Recent remarks to American Bar Association’s National White Collar Criminal Defense Institute by Deputy Attorney General Lisa O. Monaco serve as a clear warning to businesses that the Biden Justice Department will demand prosecutions of individuals who have engaged in corporate criminal enforcement misconduct when resolving its investigations.
During the last years of the Obama administration, then Deputy Attorney General Sally Yates issued a memorandum emphasizing that if a corporation sought cooperation credit with the Justice Department in resolving a federal corporate criminal investigation, the corporation would be expected to identify individuals within the corporation who were personally responsible for the misconduct, and provide the Justice Department with evidence to support a prosecution of such individual. The Yates Memorandum was highly criticized because of the conflict of interest it could create between the corporation and its officers and employees. The Department’s emphasis on ferreting out individual misconduct in this manner could cause the company to become an arm of the Justice Department in conducting federal criminal investigations. Several high-profile federal prosecutions were infected by corporate counsel moving too aggressively against the company’s own officers and employees in an effort to persuade the Justice Department to resolve the investigation of the corporation.
The Trump administration, through then Deputy Attorney General Rod Rosenstein, issued guidelines that withdrew the emphasis on pressuring corporations to turn individuals in to the Justice Department in an effort to resolve a criminal investigation. In her October 28 remarks, Monaco returned to the emphasis of the Yates Memorandum on searching for individual prosecutions of corporate misconduct. Indeed, Monaco’s guidelines appear to provide even more emphasis on individual prosecutions than the Yates Memorandum.
Monaco informed the federal defense bar that the Justice Department would be providing more resources and support, including dedicated agents, to assist prosecutors in uncovering and prosecuting the most sophisticated corporate criminals. For example, a new squad of FBI agents will be dedicated exclusively to the Department’s Criminal Fraud Section. Monaco also emphasized that the Department will review and assess a company’s prior misconduct, even if unrelated to the current investigation, in deciding an appropriate resolution of the investigation. The Department will work closely with other federal and state regulators to understand the scope of a company’s prior misconduct. Monaco expressed that a record of past corporate misconduct may reflect a company’s lack of a commitment to compliance programs and the appropriate culture to discourage criminal activity. Further, Monaco emphasized that the Department would be looking to use corporate monitors more than the previous administration, as a method to monitor corporate compliance with a resolution of a criminal investigation, especially in connection with Deferred Prosecution or Non-Prosecution Agreements that are commonly used to resolve such investigations.
What Corporations Can Expect Next
Monaco’s remarks left no question that corporations and their officers will be under close government scrutiny. Significant resources will be spent on combatting corporate crime. Monaco specifically stated that, “our mission must remain the same — enforce the criminal laws that govern corporations, executives, officers and others… We will hold those that break the law accountable… Accountability starts with the individuals responsible for criminal conduct… it is unambiguously this department’s first priority in corporate criminal matters to prosecute the individuals who commit and profit from corporate malfeasance.”
To avoid ending up in the crosshairs of a criminal investigation, companies should work with counsel to ensure they are demonstrating a commitment to compliance programs and making efforts to root out criminal activity. Additionally, if a corporate officer or employee is to be questioned by corporate counsel in connection with allegations of misconduct, and/or in response to a criminal investigation, counsel must be careful to protect the rights of the individual, including consideration of advising the officer or employee of his or her right to retain individual counsel. The conflict of interest that can be created by the Justice Department’s expectation that corporate counsel will identify individual wrongdoers to the government, and provide evidence that the DOJ can use to prosecute the individual, compels a careful approach to such internal investigations.
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