Speaking at the keynote address at the annual ABA White Collar event in Miami this week, Lisa Monaco, the Deputy Attorney General announced major changes to how the Biden Justice Department will approach corporate crime. These announcements will undoubtedly change the way the Department of Justice investigates and prosecutes those cases, and the way in which corporations and individuals who are the subject of those investigations respond.
Monaco started by announcing three new actions on what she termed “corporate crime.” First, she announced that the Justice Department is restoring prior guidance that required companies seeing cooperation credit to provide the Department with information about all individuals involved in alleged misconduct. Monaco emphasized that companies will no longer be able to limit disclosures to those the company believes were substantially involved in the alleged conduct. She emphasized that in the Department’s view, DOJ investigatory teams are better suited to determine who is, and is not, culpable. She also emphasized that she expected the identification of low-level or less involved individuals –who in the past a corporation may have avoided disclosing – may yield additional information for DOJ investigations.
Second, Monaco stated that as of today the Department of Justice will consider all prior misconduct by a company in evaluating what type of resolution should be reached. Monaco said that internal Department data analysis had shown that upwards of 20% of resolutions with corporate defendants involve companies that have had prior criminal, civil, or regulatory enforcement actions brought against them. Monaco said she was directing DOJ prosecutors to coordinate across the Department to determine if a company has had a prior action taken against it, and to take that prior action into account in reaching any resolution. Importantly, this change is not limited to criminal prosecutions. Monaco made it clear that the Department will consider all prior enforcement actions, including whether a company has run afoul of regulators or been the target of enforcement actions by States or even other countries. This sea change to how the Department considers past enforcement actions – especially the addition of past regulatory enforcement actions – could have huge implications for companies in highly regulated industries such as healthcare and financial services. It will be important for any company that runs the risk of DOJ enforcement to watch how this development plays out in practice.
Third, Monaco weighed in on the use of corporate monitors. While the Department of Justice has previously vacillated over the use of corporate monitors in connection with deferred prosecution agreements (“DPAs”) and non-prosecution agreements (“NPAs”), Monaco offered a full-throated endorsement of them. She advised that the Justice Department was rescinding past guidance suggesting the appointment of monitors should be the exception rather than the rule, and stated that she was directing Department prosecutors to affirmatively consider whether a monitor should be used. With a nod to past controversies around the selection on monitors, Monaco said that the Department was studying the monitor-selection process and considering whether it should be standardized. On the subject of NPAs and DPAs specifically, Monaco stated that the Department was studying their use and assessing whether they have been employed too often. Expressing concern that those agreements have not been enforced frequently or forcefully enough in the past and that companies had little concern about of violating them, Monaco said that the Department would no longer tolerate any violations of such agreements and specifically referenced breach notifications that have been sent in the past week to two multi-national companies operating under DPAs.
Coming from the second in command at the Justice Department, and delivered at the preeminent gathering of white-collar corporate lawyers, these remarks were designed to catch attention. Monaco herself is intimately familiar with this area. She cut her teeth as one of the lead prosecutors on the Enron task force and has prosecuted and defended corporations and their employees and boards for decades. These significant changes amount to a rollback of initiatives under the prior administration and should be seen as a warning that the Biden Justice Department is taking square aim at corporate crime of all type, from traditional fraud and financial crimes to antitrust, crypto, trade secrets, and cybercrime.
These remarks could not have been more blunt, and it was clear that Monaco wanted to drive how a clear message – the Department of Justice is back and intends to be a formidable adversary going forward. Recognizing that she was speaking to an audience of white-collar attorneys who routinely advise corporations and their boards on serious civil and criminal issues, Monaco closed with five succinct points that she said she wanted to communicate to their clients.
With the DOJ’s renewed focus on corporate crime, companies of all types need to actively review and update their compliance programs.
For companies facing ongoing investigations, as of today the Department of Justice will begin reviewing that company’s past criminal, civil, and regulatory enforcement history in deciding what type of resolution is appropriate
For companies cooperating (or thinking about cooperating ) with an ongoing investigation, as off today, they will need to identify all individuals involved in the criminal or fraudulent conduct
For companies negotiating (or contemplating) the resolution of an ongoing investigation, there is always an option for a monitor and DOJ may affirmatively put one in place
For all companies and potential corporate defendants: this is the start, not the end. DOJ is going to be analyzing corporate fraud and expects to engage in a dialogue with corporations, corporate attorneys, and enforcement agencies on what changes will best impact corporate fraud and crime concerns.
We’ve been waiting for a while to see what the Biden Justice Department would choose to focus on. We now know, at least in part, what that will be – corporate crime and fraud. The initiatives announced today bear careful attention in the months and years ahead.
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