United States: DOJ Announces Changes In White-Collar Criminal Enforcement In The Interest Of Transparency

The Situation<: On October 8, 2019, the U.S. Department of Justice ("DOJ") announced two significant developments relating to the enforcement of white-collar crime: (i) new guidance on how prosecutors should evaluate requests by corporate defendants for a reduction in fines and penalties based on a stated inability to pay; and (ii) the restructuring of DOJ's Securities and Financial Fraud Unit as the Market Integrity and Major Frauds Unit.<

The Result<: DOJ continues to prioritize the enforcement of corporate crime while simultaneously attempting to provide corporate entities greater "transparency" with respect to its decision-making process in key enforcement areas. DOJ hopes to increase incentives for companies to take affirmative steps to prevent fraud and other malfeasance, promote "consistency and predictability" in DOJ's decision-making, and clarify the factors that DOJ will and will not consider in evaluating corporate inability to pay claims.<

Looking Ahead<: The "Benczkowski Memorandum" on inability to pay became effective on October 8, 2019. While it disclaims the creation of any enforceable "substantive or procedural rights," corporate targets of DOJ criminal enforcement actions should be able to rely on its provisions when negotiating with DOJ a reduction in fines and penalties.<

DOJ recently announced new guidance detailing the criteria prosecutors will consider when evaluating corporate defendants' claims of an inability to pay a criminal fine or monetary penalty, as well as a restructuring within the DOJ Fraud Section. The announcements on October 8, 2019, by Brian Benczkowski, Assistant Attorney General for DOJ's Criminal Division, reflect DOJ's emphasis on enhancing transparency to the corporate community about its enforcement priorities, processes, and procedures.

AAG Benczkowski stated that while DOJ continues to pursue aggressively white-collar criminal cases, and that this "remains a top priority" for DOJ, the goal "is to not just punish corporate crime, but to deter it as well." To that end, DOJ has recently publicized its internal guidance defining the "criteria prosecutors will apply to key decisions" in several areas, including incentives for cooperation in Foreign Corrupt Practices Act cases (November 2017), when DOJ will impose a corporate monitor (October 2018), and how DOJ evaluates corporate compliance programs (April 2019). DOJ's guidance on factors relevant to the inability to pay analysis is the latest DOJ effort to increase the agency's transparency to the corporate community so that companies may "invest fully in compliance on the front end" and "make good decisions in the face of misconduct on the back end."

Inability to Pay Memorandum and Questionnaire

DOJ published a memorandum to provide an "analytical framework" for evaluating a company's inability to pay a claim ("Benczkowski Memorandum"). The Benczkowski Memorandum clarifies that the ability of a corporate defendant to pay is not a threshold issue in its negotiations with the government. Before DOJ will consider a claim of inability to pay, the corporate defendant and DOJ must first agree to the form of the criminal resolution, whether by guilty plea, a deferred prosecution agreement, or nonprosecution agreement, as well as the amount that the monetary penalty would be based on the conduct at issue without consideration of the company's financial condition. Only then should attorneys in DOJ's Criminal Division consider a range of factors enumerated in the Benczkowski Memorandum, including:

  • What gave rise to the organization's current financial condition? (e.g., whether the alleged lack of money is the result of intentional corporate decisions like dividends, distributions, or compensation to ownership and management; investments like capital improvements or acquisitions; or engaging in related party transactions);
  • Alternative sources of capital (e.g., whether the company has credit lines or booked reserves);
  • Significant and likely collateral consequences of the fine or penalty to the company (e.g., pension obligations, layoffs, or product shortages); and
  • Whether the proposed fine or penalty will impair the company's ability to pay restitution to victims.

These factors do not supersede, and should be applied in conjunction with, the statutory sentencing factors in 18 U.S.C. § 3572 and U.S. Sentencing Guidelines §§ 8C2.2 and 8C3.3.

A detailed questionnaire accompanies the Benczkowski Memorandum to provide objective data in support of a company's request. Corporate defendants are required to provide DOJ with voluminous information, including recent cash flow projections, operating budgets, acquisition or divestiture plans, encumbered assets, audited financial statements, and income tax returns for five years.

If a company is in fact unable to pay the agreed-upon fines and penalties after evaluation of these factors and its financial information, and often after consultation with an accounting expert for the government, Criminal Division attorneys should recommend an adjustment to the monetary penalties and fines "to the extent necessary to avoid (1) threatening the continued viability of the organization and/or (2) impairing the organization's ability to make restitution to victims."

Guidance on corporate defendants' ability to pay claims is consistent with DOJ's increased emphasis on transparency in its decision-making processes with respect to corporate prosecutions, including its April 2019 guidance on evaluating corporate compliance programs and the factors DOJ will use to determine if a program is operating effectively in practice. It is also in line with the October 2018 guidance clarifying that monitors should be approved only in cases where there is a demonstrable need and not as punishment.

Both the substance of DOJ's recent guidance and its strategy to publicize the guidance are "part and parcel" of DOJ's goal "to establish more predictable guideposts by which companies can gauge expectations, conform their conduct, and act as responsible corporate citizens."

Changes to DOJ's Securities and Financial Fraud Unit

AAG Benczkowski also announced that DOJ is reorganizing its Securities and Financial Fraud Unit within the Fraud Section, renaming it the Market Integrity and Major Frauds Unit "to capture the broad range of fraud enforcement work that its prosecutors actually perform." More importantly, DOJ is establishing five discrete teams of prosecutors that will specialize in the following substantive areas of white-collar crime: Securities Fraud; Commodities Fraud; Government Procurement Fraud; Fraud on Financial Institutions; and Consumer Fraud, Regulatory Deceit, and Investor Schemes. With increased subject matter specialization and DOJ's aggressive investigation of white-collar cases, we should expect DOJ to bring more fraud cases, including those with wide-ranging impacts in several industries.

Five Key Takeaways

  1. Criminal enforcement against corporations remains one of DOJ's top priorities.
  2. DOJ has shown a recent willingness to pull back the curtain to increase "transparency" of the factors it considers relevant in white-collar criminal enforcement.
  3. Corporate criminal defendants have more clarity on the factors DOJ will use to assess claims of an inability to pay criminal fines and penalties, as well as the financial records required to support such a request.
  4. DOJ has reorganized a key enforcement unit for white-collar crimes that should lead to larger and more impactful cases in five areas of substantive focus.
  5. DOJ wants companies "to trust that, if they respond appropriately to misconduct, they can be assured of fair and evenhanded treatment by the Department of Justice."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions