DOJ vows stricter white-collar enforcement, increased risk of monitors

The announcements came in virtual remarks delivered Thursday by Deputy Attorney General Lisa Monaco at the ABA’s 36th National Institute on White Collar Crime. Monaco shared actions the Department of Justice will be taking to strengthen its response to corporate crime and what areas it will be looking at moving forward.

Among the agency’s top priorities include:

Individual accountability: “Accountability starts with the individuals responsible for criminal conduct,” she said. “Attorney General (Merrick) Garland has made clear it is unambiguously this Department’s first priority in corporate criminal matters to prosecute the individuals who commit and profit from corporate malfeasance.”

More resources: Monaco promised a “surge” in resources to prosecutors. “As one example, a new squad of [Federal Bureau of Investigation] agents will be embedded in the Department’s Criminal Fraud Section,” she said. “… As I’ve seen personally, putting agents and prosecutors in the same foxhole can make all the difference, particularly in complex cases.”

Corporate accountability: “While the priority remains on individual accountability, where appropriate, we will not hesitate to hold companies accountable,” she said. “… A corporate culture that fails to hold individuals accountable or fails to invest in compliance—or worse, that thumbs its nose at compliance—leads to bad results.”

Relative to these three priorities, Monaco announced the Justice Department will be enacting the following three new policies concerning corporate criminal enforcement efforts:

Non-privileged information must now be provided by cooperating companies. “To hold individuals accountable, prosecutors first need to know the cast of characters involved in any misconduct,” she said. Thus, the Department will be restoring prior guidance “making clear that to be eligible for any cooperation credit, companies must provide the Department with all non-privileged information about individuals involved in or responsible for the misconduct at issue. To be clear, a company must identify all individuals involved in the misconduct, regardless of their position, status, or seniority.”

“A corporate culture that fails to hold individuals accountable or fails to invest in compliance—or worse, that thumbs its nose at compliance—leads to bad results.”

Deputy Attorney General Lisa Monaco

Companies can no longer limit disclosures to those they assess to be “substantially involved” in the misconduct, Monaco said. “Such distinctions are confusing in practice and afford companies too much discretion in deciding who should and should not be disclosed to the government. Such a limitation also ignores the fact that individuals with a peripheral involvement in misconduct may nonetheless have important information to provide to agents and prosecutors.”

All prior misconduct will be evaluated for resolution purposes. “That record of misconduct speaks directly to a company’s overall commitment to compliance programs and the appropriate culture to disincentivize criminal activity,” Monaco said. Consequently, prosecutors will be provided with new guidance regarding “what historical misconduct needs to be evaluated when considering corporate resolutions,” she said.

Relatedly, the Department’s “Principles of Federal Prosecution of Business Organizations” will be amended. “Going forward, prosecutors will be directed to consider the full criminal, civil, and regulatory record of any company when deciding what resolution is appropriate for a company that is the subject or target of a criminal investigation,” Monaco said.

Corporate monitors will be the rule, not the exception: “In recent years, some have suggested that monitors would be the exception and not the rule,” Monaco said. “To the extent that prior Justice Department guidance suggested that monitorships are disfavored or are the exception, I am rescinding that guidance.”

Instead, she said, the Department is “free to require the imposition of independent monitors whenever it is appropriate to do so.”

Other areas under review

According to an analysis of corporate resolutions conducted by the Justice Department, between 10 percent and 20 percent of all significant corporate criminal resolutions involve recidivist companies. “In certain cases, the Department sees the same company become the subject of multiple investigations—not just in the same office or section, but in multiple sections and divisions across the Department,” Monaco said.

The agency will review whether and how to differently account for companies that become the focus of repeated and multiple Justice Department investigations, she said.

A second area of focus will be whether companies under the terms of a non-prosecution agreement (NPA) or deferred prosecution agreement (DPA) take their obligations seriously enough.

“We will hold accountable any company that breaches the terms of its DPA or NPA,” Monaco said. “DPAs and NPAs are not a free pass, and there will be serious consequences for violating their terms.”

New advisory group

Monaco announced the formation of a new Corporate Crime Advisory Group, “made up of representatives from every part of the Department involved in corporate criminal enforcement.” The group will be tasked with considering monitorship selection, recidivism, NPA/DPA noncompliance, and what benchmarks the Department should use to measure a company’s successful cooperation, among other issues, she said.

“It will also make recommendations on what resources can assist more rigorous enforcement and how we ensure that individual accountability is prioritized,” Monaco added. “The advisory group will then develop recommendations and propose revisions to the Department’s policies on corporate criminal enforcement.

Compliance action steps

Monaco concluded with the following final thoughts on what these changes mean for compliance and legal professionals in practice:

• Companies must actively review their compliance programs to ensure they adequately monitor for and remediate misconduct.
• For clients facing investigations, the Department will review their whole criminal, civil, and regulatory record.
• For clients cooperating with the government, they need to identify all individuals involved in the misconduct and produce all non-privileged information about the involvement.
• For clients negotiating resolutions, there is no default presumption against corporate monitors. The decision will be made by the facts and circumstances of each case.

“As we review and reassess our approach to corporate criminal enforcement, let me assure you that we will be in dialogue with [practitioners],” she said. “We value your input and views on what are a complex set of issues.”