DOJ Leadership Highlights Focus on Individual Culpability and Victims’ Restitution in White-Collar Prosecutions

In addressing the bar, AG Garland observed that “[c]orporate crime weakens our economic institutions by undermining public trust in the fairness of those institutions,” noting that the failure to “aggressively prosecute such crimes weakens our democratic institutions by undermining public trust in the rule of law.” Remarking specifically that “corporations only act through individuals,” AG Garland reinforced that the Department’s ongoing focus on imposing penalties on individual wrongdoers places the cost of corporate crime on the individual “rather than [on] shareholders or inanimate organizations.” To that end, AG Garland detailed a number of budget and personnel increases that will assist the Department in “obtaining individual convictions rather than accepting big-dollar corporate dispositions.”

AG Garland likewise described three so-called “force multipliers” that would bolster the resources available to prosecutors, including the Department’s “partnerships at every level of government and around the world” as well as the Department’s ongoing use of data analytics and “big data ... to identify payment anomalies that are indicative of fraud.” AG Garland further observed that the third “force multiplier” was white-collar counsel themselves, “who represent corporations and their boards of directors.” By way of explanation, AG Garland reinforced that the Department’s guidance makes clear that for companies “to be eligible for any cooperation credit, [they] must provide the Justice Department with all nonprivileged information about individuals involved in or responsible for the misconduct at issue.” AG Garland underscored that unlike prior guidance from the Department — which predicated cooperation credit on providing information only on those individuals where were substantially involved in the misconduct at issue — the Department’s current guidance requires that information about “all individuals, regardless of their position, status, or seniority, and regardless of whether a company deems their involvement as ‘substantial,’ ” must be provided to the Department in order to obtain cooperation credit.

In a follow-up keynote address at the same conference, Assistant Attorney General (AAG) for the Criminal Division Chief Kenneth A. Polite Jr. echoed this focus on prosecution of individuals for white-collar crimes. In recalling how the murder of his brother led him to pursue a career as a prosecutor, AAG Polite passionately and forcefully exhorted the bar to “not forget the people” who are the victims of corporate crime, who are often less considered — and less visible — than victims of violent crime. Like AG Garland, Polite also noted that public credibility of the criminal justice system is undermined when the Department fails to consider “individual accountability” in its prosecutions of white-collar crimes.

In highlighting the Department’s efforts to provide measurable means of restitution to victims of white-collar crime, AAG Polite recounted the over $420 million that the Department repatriated to the people of Malaysia following the 1MDB scandal as well as the $3.7 billion in restitution made to nearly 31,000 victims of the Bernie Madoff scheme. AAG Polite likewise noted that the Department was retooling its structure and processes to heighten the focus on victims of white-collar crime, including the addition of a “victim coordinator” to the Criminal Division’s front office, a reassessment of the tools available to victims to report financial crimes, and an increased focus on addressing “victim issues as part of the Filip Factors.”

AAG Polite closed by bluntly acknowledging that the “carrots and sticks of our corporate enforcement” are “to affect, punish, deter, or change the decision-making and actions of individuals.” To that end, he observed that even in instances in which senior corporate leaders were not found to be involved in misconduct, companies must nevertheless consider whether adequate remediation should include a change in leadership — not “for change’s sake” but instead for fostering a climate in which wrongdoing was committed, “permit[ing] weak internal controls,” or for “model[ing] poor ethical behavior for the workforce.”