Will There Be a New Wave of Federal White Collar Crime Enforcement? DOJ Announces Its New Priorities to Focus on Combatting Corporate Wrongdoing
Last week, the U.S. Department of Justice’s Deputy Attorney General Lisa Monaco announced plans to increase its enforcement of white collar crimes against individuals and corporations. Monaco made the announcement speaking at the American Bar Association’s While Collar Crime Conference. She made clear to “those of you who are counselors and voices in the C-Suite and Boardroom” that DOJ “will not hesitate to take action when necessary to combat corporate wrongdoing.”
Monaco, DOJ’s second in command, is no stranger to prosecuting corporate crimes having participated in the Enron investigation. Unveiling an ambitious plan for prosecutors to hold accountable those who engage in criminal conduct, Monaco noted that, going forward, federal prosecutors will have a mandate to “enforce the criminal laws that govern corporations, executives, officers and others, in order to protect jobs, guard savings and maintain our collective faith in the economic engine that fuels this country.”
Additionally, Monaco informed the audience that Attorney General Merrick Garland “has made clear it is unambiguously this department’s first priority in corporate criminal matters to prosecute the individuals who commit and profit from corporate malfeasance.” This directive comes on top of DOJ’s continued and public focus on criminal and civil investigations on COVID-19 related enforcement.
According to Monaco, the impetus for this new focus on corporate wrongdoing arose from the changing nature of corporate crime: corporate crimes increasingly have a national security implication; investigators are able to use more sophisticated data analytics to track criminal conduct; and emerging technological and financial industries, such as cryptocurrency, are leading to new frontiers in criminal schemes.
Monaco acknowledged that cases against corporate executives are “some of the most difficult” that DOJ brings, but she pledged that prosecutors will not be deterred by the prospect of losing cases. She urged prosecutors to be “bold” in bringing cases against executives in order to hold accountable those who committed crimes. And, significantly, Monaco noted that DOJ intends to provide substantial resources for its prosecutors to initiate these kinds of enforcement actions.
Specifically, Monaco detailed three new DOJ initiatives that will guide federal prosecutors—though she cautioned these policies would just be a “first step” in ramped up DOJ investigations into corporate crimes. These initiatives come on the heels of DOJ’s 2020 release of its revisions to the “Evaluation of Corporate Programs” guidance, which focused on more individualized evaluations for corporations caught in DOJ’s crosshairs.
First, DOJ will mandate more disclosures from corporations regarding misconduct. “It will no longer be sufficient for companies to limit disclosures to those they assess to be ‘substantially involved’ in the misconduct.” Instead, in a restoration of prior principles detailed in the Yates memo, to receive credit for cooperation with prosecutors, corporations must disclose “all non-privileged information about individual wrongdoing.” This puts federal prosecutors—and not corporations and executives themselves—in the position to assess the relevance and culpability of any individuals involved with the misconduct.
Second, when evaluating resolutions, DOJ will now not just consider a corporation’s past similar misconduct, but, instead, DOJ will take into account the entirety of a corporation’s past misconduct. Currently, for example, in a tax matter, DOJ would only consider the corporation’s prior tax misconduct (if any) in reaching a resolution to that tax matter. Now, going forward, DOJ will consider any prior misconduct, whether related to violations of the tax code, the Foreign Corrupt Practices Act, the anti-money laundering provisions, False Claims Act, or any other federal or state Of note, Monaco made it clear that federal prosecutors will not ignore a corporation’s past state-based misconduct. Monaco directed prosecutors “to start by assuming all prior misconduct is potentially relevant.” Monaco questioned whether pre-trial diversion, such as non-prosecution or deferred prosecution agreements, is appropriate for recidivist corporations.
Third, DOJ will seek to impose independent monitors to oversee a corporation’s compliance and disclosure obligations. This last initiative marks a distinct break from recent years, when independent monitors were the exception and not the rule and a return to prior DOJ policies.
Additionally, Monaco also announced the formation of Corporate Crime Advisory Group. This new group will propose new policies and procedures for corporate crime enforcement within DOJ. The group will consider issues such as repeated corporate offenders, non-compliance with deferred prosecution agreements, selection of monitors, and resource allocation for investigating corporate crimes, and also develop benchmarks by which a corporation’s cooperation can be measured.
Echoing recent statements regarding the importance of compliance, Monaco closed by cautioning companies “to actively review their compliance programs to ensure they adequately monitor for and remediate misconduct — or else it’s going to cost them down the line.”
Corporations should heed this advice. Indeed, when it comes to avoiding government investigations, there are substantial benefits for corporations to be proactive about reviewing and updating their compliance programs and procedures. The applicability of Benjamin Franklin’s old adage— an ounce of prevention is worth a pound of cure—cannot be overstated. Corporations will be better served by conducting an assessment of their actions today, rather than have DOJ investigate their actions tomorrow in the wake of a planned increase in white collar investigations and prosecutions.