Yesterday, the United States Department of Justice issued a policy memorandum to all United States Attorneys, the FBI, and to each of its own enforcement divisions (criminal, civil, tax, environment, national security), including United States Trustees, entitled: Individual Accountability for Corporate Wrongdoing. The memorandum makes clear that the federal government intends to “leverage its resources to identify culpable individuals at all levels in corporate cases.” The author of the directive, Deputy Attorney General Sally Quillian Yates, was quoted in today’s New York Times: “Corporations can only commit crimes through flesh-and-blood people . . . It’s only fair that the people who are responsible for committing those crimes be held accountable. The public needs to have confidence that there is one system of justice and it applies equally regardless of whether that crime occurs on a street corner or in a boardroom.” http://www.nytimes.com/2015/09/10/us/politics/new-justice-dept-rules-aimed-at-prosecuting-corporate-executives.html
The DOJ memorandum contains guidance for future criminal and civil investigations, and for those investigations “pending as of the date of this memo, to the extent it is practicable to do so.” The memo outlines “six key steps” to enhance the government’s pursuit of individuals allegedly responsible for corporate misconduct: (1) focusing on individuals from the inception of an investigation; (2) routinely conducting parallel criminal and civil investigations; (3) denying “any cooperation credit” to corporations that do not provide all relevant facts regarding responsible individuals; (4) declining to release individuals from civil or criminal liability when resolving an investigation with a corporation, “absent extraordinary circumstances or approved departmental policy”; (5) declining to close an investigation into corporate liability without a clear plan with respect to individual liability and documenting all decisions regarding individuals; and (6) in civil cases, evaluating “whether to bring suit against an individual based on considerations beyond that individual’s ability to pay [such as the nature of the misconduct and prior history], and “whether pursuing the action reflects an important federal interest.”
The Department of Justice has a long history of issuing policy directives for the exercise of law enforcement discretion in white collar crime cases. As a result of this new directive, corporate executives can expect their individual conduct to be thoroughly scrutinized in any federal investigation. The possible resolution of corporate liability will not signal an end to investigations into individual responsibility. Corporations will be incentivized to identify the perpetrators, and may be required to do so as a part of any settlement of corporate liability. By targeting individuals from the beginning, the government plans to “increase the likelihood that individuals with knowledge of the corporate misconduct will . . . provide information against individuals higher up in the corporate hierarchy.” The federal government has served notice to corporate executives that being “insulated from the day-to-day activity in which the misconduct occurs” will not deflect “painstaking” investigations of their individual conduct and will not preclude action against them individually for the misconduct of their businesses.