Last week, in a virtual keynote address delivered at the American Bar Association’s Annual Conference on White Collar Crime, Deputy Attorney General Lisa O. Monaco pledged a DOJ crack-down on white-collar crime. Her comments echo similar remarks recently made by Principal Deputy Attorney General John Carlin, and cap off a busy month for DOJ, which included the announcement of a new civil cyber-fraud initiative and the launch of a national cryptocurrency enforcement team. Taken together, these new DOJ initiatives demonstrate the Department’s targeted focus on prosecuting complex white collar crime, and appear likely to have an impact on the Department’s future enforcement activities.
During her remarks, Ms. Monaco announced three new actions that she directed the DOJ to take to strengthen the department’s response to corporate crime.
First, Ms. Monaco announced the restoration of prior department guidance making clear that for a company to be eligible for cooperation credit, the company must provide the department with all non-privileged information about all individuals involved in or responsible for the misconduct being investigated, regardless of the person’s position, status or seniority. Prior to this announcement, it had (most recently) been DOJ’s view that a company need only identify those individuals the company deemed to be “substantially involved” in the misconduct in order to cooperate with DOJ. Ms. Monaco criticized the “substantial involvement” policy as confusing and affording companies too much discretion in deciding whose identity and participation should and should not be disclosed to the government. As a result of this change, DOJ may now demand access to the identities of individuals who are peripherally involved in alleged misconduct, but who may, nonetheless, have information to share with the government as witnesses. As for those individuals DOJ believes are responsible for misconduct, Ms. Monaco said that prosecutors will not hesitate to bring tough cases, even when vigorously contested by well-funded defense counsel.
Second, Ms. Monaco announced an amendment to the “Principles of Federal Prosecution of Business Organizations” that requires prosecutors to consider the full criminal, civil, and regulatory record of any company that is the subject or target of a criminal investigation when deciding what resolution is appropriate for that company. Until now, prosecutors were only required to take into account historical misconduct that was similar in nature to the conduct at issue in the investigation. But Ms. Monaco explained her belief that a company’s full record of misconduct is relevant in assessing the company’s overall commitment to compliance and the steps that it has taken to build a culture that disincentivizes criminal activity. This change could mean that a company may not receive a more lenient disposition, such as a deferred prosecution agreement or similar settlement, based upon historical misconduct wholly unrelated to the conduct under review by the DOJ.
Third, Ms. Monaco addressed DOJ’s use of independent corporate monitors. In recent years, corporate monitorships have been more the exception than the norm, with DOJ itself serving to monitor a company’s commitment to improving its policies and corporate culture. With her comments, Ms. Monaco rescinded prior DOJ guidance suggesting that monitorships are disfavored, and made clear that prosecutors are free to require the imposition of independent monitors whenever they deem it is appropriate. These comments signal the potentially important role that corporate monitorships may play in the future as DOJ returns to this alternative (and typically more expensive and disruptive) method of assessing adherence to compliance and disclosure obligations under negotiated settlements.
Ms. Monaco’s comments during her keynote address make clear that in its conversations with companies (and executives) suspected of corporate malfeasance, DOJ is placing a renewed emphasis on cooperation and robust corporate compliance measures. As Ms. Monaco said when addressing the conference, “corporate culture matters, [and a] corporate culture that fails to hold individuals accountable, or fails to invest in compliance—or worse, that thumbs its nose at compliance—leads to bad results.”
