On September 9, 2015, the United States Department of Justice, Office of the Deputy Attorney General issued a memorandum outlining the Department’s new approach to civil and criminal investigations of corporate wrongdoing.
The memorandum notes that it is the product of a working group of senior attorneys within the Department of Justice and the United States attorney community with experience in investigations and prosecutions for corporate wrongdoing. The memorandum also specifically states that the guidance contained therein will apply to both civil and criminal corporate investigations.
The six (6) steps outlined in the memorandum are as follows:
1. Increased Threshold for Eligibility for Cooperation Credit
Under this point of guidance, corporations who are under investigation, either civilly or criminally, that desire to receive cooperation credit as a mitigating factor must “identify all individuals involved in, or responsible for the misconduct at issue, regardless of their position, status, or seniority, and provide to the department all facts relating to that misconduct.” The memorandum specifically states that barring complete cooperation with this requirement, the company’s cooperation will not be considered a mitigating factor. The memorandum goes on to note that the extent of cooperation credit depends upon a multitude of factors, listing as examples: timeliness, diligence, thoroughness, speed of internal investigation, and proactive nature of the cooperation. This guidance further advises department attorneys to continue to investigate any information provided by corporations in order to ensure that it is truthful and accurate, and not attempting to minimize the behavior of any particular individual who might be held accountable. Finally, this guidance states that, to the extent that plea or settlement agreements are reached before investigation of individuals is completed, such plea or settlement agreements should include provisions that require continued cooperation from the company and list specific consequences (i.e. stipulated penalties and/or material breach) for failure to provide further information after the plea or settlement agreement is reached.
2. Individual Accountability for Corporate Wrongdoing Should Be the Focus of Investigations from the Inception
The guidance advises department attorneys to focus on individuals from the beginning of any investigation of corporate misconduct, reasoning that early focus maximizes the government’s ability to investigate corporate misconduct, increases the likelihood that knowledgeable individuals will cooperate, and ultimately results in more individuals being held accountable.
3. Routine Communication Between Criminal and Civil Attorneys
The guidance instructs criminal and civil divisions of the government investigating corporate wrongdoing to be in constant and early contact in order to maximize potential remedies. According to the guidance, this includes: incarceration, fines, penalties, damages, restitution, asset seizure, forfeiture, as well as exclusion, suspension, and debarment. The guidance goes on to note that criminal attorneys who decline to prosecute should be particularly mindful that their civil counterparts may have more success due to elements that are commonly difficult in criminal cases against corporations, i.e. intent or burden of proof, which are much easier for civil counterparts to pursue.
4. Resolution of Investigations with Corporations Shall Not Provide Protection from Criminal or Civil Liability for Individuals Absent Extraordinary Circumstances
This guidance specifically states that government attorneys should take care to preserve any causes of action against individuals for corporate wrongdoing even when resolving investigations with the corporation itself. The memorandum specifically requires that extraordinary circumstances supporting a release of civil or criminal liability for an individual must be approved in writing.
5. A Documented Plan to Resolve Individual Accountability for Corporate Misconduct Must Be In Place Before Resolving Corporate Cases
The guidance states that the documented plan must address which individuals are potentially liable, describe any investigation of those individuals to date, and detail what investigation remains along with a plan for resolving those investigations before the statute of limitations has expired. When a decision is made not to pursue individual actions after the resolution of a corporate case, the reasons for that determination must also be documented and approved in writing.
6. An Individual’s Ability to Pay is Not the Only Factor in Considering Civil Action for Corporate Misconduct
The guidance recognizes that the department’s two goals of returning government money and holding corporate wrongdoers accountable can, under certain circumstances, be in opposition. However, the guidance states that civil attorneys should not dismiss the possibility of pursuing action against individual corporate wrongdoers based solely on the fact that such individuals may not have the resources to pay a significant judgment. The guidance advises civil attorneys to consider such factors as “whether the person’s misconduct was serious, whether it is actionable, whether the admissible evidence will probably be sufficient to obtain and sustain a judgment, and whether pursuing the action reflects an important Federal interest.” The guidance also advises civil attorneys to consider the individual’s specific misconduct and any past history and circumstances relating to that misconduct, as well as the needs of the communities served and the Federal government’s resources and priorities.
In summary, the government is officially targeting individuals within corporations to be held accountable for corporate wrongdoing. Policies are being changed and procedures amended in order to maximize this effort. Any company under investigation or any individual within such a company who may be personally liable should engage any attorney as soon as possible to assist in safely and effectively cooperating with the government.