On September 17, 2014, in three separate speeches—one given by the United States Attorney General and two others given by two different high-ranking DOJ officials—the U.S. Department of Justice signaled its heightened focus on the criminal prosecution of individuals. The speeches mark the DOJ’s increased attention on white-collar crime and appear to forecast a renewed aggressiveness in law enforcement to prosecute suspected fraud.
Attorney General Holder, in a speech at New York University School of Law, called for Congress to consider increasing the monetary rewards available to whistleblowers under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA). General Holder noted that FIRREA has been used in recent years to achieve major settlements with JP Morgan, Citigroup, Bank of America, and other financial institutions. Holder noted, however, that whistleblower rewards under FIRREA are capped at $1.6 million, while median executive pay in the banking industry is at $15 million and rising. In contrast to FIRREA whistleblowers, under the False Claims Act whistleblowers can receive up to a third of the funds recovered by the government. Holder stated that in order to receive high-quality tips from high-level banking executives, law enforcement should be allowed to offer greater financial payouts.
Assistant Attorney General for the Criminal Division Leslie Caldwell spoke to Taxpayers Against Fraud about recent DOJ successes in prosecuting alleged False Claims Act violations as criminal cases. Caldwell requested that attorneys representing False Claims Act whistleblowers reach out to DOJ officials in the Criminal Division—not just the Civil Division—before filing lawsuits. Further, Caldwell touted recently-improved intra-agency protocols that provide criminal prosecutors early access to all False Claims Act cases, stating:
We in the Criminal Division have recently implemented a procedure so that all new qui tam complaints are shared by the Civil Division as soon as the cases are filed. Experienced prosecutors in the Fraud Section are immediately reviewing the qui tam cases when we receive them to determine whether to open a parallel criminal investigation.
Caldwell expressed the Criminal Division’s renewed interest in pursuing False Claims Act cases and noted that it has experienced prosecutors with a track record of obtaining convictions.
Principal Deputy Assistant Attorney General for the Criminal Division Marshall Miller outlined the DOJ’s expectations for companies hoping to get credit for cooperating with criminal investigations. Miller asserted that cooperators should be prepared to offer specific evidence that will advance criminal prosecutions against individual employees responsible for wrongdoing. Miller stated:
Voluntary disclosure of corporate misconduct does not constitute true cooperation, if the company avoids identifying the individuals who are criminally responsible. Even the identification of culpable individuals is not true cooperation, if the company fails to locate and provide facts and evidence at their disposal that implicate those individuals.
Thus, companies should expect that the DOJ will require complete, detailed information about responsible individuals before granting a company leniency.
Taken together, the Justice Department’s three recent speeches signal a greater priority on criminal prosecution of corporate misconduct. While federal prosecutors have obtained record high monetary settlements in recent years, the DOJ has been criticized for not indicting more individuals following the 2008 financial crisis. Perhaps in response to these criticisms, the Department of Justice appears eager to attract greater assistance from whistleblowers, to pursue more cases through criminal prosecution, and to demand that corporations reveal detailed information about the culpability of their employees.