Recent language from the Department of Justice makes it clear that U.S. Attorneys are implementing stricter corporate criminal enforcement policies with a focus on individual accountability. This shift has far-reaching implications for business executives and leaders, their counsel, hiring practices and more.
DOJ's priorities and their enforcement often shift with each presidential administration. This can make the already tricky waters of government investigations more difficult to navigate. And a misstep or misunderstanding of the DOJ's policies could lead to a potentially damaging and burdensome investigation, even prosecution.
Six Phelps partners have occupied critical positions at the Department of Justice. Working under four different administrations in three states, they offer unparalleled insight into best practices and what to make of the DOJ's tougher stance on corporate enforcement.
The Phelps partners who served as United States Attorneys or Assistant U.S. Attorneys (AUSAs) are:
- Harry Rosenberg served as the U.S. Attorney for the Eastern District of Louisiana from 1990 to 1993. He was appointed by President George H. W. Bush.
- Shaun Clarke served as Assistant U.S. Attorney for the Eastern District of Louisiana from 1992-1995.
- Brian Albritton served as the U.S. Attorney for the Middle District of Florida from 2008 to 2010. He was appointed by President George W. Bush.
- Walt Green served as the U.S. Attorney for the Middle District of Louisiana from 2013 to 2017. He was appointed by President Barack Obama.
- Candace Gregory served as Assistant U.S. Attorney for the Southern District of Mississippi from 2016 to 2020.
- Mike Hurst served as the U.S. Attorney for the Southern District of Mississippi from 2017 to 2021. He was appointed by President Donald Trump.
It is useful to look at what the Biden Administration prioritized and what has been devoted to those priorities when trying to understand corporate enforcement trends and their effects. Deputy Attorney General Lisa Monaco, the second highest ranking official at DOJ has made recent statements that emphasize DOJ's heightened focus on individual accountability for corporate crime.
"Cases against corporate executives are among some of the most difficult that the department brings, and that means the government may lose some of those cases," she said in March. "But I have and will continue to make clear to our prosecutors that, as long as we act consistent with the Principles of Federal Prosecution, the fear of losing should not deter them. We will urge prosecutors to be bold in holding accountable those who commit criminal conduct."
Monaco's statement is significant. The DOJ typically focuses its time and resources on cases that it deems readily provable in court. Now, Monaco is prioritizing individual accountability over "the fear of losing," as long as U.S. Attorneys comply with the department's published Principles of Federal Prosecution.
These strong statements are not just lip service. Recent spending and hiring shows the Biden Administration's commitment to these policies:
- The DOJ Fraud Section hired 34 new prosecutors in 2021
- The DOJ set aside $36.5 million in its 2022 budget to hire 120 additional federal prosecutors to prosecutor fraud cases
- Another $325 million will fund 900 white-collar focused FBI agents
Additionally, the Biden Administration is implementing tighter measures in evaluating cooperation by corporations where misconduct has occurred.
In 2015, then-Deputy Attorney General Sally Yates issued what has become known as the Yates Memo, outlining the administration's efforts to hold corporate executives accountable. Yates dictated that for corporations to receive cooperation credit when being considered for prosecution they were required to turn over evidence on individual employees, officers and directors.
With some revisions, the Yates Memo has been the DOJ guidance since about 2015, but Monaco recently introduced three fundamental changes to that guidance:
- Companies must now turn over all non-privileged information about all individuals involved in wrongdoing, regardless of position, status or seniority
- A company's entire criminal, civil and regulatory record will be considered in prosecutive decision making
- DOJ has eliminated any perceived presumption against corporate monitorships
These amendments will have wide-reaching impact. Companies are now allowed little discretion when determining what information must be shared to be considered cooperative. Also, now a company's entire regulatory history is up for consideration when DOJ attorneys are deciding whether or not to prosecute, which could have particular impact for businesses in heavily regulated sectors, such as health care, financial services and environmental. Additionally, the potential of a corporate monitorship could weigh heavy on a business, as they are burdensome, costly and can interfere with a company's ability to be agile.
We've already begun to see the impact of this increased level of scrutiny. These stricter measures and growing resources will likely lead to more investigations and prosecutions in 2023 and beyond.
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