U.S. Deputy Attorney General Announces New DOJ Guidance in Prosecuting Corporate Crimes

United States Deputy Attorney General Lisa Monaco gave a speech on September 15, 2022 re-emphasizing the U.S. Department of Justice’s continuing focus on prosecuting corporate crime.

In connection with her speech, the U.S. Department of Justice (DOJ) issued a memorandum with new and expanded directives and guidelines for companies, government entities, associations, and their employees and executives, building upon and adding to DOJ’s already robust guidelines for corporate criminal enforcement.

This recent speech does not appear to be lip-service aimed at corporate malfeasance, as Monaco revealed that DOJ is also requesting $250 million from Congress next year for corporate crime initiatives.

Here are some highlights from her speech and DOJ’s new policy toward corporate criminal enforcement:

Individual Accountability

Monaco underscored that the DOJ’s number one priority in its enforcement of corporate criminal matters remains holding individuals accountable who commit and profit from corporate crimes.. Monaco stressed that DOJ was going to “do more and move faster” in such cases, starting with requiring companies to come forward with evidence of criminal conduct more quickly.

DOJ’s newly-released memo states that for companies to be eligible for cooperation credit, they must disclose to DOJ “all relevant, non-privileged facts about individual misconduct.” Mere disclosure of records is not enough. If prosecutors determine that a company has unduly or intentionally delayed the production of information or documents – particularly with respect to documents that impact the government’s ability to assess individual accountability – cooperation credit will be reduced or eliminated. As Monaco stated, “Gamesmanship with disclosures or productions will not be tolerated.”

Further, the Department is prioritizing prosecutions of individuals before resolving corporate cases, noting that prosecutors “must strive” to complete and seek criminal charges against individuals prior to or at the same time as entering into a resolution with a company. However, DOJ did leave some wiggle room to resolve company cases first, but requiring that prosecutors submit such corporate resolutions, as well as a full investigative plan outlining the remaining work to be done on cases against individuals and a timeline for completing that work, all to be approved by DOJ leadership. Monaco stated that the intent of these requirements was to “push prosecutors and corporate counsel alike to feel like they are ‘on the clock’ to expedite investigations, particularly as to culpable individuals.”

Corporate Accountability

a. Corporations’ History of Misconduct

While noting DOJ’s October 2021 memorandum requiring prosecutors to consider a corporation’s full criminal, civil and regulatory record when resolving matters, Monaco pointed out that not all prior misconduct was equally relevant or probative.

While the most significant type of prior misconduct would be criminal resolutions in the United States, as well as prior wrongdoing involving the same individuals or management as the current misconduct, some dated past actions (criminal matters more than 10 years old; civil or regulatory more than 5 years old) might not accurately reflect a company’s current culture or commitment to compliance and therefore should be given less weight.

DOJ would also consider the nature and circumstances of a company’s prior misconduct, including whether it shared the “same root causes” as the present misconduct. Prosecutors would also be instructed to examine whether there were broader weaknesses in a company’s compliance culture or practices, such as whether the wrongdoing occurred under the same management or executive leadership.

In addition, DOJ’s memo emphasized that multiple, successive non-prosecution agreements (“NPA”) and deferred prosecution agreements (“DPA”) with the same company would be “generally disfavored” and would require prior approval of Department leadership. As Monaco stated, “Companies cannot assume that they are entitled to an NPA or a DPA, particularly when they are frequent flyers. We will not shy away from bringing charges or requiring guilty pleas where facts and circumstances require. If any corporation still thinks criminal resolutions can be priced in as the cost of doing business, we have a message—times have changed.”

b. Voluntary Self-Disclosure

According to Monaco, the easiest way for a company to avoid a guilty plea or indictment is through voluntary self-disclosure.  She went on to state that DOJ’s goal is to reward companies with robust compliance programs and to incentivize others to make similar investments.

According to DOJ’s memo, DOJ will not seek a guilty plea where a corporation has voluntarily self-disclosed, fully cooperated, and timely and appropriately remediated the criminal conduct (unless there are aggravating factors).  In addition, DOJ will not require an independent compliance monitor for a cooperating corporation that voluntarily self-discloses the relevant conduct if, at the time of resolution, it also demonstrates that it has implemented and tested an effective compliance program.

Significantly, for the first time ever, DOJ is now requiring that every component of DOJ that prosecutes corporate crime to have a formal, written policy that incentivizes voluntary self-disclosure. 

c. Cooperation by Corporations

Cooperation is considered by DOJ to be different from voluntary self-disclosure, with a company’s degree of and commitment to cooperation determining the amount of credit awarded by DOJ, including ultimately the form of the resolution, the applicable fine range and the undertakings involved in the resolution.  DOJ’s memo states that companies seeking credit must “timely preserve, collect and disclose relevant documents” to DOJ. 

“Relevant Considerations” in Resolving Corporate Criminal Matters

Finally, DOJ’s memo lays out a proverbial “roadmap” into the mind of prosecutors, listing several “relevant considerations” that will be considered, evaluated and ultimately documented to justify a prosecutor’s decision to enter into an agreement to resolve a corporate criminal matter.  These “relevant considerations” can include a company’s voluntary self-disclosure, cooperation, and remedial efforts (or lack thereof); the cooperation credit, if any, that a company is receiving; the seriousness and pervasiveness of the criminal conduct; the company’s history of misconduct; the company’s compliance program at the time of the underlying criminal conduct and the time of the resolution; the reasons for imposing an independent compliance monitor or any other compliance undertaking, if applicable; and any other key considerations.

Companies who discover concerning issues of potential or actual criminal conduct should take notice of these new DOJ directives and guidance to prosecutors, particularly as they relate to actions needed to be taken swiftly by companies in order to receive cooperation credit from DOJ, effectively address and remediate current crises, and prevent future harm.

If you have questions or need help navigating this complex maze of DOJ policies and enforcement, Phelps’ team of former U.S. Attorneys and federal and state prosecutors have the experience and relationships to assist you through enforcement actions and can help you develop compliance programs and executive swift, comprehensive internal investigations in order to avoid problems in the future. For more information, please contact Mike Hurst or another member of Phelps’ White Collar Defense and Investigations team.