DOJ to seek more info on victims in white-collar enforcement cases

Assistant Attorney General Kenneth Polite Jr., head of the agency’s Criminal Division, announced in a keynote speech Thursday at the American Bar Association’s White Collar Crime National Institute several steps he is taking to revise how the Justice Department fulfills its obligations to crime victims.

“Considering victims must be at the center of our white-collar cases,” Polite said.

Among new expectations Polite discussed, Criminal Division prosecutors moving forward will be asking companies to enhance how they address victim issues during their “Filip Factors” presentations—the process the agency undertakes when it is deciding whether to criminally charge a corporation.

“In addition, where appropriate and necessary, we will bifurcate corporate plea hearings from sentencing hearings to allow time for any victims to come forward,” Polite said. “Keep that potential timetable in mind.”

The increased focus on victims is nothing new for the Justice Department—Polite in his speech referenced multiple examples where recovery on behalf of affected individuals was prioritized in its cases, including 1MDB, Western Union, and the Bernie Madoff fraud scheme. But the agency’s new expectations put pressure on businesses to fully confront the scope of their actions or face stiffer penalties.

“I encourage you to proactively think about potential crime victims and others in the community not only when you are sitting across the table from our prosecutors, but also when your corporate clients first learn of misconduct and during remediation,” he told the audience of legal experts.

Also at the conference, Attorney General Merrick Garland on Thursday delivered a speech reinforcing announcements made by Deputy Attorney General Lisa Monaco in October—that the Justice Department will be prioritizing individual accountability, the provision of nonprivileged information, and the imposition of monitors in white-collar enforcement cases.

“When the Justice Department offers a company the opportunity to enter into a resolution for its misconduct, it is in that company’s best interest to provide us with a full picture of what happened and who was involved,” said Garland. “When we give a company the opportunity to come clean, it must come clean about everyone involved in the misconduct, at every level.”

Polite also touched on these efforts, noting the importance of businesses empowering their compliance programs to create an ethical culture to help limit misconduct by individuals. Polite, a former chief compliance officer himself, said the Justice Department isn’t just looking for a compliance program to have the most consultants or the fanciest technology.

“I want to know whether you are doing everything you can to ensure that when that individual employee is facing a singular ethical challenge, he has been informed, trained, and empowered to choose right over wrong,” he said. “Or, if he makes the wrong choice, you have a system that immediately detects, remediates, disciplines, and then adapts to ensure that others do not follow suit.”