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DOJ Announces New Guidelines to Assist Prosecutors in Assessing Fair and Sensible Corporate Penalties in White Collar Cases

The U.S. Department of Justice released guidelines on October 8, 2019 that aim to provide federal prosecutors with more guidance on how to approach claims by white collar defendants that they are unable to pay fines or penalties sought by prosecutors for criminal infractions. The guidelines are a positive development for companies that often find themselves unable to pay the fines that are otherwise deemed appropriate by the DOJ after considering the law and facts of a given case.

Assistant Attorney General Brian Benczkowski announced the guidelines, and an accompanying questionnaire, and expressed hope that the materials would promote transparency inside and outside of the DOJ, allow prosecutors to utilize a more uniform set of considerations and give companies looking to resolve matters greater insight into prosecutors’ thinking.

The guidelines stress that before any inability to pay argument is considered by the DOJ, prosecutors and a corporate defendant must agree upon the monetary penalty that is appropriate based solely on the law and facts. Prosecutors and the government’s accounting experts may then use a company’s responses to a DOJ questionnaire with a view towards making a more informed and fair determination concerning a company’s ability to pay. The questionnaire considers a wide range of factors including recent cash flow projections, operating budgets and projections of future profitability, capital budgets and projections of annual capital expenditures, proposed changes in financing or capital structure, acquisition or divestiture plans, restructuring plans, claims to insurers, encumbered assets and liens. 

In addition to financial metrics, prosecutors are urged to consider the collateral consequences of the imposition of a fine that may be beyond the means of a corporate defendant, such as the impact on pensions, employee jobs at a company and product shortages that may cause disruption to the larger market. Prosecutors are also urged to consider whether a proposed fine will impair the organization’s ability to make restitution to any victims.

The guidelines and questionnaire represent a positive step by the DOJ toward assessing fair and sensible penalties for corporate defendants in white collar cases. Polsinelli will continue to monitor developments in this area and will work with clients to assist them in negotiating equitable resolutions with the government.

© Polsinelli PC, Polsinelli LLP in California

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About this Author

Brian F. McEvoy, Polsinelli PC, Atlanta, white collar criminal defense lawyer, health care fraud matters attorney
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Brian McEvoy is an accomplished litigator with a well-earned reputation for working tirelessly to achieve the best outcomes for clients and for thinking creatively and strategically to resolve difficult problems with efficiency and professionalism. Brian is a former federal prosecutor with a practice focus on white collar criminal defense and a special emphasis in health care fraud matters. During his service as a federal prosecutor, he received special commendation from the Department of Health and Human Services by receiving the Inspector General's Integrity Award for...

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As a shareholder in the Government Investigations practice, Brian Rafferty leverages a distinguished background serving as Chief of the Criminal Division of the United States Attorney’s Office for the Southern District of Georgia. In his more than ten years of experience as a federal prosecutor, Brian oversaw and managed some of the most high-profile and complex investigations in the Southern District of Georgia. Before his work as a federal prosecutor, Brian was a partner at white collar criminal litigation boutique in New York, where he represented individuals in government investigations.  Brian draws upon his deep understanding of the inner workings of enforcement authorities to represent clients facing regulatory and criminal enforcement actions. Leveraging his extensive experience and sound judgment, Brian constructs comprehensive strategies to defend entities and individuals facing government investigations and enforcement proceedings.

Brian focuses his practice on defending clients in a multitude of white collar defense, internal investigations and complex federal litigation matters. He provides prospective guidance to mitigate and ensure compliance with applicable state and federal laws and regulations. His work spans an array of industries with a particular focus on health care fraud, government contracting, and financial industries.

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Michael M. Besser, Associate, Polsinelli, Government Investigations, False Claims Act Defense, internal investigation matters
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As a member of Polsinelli's Government Investigations practice, Michael Besser helps clients mitigate risk and resolve collateral consequences in a practical and efficient way, while minimizing impact on their business and reputation. He assists seasoned Polsinelli attorneys with the representation of individuals, organizations, and corporations in all aspects of white collar defense and internal investigations, from discovery through sentencing, including factual and legal research and motion practice. Michael also focuses his practice on False Claims Act Defense and...

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