Thursday, September 10, 2015

New DOJ Policy on Prosecuting Individuals Beyond Corporate Crime (9/10/15)

DOJ has announced new policies that, in the words of an NYT article, "prioritize the prosecution of individual employees — not just their companies — and put pressure on corporations to turn over evidence against their executives." Matt Apuzzo and Ben Protessept, Justice Department Sets Sights on Wall Street Executives (NYT 9/9/15), here.  The policies are state in a Memorandum by Sally Quillian Yates to DOJ Officers about the new policy, here.  DAG Yates discussed the policy in remarks at NYU, here.

The key seems to be to deter corporate misbehavior by getting to the people in charge who can be sent to prison.  The corporation itself cannot be sent to prison, but can only pay fines and take other remedial actions.  And, the corporation -- a lifeless breathless legal fiction -- does not commit crimes; rather its officers, employees and agents do.

Among the key points is to focus on individuals early in the investigation so that appropriate cases can be built against culpable individuals.  And, the corporation can mitigate its damages by cooperating in its own investigation as well as the investigations of the overall culpability.  The NYT article quotes Ms. Yates as saying: "We mean it when we say, ‘You have got to cough up the individuals.’"

Of course, those who remember the tax shelter prosecutions in the Southern District of New York after the turn of the 2000s will recall that pressure was placed on the entities -- most significantly KPMG -- to cough up individuals.  Some fairly high individuals were coughed up.

It is not clear precisely what this will mean in the real world of white collar crimes involving corporations.  The devil will be in the implementation.

Another good quote:  "We’re not going to be accepting a company’s cooperation when they just offer up the vice president in charge of going to jail.”

As an example of what DOJ wants to avoid, the NYT article says:
A criminal case last year against BNP Paribas, France’s biggest bank, demonstrated the gap between charging a bank and its employees. Even as officials extracted a record $8.9 billion penalty and made the company one of the first giant banks to plead guilty to a crime, no BNP employees faced charges. The Justice Department said the bank insulated its employees by withholding records until after a deadline had passed to file individual charges.
* * * * 
Still, even if the Justice Department’s effort succeeds, it will not automatically put more executives behind bars. Mr. Garrett, the University of Virginia law professor, analyzed the cases in which corporate employees had been charged.
More than half, he said, were spared jail time.

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