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Hot Topic: DOJ Outlines New Policy Focusing on White Collar Cases Against Individuals for Corporate Fraud

GOVERNMENT STEPS UP ITS GAME IN CORPORATE CONDUCT INVESTIGATIONS

Sally Q. Yates, the Deputy Attorney General of the United States, issued a new directive for United States Attorneys and DOJ civil lawyers last week that is geared to hold more individuals accountable for illegal corporate conduct.  Below is a summary of the memo setting forth the salient factors. The memo sets forth specific steps DOJ attorneys should take to get to high level corporate executives, who, the memo notes, tend to be shielded from the day to day operations where the misconduct generally occurs. The memo then outlines the steps government prosecutors and government civil attorneys should take in civil and criminal corporate conduct cases, and provides that these steps apply to all pending (to the extent possible) and future corporate conduct investigations.

 

  1. Corporations must provide to DOJ all relevant facts relating to the individuals responsible for the misconduct in order to qualify for cooperation credit. 

In order to receive any consideration for cooperation credit, companies will be required to identify all individuals involved and/or responsible for the misconduct, regardless of their position, status or seniority.  In addition, the companies will be required to provide to the Department all facts relating to that misconduct.  No cooperation credit will be considered unless the company meets a threshold requirement relating to providing this information.  Once that threshold is met, factors relating to the information provided in the internal investigation, such as the timeliness, diligence, and thoroughness, will determine the extent of the cooperation credit.

  1. The criminal and civil corporate investigations should focus on individuals from the inception.

Several goals can be achieved by focusing on individuals at the start of the investigation: 1) since a corporation only acts through individuals, investigating individual conduct gets to the facts at issue in the most effective and efficient manner, 2) it is more likely individuals with information will cooperate and give the information necessary involving other “higher up” individuals, 3)  increases chances individuals, not just corporations, will be held responsible for civil and criminal conduct.

  1. Regular communication between criminal and civil prosecutors.

Criminal AUSAs should notify civil DOJ attorneys as early as  possible of  conduct that might amount to potential individual civil liability, whether or not criminal liability continues to be sought. Civil DOJ attorneys should also promptly contact criminal AUSAs and recommend individuals in matters that in the course of their corporate investigation, they believe should be subject to a criminal inquiry. 

  1. No corporate resolution will provide protection from criminal or civil liability for any individuals, except in extraordinary circumstances,

DOJ attorneys should not agree to a corporate resolution that includes an agreement to dismiss charges against, or provide immunity for, individual officers or employees, absent extraordinary circumstances, and any such release from criminal or civil liability must be personally approved in writing by the relevant Assistant Attorney General or U.S. Attorney.

  1. Corporate cases should not be resolved without a clear plan to resolve related individual cases – decisions not to bring civil or criminal actions against individuals must be memorialized.

If a DOJ attorney makes a decision at the end of the investigation to not bring civil claims or criminal charges against the individuals who committed the misconduct, the reason for that determination must be memorialized and approved by the U.S. Attorney or Assistant Attorney General whose office handled the investigation.

  1. Civil DOJ attorneys should evaluate whether to bring suit against an individual based on other considerations than an individual’s ability to pay.  

A decision of whether or not to pursue a civil action against a culpable individual should not be based solely on that individual’s ability to pay. Civil DOJ attorneys should also consider factors such as extent of person’s misconduct, whether it is actionable, whether admissible evidence will support the attainment of a judgment, and whether pursuing such case promotes interests.

 

If you are an individual being investigated by the US Government for corporate conduct, or by the FBI or any other government investigative agency, contact New Jersey Attorney, Lorraine Gauli-Rufo at LGR Law.  Ms. Gauli-Rufo specializes in federal criminal defense, including white collar crimes such as RICO, fraud and securities crimes.

 

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