The Department of Justice's (DOJ) recent announcement that it would decline to prosecute a self-reported criminal export control violation demonstrates the continuing importance of prompt, voluntary self-disclosure (VSD) and a strong compliance program to facilitate rapid remedial action. This development underscores that companies should continue to view the DOJ's VSD policy—which encourages self-disclosure and cooperation as conditions of potential non-prosecution agreements—as integral to internal compliance programs.
The Impact of VSD Policy in a Criminal Export Control Investigation
On April 30, 2025, DOJ announced that it was declining to prosecute the Universities Space Research Association (USRA) because of the company's self-disclosure and cooperation with the government's investigation of criminal export control violations committed by a former employee. The employee, Jonathan Soong, pleaded guilty in January 2023 to violating export control laws as part of a scheme to funnel sensitive aeronautics software to a university in China.
DOJ's National Security Division (NSD) announced that it would not charge USRA under the NSD Enforcement Policy for Business Organizations, also known as the NSD VSD Policy, which was issued in 2023 and updated in 2024.
This announcement makes clear that, despite some recent changes in DOJ's approach to national security-related enforcement, the NSD VSD Policy continues to be an important part of DOJ's approach. In a press release regarding the declination, the acting head of NSD emphasized that USRA had been a "responsible corporate actor" that "caught [its employee] and immediately turned him in." Similarly, the acting U.S. Attorney for the Northern District of California, which partnered with NSD on the investigation, noted: "What the company did next made all the difference in the Government's decision not to prosecute it: the company took swift and proactive measures to disclose the employee's wrongdoing, provide all known facts, and cooperate – and continue to cooperate – with the government's investigation."
Implementing a Strong VSD and Compliance Policy and Process
Prior to this action, the Attorney General's recent memorandum raised questions about DOJ's ongoing commitment to national security corporate enforcement, including the enforcement of export control and sanctions violations. The USRA declination is an important early sign that the Trump Administration will continue to prioritize enforcement by rewarding corporate cooperation and compliance through NSD's voluntary disclosure program.
DOJ's decision signals that companies should continue to implement policies and practices to facilitate prompt and accurate disclosures of potential export control and sanctions violations, including those committed by company employees. To make that possible, companies should have strong internal compliance and training programs to detect, if not prevent, possible issues.
Having such programs in place is particularly important given that, in 2024, NSD announced a revised policy to strengthen the NSD VSD Policy as part of an increased focus on the intersection of corporate enforcement and national security risks. The updated policy clarified that when corporations self-disclose potential sanctions or export control violations to DOJ, cooperate with investigators, remediate misconduct and do not present other aggravating factors, NSD will apply a presumption that the company will receive a non-prosecution agreement and not be fined. NSD also considers whether a company has an adequate compliance program in place, examining whether the program is appropriately resourced, run by sufficiently independent and experienced compliance personnel, and tested for effectiveness.
Ultimately, the NSD VSD Policy is designed to incentivize companies and other organizations to come forward as soon as they learn about potential violations in order to reduce or even eliminate the likelihood of criminal penalties. Disclosures of potential criminal violations to NSD under its VSD policy would be in addition to voluntary disclosures that might also be made to the Commerce, State and Treasury department agencies that administer the Export Administration Regulations, International Traffic in Arms Regulations and sanctions regulations, respectively.
In the USRA matter, NSD underscored that these factors drove its declination decision, noting that USRA made its disclosure "less than three months after outside counsel had been retained, within days of Mr. Soong's admission of wrongdoing to outside counsel, and well before the internal investigation's completion." NSD further noted that the company provided "exceptional and proactive cooperation" that "materially assisted the government's prosecution of Mr. Soong." NSD also emphasized that USRA undertook "timely and appropriate remediation," including terminating Soong's employment, disciplining a supervisory employee, paying restitution to the government, and improving its internal controls and compliance program.
This DOJ action and the reasoning behind it demonstrate that DOJ continues to expect companies to come forward as soon as they uncover potential wrongdoing and will respond favorably to those that do. VSD incentives, however, are only one part of a DOJ strategy that is also backed by the credible threat of prosecution. Just as DOJ has touted the rewards of good behavior here, DOJ may be inclined to make strong deterrent examples of those companies that do not have adequate compliance programs in place or attempt to delay or avoid notifying law enforcement.
WilmerHale has deep experience advising companies in ways implicated by the now-confirmed continuation of DOJ's VSD policy. Our attorneys are well placed to advise companies on:
- Sanctions and export control compliance and licensing.
- The establishment of effective internal compliance programs consistent with the disclosure guidelines published by the Commerce and Treasury departments, as well as DOJ.
- Mechanisms for periodic testing of sanctions and export control compliance programs, another VSD qualifying criterion.
- Internal investigations or Commerce, State, Treasury and/or DOJ investigations for alleged export control or sanctions violations.
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