The D.C. Circuit dealt a blow last week to judicial attempts to exercise supervision over Justice Department negotiated Deferred Prosecution Agreements. In United States v. Fokker (Here), the Court answered the question in a resounding affirmation of the authority of prosecutors to resolve criminal cases and exercise discretion in charging decisions. In the end, the court’s decision was not a great surprise but the strength of its decision left little room for others to argue for judicial review of DPAs and charging decisions.
Judge Leon had questioned the government’s settlement with Fokker Industries, which included an eighteen-month DPA, and a $21 million fine. Fokker had committed over 1000 export and sanctions controls violations over a 5-year period.
Judge Leon questioned the government’s failure to prosecute any individuals, the amount of the fine as being too low, and that some employees were allowed to remain at the company.
In rejecting Judge Leon’s action, the Court of Appeals’ decision which was written by Judge Srinivasan, reiterated the Executive’s “primacy in criminal charging decisions.” In particular, the Court criticized Judge Leon’s attempt to inflate the role of a trial judge in reviewing a DPA under the Speedy Trial Act provisions that confer jurisdiction on the trial court to hold the criminal charges in abeyance during the DPA period.
While the Court’s ruling was not a big surprise, the decision underscores the importance of cooperation with government prosecutors. A company that voluntarily discloses a matter, cooperates during the investigation and remediates its compliance program stands shoulder-to-shoulder with the government before a trial judge seeking approval of a negotiated settlement.
If a company chooses to disclose and cooperate as its best strategic choice, then the company cannot engage in half-hearted attempts to earn cooperation credit from the government. The implications of this ruling are significant, especially in light of the Yates Memorandum and, in the FCPA context, the Justice Department’s recent guidance on disclosure and cooperation.
The government is in the driver’s seat when it comes to settling cases and awarding credit for disclosure, cooperation and remediation. In the future, providing information about culpable individuals will be a key component in assessing company cooperation.
Fokker’s settlement of a DPA and a $21 million fine was earned by its voluntary disclosure, extensive cooperation, and remediation of its compliance program. In fact, the government noted these factors in its filings, and the Court cited these explanations from the government.
As part of its cooperation, Fokker facilitated interviews of relevant witnesses, expedited the government’s requests for documents under the MLATs, and conducted its own internal investigation.
Fokker also took a number of remedial measures to improve its corporate compliance program, adopting a set of procedures to track parts for sanctions screening and compliance, and bolstering its training program. Fokker fired its president and demoted or reassigned other employees who were involved in the violations.
The government cited Fokker’s compliance and remediation efforts as “a model to be followed by other corporations.”
The government, in exercising its discretion, took all of these circumstances into account and reached a final settlement with Fokker.