DOJ Warns White Collar Bar It Is Coming After Individuals

07 March 2022 Legal News: Government Enforcement Defense & Investigations Publication
Author(s): Jennifer Z. Belveal Matthew D. Krueger Pamela L. Johnston Byron J. McLain Lisa M. Noller Whitney M. Swart

On March 3, 2022, at the American Bar Association’s National Institute on White Collar Crime, Attorney General Merrick Garland emphasized in a keynote address the Biden Administration’s stated priority to increase corporate criminal enforcement, especially of individual defendants.

Garland stressed that DOJ’s “first priority in corporate criminal cases is to prosecute the individuals who commit and profit from corporate malfeasance.” While DOJ previously has said it is renewing its focus on individual prosecutions, Garland’s statements underscore this commitment. In particular, Garland (1) announced purported budget increases to hire DOJ Criminal Division attorneys and FBI white collar crime agents and (2) referenced various “force multipliers” designed to expand DOJ enforcement capabilities.

Garland said additional resources are needed to assist DOJ’s enforcement goals. DOJ is seeking an additional $36.5 million to hire 120 more attorneys for the U.S. attorneys’ offices and the Criminal Division. DOJ also seeks $325 million to fund 900 FBI agents in support of the FBI’s White Collar Crime program.

Garland also announced three force multipliers: (1) interagency, state, and local government partnerships; (2) data analytics; and (3) defense counsel.

First, through increased partnerships such as interagency task forces, collaborations with inspectors general, and parallel SEC investigations, Garland said interagency cooperation will dramatically increase his agency’s reach. This approach notably may signal a shift away from DOJ’s previous “anti-piling on” policy, which discouraged parallel corporate criminal enforcement by multiple regulatory bodies to prevent over-enforcement.

Second, Garland explained that DOJ has expanded its use of big data, both internal and external, to identify payment anomalies indicative of fraud.

Third, Garland asked defense counsel to join DOJ’s efforts to combat fraud. Garland echoed the policy changes Deputy Attorney General Monaco announced at the 36th Institute on White Collar Crime on October 28, 2021. He reemphasized DOJ’s reversion to the 2015 “Yates Memorandum” standard for cooperation credit, requiring companies to provide information about all individuals involved in the relevant misconduct regardless of the degree of involvement, status, or seniority. Once fully implemented, this policy will be a change from the most recent standard for cooperation credit, which required companies to disclose information only about individuals “substantially involved” in misconduct.

Garland’s Announcement Is a Policy Shift

Garland’s keynote statement continues a series of recent pledges by the Biden Administration to bolster enforcement of corporate crime. A few key takeaways from this renewed focus include:

  • The path to obtaining cooperation credit is more difficult. If a company seeks cooperation credit, it must thoroughly investigate conduct to persuade DOJ that the company has met its obligation to identify and disclose all non-privileged information about all individuals.
  • Heightened disclosure obligations are likely to amplify the scope and requirements of credible internal investigations. Consequently, companies may seek to avoid internal investigations and forfeit cooperation credit where it deems the burdens too weighty or the stakes of disclosure too high. Similarly, attorneys’ approaches and obligations in internal investigations may further alter their scope. Depending on the interpretation of “all non-privileged information,” DOJ may push attorneys to disclose their interview memoranda or internal notes.
  • Companies should be proactive, following clear and robust compliance programs that specify how they will deal with potential misconduct of their employees and executives and how they will meet possible disclosure obligations.

If you have any questions about which approach your company should take, please contact any of the authors of this article or your Foley attorney.

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