Justice Department Details Prioritization of Corporate Crime Prosecution

    March 04, 2022, 09:00 AM

    On March 3, 2022, Attorney General Merrick Garland addressed the American Bar Association’s Institute on White Collar Crime by announcing that the “prosecution of corporate crime is a Justice Department priority.” The tone from the Justice Department under the Biden Administration should not be surprising given repeated prior announcements about its revitalized focus on white-collar crime. However, these statements provide perhaps the clearest picture to date of the measures the Justice Department intends to use to pursue its goals. Attorney General Garland concluded with an understatement by remarking that over his career he has “seen the Justice Department’s interest in prosecuting corporate crime wax and wane over time. Today, it is waxing again.”

    Moving forward, the Department of Justice is prioritizing the prosecution of individual defendants who have committed or are profiting from corporate malfeasance. Inferred is that DOJ does not intend to limit enforcement efforts against a corporate entity alone and individual wrongdoers within a company can expect to come under higher scrutiny for possible indictment and prosecution for their individual role in identifiable wrongdoing. Already a historically underutilized option when compared to nationwide criminal prosecution statistics, white collar defendants can expect a shrinking possibility of negotiating a corporate plea and fine only as part of an agreement to avoid individual criminal charges.

    As President Biden mentioned in the recent State of the Union, the Justice Department is to receive additional financial resources as it reorients its goals. Specifically, FY2022 includes budget increases for corporate criminal prosecution efforts to be applied to all 93 US Attorney’s Office as well as the Criminal, Antitrust, Tax, and Environmental Divisions. The anticipated budget increases will provide $36.5 million designated to combat COVID-19 related fraud which includes the addition of 120 additional prosecutors focused on financial crime stemming from the pandemic. Further, $325 million has been earmarked to fund 900 FBI agents supporting DOJ’s white-collar crime programs.

    Attorney General Garland described three “force multipliers” to pursue the Justice Department’s corporate prosecution efforts:

    • First, DOJ intends to build an interagency taskforce at every level of government and around the world to target Russian oligarchs and identify individuals seeking to evade U.S. sanctions or profit from corrupt conduct. This effort, including the addition of a chief prosecutor overseeing a specialized team to combat pandemic-related fraud, builds on the COVID-19 Fraud Enforcement Task Force established in May 2021. The Task Force aims to coordinate the combined efforts of the Labor Department, Treasury, Small Business Administration (SBA), US Postal Service, and the Pandemic Response Accountability Committee to combat fraud against government programs. Finally, similar to other types of crime, DOJ plan to use law enforcement strike forces dedicated to corporate crimes.
    • Second, the Justice Department intends to harness data analytics to help the Criminal Division prosecute financial crime by identifying payment anomalies indicative of fraud. This expansion is similar to the tools already in place to combat healthcare fraud.
    • Third, the Justice Department identified reliance on defense counsel to properly advise corporate boards and company directors regarding the previously announced DOJ policy tightening the measure for corporate compliance. As announced in 2021, the Justice Department has formally returned to a standard whereby eligibility for cooperation credit is based on a company providing the Government with all non-privileged information about individuals involved in or responsible for misconduct. This reporting requirement is intended to identify all potential wrongdoers regardless of status, position, or seniority irrespective of whether a company deems their involvement substantial.

    The announced changes and initiatives can expect to produce increased prosecutions above the 10% yearly increase achieved in 2021 when 5,521 individuals were charged with white-collar related offenses. In addition to general white-collar enforcement, continued increases can be expected for prosecution of all forms of CARES Act fraud. Regarding increases in antitrust enforcement, there were 5,521 individuals charged with white-collar crimes in FY2021 and Justice Department has 146 open grand jury investigations into anticompetitive conduct – the most in 30 years. Finally, the Environmental and Natural Resources Division has prioritized the investigation and prosecution of those committing and profiting from corporate environmental violations.

    Key Takeaways:

    • Companies should anticipate an increase in government investigations and use the opportunity to implement or enhance compliance programs.
    • Businesses are encouraged to consult outside counsel regarding proactive measures for best protecting the company and to ensure a clear understanding of the parameters necessary for cooperation credit.
    • Companies should take steps to make sure executives and other employees are trained regarding their obligations and make reporting mechanisms and expectations clear.