Another day, another collar, and another notable policy shift from the Justice Department.
Last week, it was a policy memorandum that made a splash in the world of white-collar enforcement and defense. The policy was circulated internally on September 9 and unveiled publicly the next day in a speech by Deputy Attorney General Sally Yates.
Titled, Individual Accountability for Corporate Wrongdoing, the policy prioritizes and emphasizes the prosecution of people and not just business organizations. It applies to both the Department’s civil and criminal divisions, and it prescribes the following six points.
First, to receive even partial credit for cooperation, an organization must disclose all relevant facts regarding the individuals responsible, regardless of their position, status, or seniority. Cf. U.S.S.G. § 8C2.5, comment. (n. 13). Only once an organization does that does it become eligible for cooperation credit, and its failure to follow through and make good on that may trigger stipulated penalties or a material breach of its settlement agreement. The same goes for civil enforcement actions, including civil actions brought under the False Claims Act. See, e.g., 31 U.S.C. § 3729(a)(2) (defining cooperation sufficient to reduce the statutory penalties).
Second, the Department’s investigation of a business organization should focus on individuals from the beginning, because it helps prosecutors climb the organization’s ladder by flipping those on the lower rungs.
Third, attorneys in the civil and criminal divisions who handle such investigations should routinely talk to each other in order to maximize recoveries and take advantage of the full range of remedies available to the government—including imprisonment, fines, penalties, damages, restitution, forfeiture, and regulatory exclusion, suspension, or debarment.
Fourth, absent extraordinary circumstances or an approved policy, the Department will not agree to cut people loose from civil or criminal liability in order to resolve a case against their organization. When government lawyers resolve a case against a business, they should preserve their ability to pursue its officers or employees, and they should not agree to dismiss charges against, provide immunity for, or release civil claims against them. Or, if they do, the agreement must be approved by the appropriate United States Attorney or Assistant Attorney General.
Fifth, the department’s lawyers should not resolve a case against a business without a clear plan to resolve any related cases against individuals, and they should explain their decision to prosecute or decline such cases in a formal memorandum that must be approved by the relevant U.S. Attorney or Assistant Attorney General or their designee. Furthermore, if they reach a tolling agreement with the business to avoid blowing the statute of limitations, they should take care to resolve any individual cases before the statute runs or get tolling agreements there, too.
Sixth, the department’s civil division should consistently focus on people as well as businesses, and its lawyers should consider suing culpable individuals in order to punish and deter wrongdoing, even when they may not be able to pay a large judgment.
The memorandum closes by directing all components to incorporate these points into their everyday work, beginning with a training conference tomorrow in Washington, D.C.