Criminal, civil, and regulatory authorities increasingly are collaborating with one another to enforce certain federal criminal laws. Leslie Caldwell, Assistant Attorney General for the Justice Department’s Criminal Division, drove this point home in recent remarks at New York University’s Center on the Administration of Criminal Law’s annual conference on Regulatory Offenses and Criminal Law.
Caldwell cited as an example the Securities and Financial Fraud Unit within the Fraud Section, which focuses on the prosecution of complex securities, commodities, and other financial fraud cases. “Working closely with regulatory partners at the Securities and Exchange Commission, the Commodity Futures Trading Commission, the United Kingdom’s Financial Conduct Authority, and other domestic and foreign agencies, the unit has tackled some of the largest frauds in the financial services industry,” she said.
Additionally, the Asset Forfeiture and Money Laundering Section (AFMLS) handles and coordinates complex, multi-district and international criminal cases involving financial institutions and individuals who violate the money laundering statutes, the Bank Secrecy Act, and other laws. “We often work with the Department of the Treasury and the Federal Reserve Board in these cases,” Caldwell said.
The conduct that the Justice Department investigates in the Criminal Division, and the conduct that regulatory partners regulate and investigate often overlap, Caldwell added. “Generally, the Department pursues criminal prosecution when the conduct at issue was knowing or willful, or where the relevant industry or conduct is so heavily regulated that participation in the industry or conduct mandates knowledge and awareness of governing laws such that criminal prosecution is appropriate even in the absence of willful conduct,” she said.
Civil and Regulatory Coordination
In her speech, Caldwell also discussed the Justice Department’s coordination with civil enforcement attorneys and regulators. “It is Department of Justice policy that criminal prosecutors and civil attorneys should coordinate with one another and with agency attorneys to protect and advance the government’s overall interests,” she said.
“Some matters initially may come to the attention of the Department through a criminal investigation, but may best be resolved through civil, regulatory, or administrative remedies,” Caldwell added. “Other matters that first come to the attention of civil or regulatory offices are best handled by prosecutors when the conduct rises to the level of criminal culpability.”
Criminal prosecutors have tools that are not available to civil or regulatory enforcement authorities. “For example, where appropriate, criminal investigators may obtain search warrants, use electronic surveillance techniques, employ undercover agents, and use grand jury subpoenas to obtain evidence and testimony,” she said.
One resolution that resulted from parallel investigations with regulators, Caldwell said, was the $1.45 billion settlement that Germany-based Commerzbank, and its U.S. branch, Commerz New York reached with the Justice Department last month to resolve criminal charges for violations of the International Emergency Economic Powers Act and the Bank Secrecy Act. Such cases “demonstrate the value that criminal enforcement adds, compared to regulatory enforcement alone,” Caldwell said.