA), Deputy Attorney General Rod Rosenstein announced a revised FCPA Corporate Enforcement Policy, which purports to lend certainty for companies grappling with the question of whether to voluntarily disclose violations. This new policy comes on the heels of the year and-a-half long FCPA Pilot Program. Prior to introducing the new Corporate Enforcement Policy, Rosenstein touted the success realized through the Pilot Program—an increase from 18 to 30 voluntary disclosures over an 18-month period. The new policy seeks to incentivize companies to voluntarily disclose FCPA violations and cooperate with the Department of Justice (DOJ) in remedying the violation.

Most notably, the policy calls for different treatment of companies that make voluntary disclosures to DOJ and those that do not make voluntary disclosures, but otherwise cooperate with DOJ. For a company to avail itself of the most favorable treatment it must voluntarily self-disclose potential FCPA violations, fully cooperate with any responsive DOJ investigation, and timely and appropriately remediate any issues of foreign corruption. Meeting these requirements will lead to a presumption towards declination by DOJ of otherwise appropriate criminal charges “absent aggravating circumstances.” The qualifying limitation for “aggravating circumstances” is not clearly delineated, but the DOJ guidance does provide examples of potentially disqualifying circumstances, including “involvement by executive management of the company in the misconduct; a significant profit to the company from the misconduct; pervasiveness of the misconduct within the company; and criminal recidivism.”

In instances where aggravating factors are present and thus criminal enforcement action is warranted, the new policy provides a recommendation for reduced penalties. Namely, DOJ “will recommend a 50% reduction off the low end of the U.S. Sentencing Guidelines, except in the case of a criminal recidivist.” Guidance as to how DOJ defines criminal recidivism is not present in the policy. DOJ will generally not require a monitor if a company has implemented an appropriate compliance program.

DOJ will offer a scaled incentive for companies that do not voluntarily disclose potential FCPA violations, but subsequently fully cooperate and remediate underlying issues. Specifically, DOJ will recommend “up to a 25% reduction off of the low end of the U.S.S.G. fine range.”

In addition to satisfying the above standards, participation in the Corporate Enforcement Policy requires disgorgement, forfeiture, or restitution of profits traceable to FCPA violations. This amount often comprises a hefty portion of the overall cost of an FCPA violation, and DOJ exercises a wide degree of discretion in determining this amount. For this reason, the disgorgement, forfeiture or restitution component is an important consideration for those corporations evaluating the benefits and costs of pursuing a “declination.”

The new Corporate Enforcement Policy lends a degree of clarity to DOJ’s FCPA policy, which will enable companies to make more informed business decisions. Still, the policy is not binding, leaving ultimate enforcement decisions to the prosecutorial discretion of DOJ components and U.S. Attorneys’ Offices. The policy further leaves unanswered questions about how DOJ will apply the policy. Among these concerns are uncertain standards to determine whether a company has sufficiently “voluntarily self-disclosed misconduct,” “fully cooperated” with the government’s investigation, and “timely and appropriately remediated.” Beyond this uncertainty as to whether a company’s actions would be deemed sufficient to trigger favorable treatment under the policy, there is further uncertainty regarding the methodology DOJ, in its sole discretion, will use to calculate profits subject to disgorgement. Finally, because the policy calls for the public disclosure of not only FCPA convictions resulting in reduced sentences but also declinations of cases that would otherwise have been prosecuted but for a company’s compliance with the policy, companies must also consider the publicity of a disclosure in determining its best course of action.

© 2018 Dinsmore & Shohl LLP. All rights reserved.

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About this Author

D Michael Crites, white collar criminal defense lawyer, Dinsmore Shohl, law firm
Partner

D. Michael Crites’ practice focuses exclusively on white collar criminal defense and complex business litigation. As the former United States Attorney for the Southern District of Ohio and an Assistant United States Attorney for the Southern District of Ohio, he has years of grand jury and litigation experience in federal court and regularly litigates and negotiates global settlements of criminal, civil and regulatory matters on behalf of corporations and businesses throughout the United States. He also serves as Special Counsel to the Ohio Attorney General.

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MIchael Ferrara, Dinsmore, trial and appellate lawyer, litigation, white collar crime, false crimes act, Columbus, Ohio, Government investigations,
Partner

Michael is a former federal prosecutor and experienced trial and appellate lawyer who focuses his practice on white collar criminal defense, internal investigations and False Claims Act litigation as a member of Dinsmore’s Litigation practice group. Prior to joining Dinsmore, he spent a decade as an assistant U.S. attorney in Chicago, where he served as the deputy chief of the narcotics section and lead attorney of a strike force which targeted organized crime for the U.S. Attorney’s Office for the Northern District of Illinois. In these roles, Michael handled and oversaw complex fraud matters and managed the office’s international money laundering and cartel prosecutions, leading teams of lawyers and investigators in years-long investigations of multi-billion dollar criminal enterprises.

In his time as a federal prosecutor, Michael gained substantial experience in litigation, trials and appellate work throughout the country, including the investigation and prosecution of a cyber-fraud organization which defrauded more than one million victims of over $100 million, criminal fraud matters related to parallel False Claims Act proceedings, and the prosecution of the leadership structure of the Sinaloa Cartel. He built his reputation as a respected, hands-on investigator by working with a wide variety of federal, state and foreign investigative and regulatory authorities. He successfully briefed and argued cases to the Seventh and Eighth Circuit Courts of Appeals, including matters of the First Amendment and complex evidentiary and federal sentencing guidelines issues.

He knows what clients facing investigations, subpoenas, trials and appeals should expect. He guides them through each process step by step, ensuring they know what to expect and counseling them on the best way to proceed along the way.

He is a graduate of Loyola University of Chicago School of Law, where he also served as an adjunct professor for more than a decade. Earlier in his career, Michael was local prosecutor in Chicago, where he specialized in forensic sciences while assigned as an assistant state’s attorney in the Cook County State’s Attorney’s Office’s cold case homicide unit.

614-628-6975
Mathew G Drocton, litigation, commercial litigation, Dinsmore, Columbus, Ohio, Honorable John J McConnell
Associate

Mathew is a member of the firm’s Litigation Department, where he focuses his practice on commercial litigation.

Prior to joining Dinsmore, he began his career working in complex commercial litigation for an Am Law 200 firm in Columbus. He also clerked for the Honorable John J. McConnell on the United States District Court for the District of Rhode Island.

614-628-6974