DOJ Further Ratchets Up Scrutiny in Corporate Investigations
On October 28, 2021, Deputy Attorney General Lisa Monaco announced at the American Bar Association’s annual white collar crime conference multiple changes to the US Department of Justice’s (DOJ) approach to investigating and prosecuting white collar crime. In combination, these policy shifts could substantially increase the burdens companies and executives under investigation may face, especially when coupled with other recent DOJ announcements about increased white collar enforcement resources and scrutiny. Deputy Attorney General Monaco also foreshadowed additional changes that will be forthcoming.
The changes Deputy Attorney General Monaco announced include:
A return to corporations cooperating against all potentially culpable individuals. In 2015, then-Deputy Attorney General Sally Yates announced the DOJ policy that, for a corporation to receive any credit for cooperating in an investigation, the corporation had to identify all individuals involved in any aspect of a crime, regardless of the individual’s status or seniority. This policy applied in both civil and criminal investigations. In subsequent years, this all-or-nothing approach to cooperation credit was relaxed in a variety of ways. In November 2018, for example, then-Deputy Attorney General Rod Rosenstein announced a policy revision that the standard for cooperation credit would vary depending on whether an investigation was criminal or civil. In criminal cases, while DOJ maintained a focus on individual accountability, it would only require companies under investigation to identify individuals who were “substantially involved in or responsible for” the criminal conduct under investigation. In the civil context, the DOJ moved to a sliding-scale approach to cooperation credit, abandoning its all-or-nothing policy.
Deputy Attorney General Monaco’s remarks mark a return of DOJ’s focus on individual prosecutions embodied in former Deputy Attorney General Yates’ 2015 memo. Once again, to receive any credit for cooperation when DOJ determines whether and what resolution is appropriate for criminal conduct, a corporation must “provide the Department with all non-privileged information about individuals involved in or responsible for the misconduct at issue.” The new policy requires disclosure of information about “all individuals involved in the misconduct, regardless of their position, status or seniority,” rather than, as in the past, just those individuals or employees who were “substantially involved.”
Penalization for a broader range of prior corporate misconduct. A company’s past misdeeds have long been relevant to DOJ’s fashioning of an appropriate resolution for criminal conduct. Deputy Attorney General Monaco’s announcement, though, broadened the scope of past misconduct that prosecutors may take into account when fashioning a resolution. Previously, DOJ counted past misconduct against corporations only when it was similar to the current misconduct. So, for example, a company resolving an FCPA matter would likely face a harsher outcome if it had a previous FCPA (or perhaps even a domestic bribery) criminal, civil or administrative resolution. But DOJ would previously not have considered (at least formally) prior, say, environmental, Bank Secrecy Act or securities fraud-related misconduct. Now, Deputy Attorney General Monaco has announced, “all prior misconduct needs to be evaluated when it comes to decisions about the proper resolution with a company, whether or not that misconduct is similar to the conduct at issue in a particular investigation.” Animating this policy shift is the belief that its “record of misconduct speaks directly to a company’s overall commitment to compliance programs and the appropriate culture to disincentivize criminal activity.” The intent behind this policy change is to create parity between the way DOJ treats individual and corporate criminal histories.
The consideration of relevant past misconduct, the deputy attorney general emphasized, would include not only prior criminal or civil resolutions with other parts of DOJ, but also prosecutions and actions by other countries, states and regulators.
A return to corporate monitors. During the Obama administration, DOJ imposed independent corporate compliance monitors in a broad range of corporate criminal resolutions. In just the final calendar year of that administration, DOJ imposed eight monitors in FCPA cases alone (and eight more across the full range of corporate criminal misconduct). That single-year tally exceeds the number of FCPA monitors (five total) DOJ imposed during the entire Trump administration.
Deputy Attorney General Monaco’s comments suggest that the Trump-era practice of limiting monitorships is over. She announced that DOJ is rescinding any past guidance, such as the 2018 Benczkowski Memoradum, than can be read to suggest that “monitorships are disfavored or are the exception.” Instead, she emphasized that DOJ “is free to require the imposition of independent monitors whenever it is appropriate to do so” to ensure that a company is living up to its obligations under its resolution with DOJ.
In practice, that new guidance will likely spark a substantial increase in monitorships. Deputy Attorney General Monaco also announced that DOJ may make changes in the way that it selects monitors, including potentially standardizing the selection process across its components, and taking steps to ensure optimal monitor independence.
Corporate Crime Advisory Group. Finally, Deputy Attorney General Monaco announced that DOJ will create a Corporate Crime Advisory Group, “which will be made up of representatives from every part of the Department involved in corporate criminal enforcement.” That group will consider the issues the deputy attorney general discussed in her address and others, including the yardsticks by which DOJ measures company cooperation, what additional resources DOJ should focus on white collar crime and whether companies that have previously received non-prosecution and deferred prosecution agreements will be eligible for them a second time.
To prepare for these changes, companies need to review their compliance programs actively and critically to ensure they are proactively monitoring for, investigating and remediating misconduct. For those under investigation, they should expect their cooperation to be assessed under higher standards and the resolutions the department offers to be potentially more onerous.
