On October 28, 2021, Deputy Attorney General (DAG) Lisa Monaco outlined sweeping changes to the Department of Justice’s (DOJ) prosecution of corporate crime, signaling a tougher stance on white collar crimes than the previous administration. In a speech at the ABA’s National Institute on White Collar Crime, DAG Monaco announced key policy changes at DOJ, including (i) heightened requirements to receive full cooperation credit and focus on individual accountability; (ii) consideration of a corporation’s criminal, civil, and regulatory conduct when evaluating a case; and (iii) potential implementation of corporate monitoring programs.
DAG Monaco announced these changes as part of a larger framework to "invigorate" DOJ's corporate enforcement program. DOJ will also focus on whether pretrial diversion programs are effective in deterring repeat offenders of corporate wrongdoing, noting that there will be "serious consequences" for companies that violate the terms of any deferred prosecution agreement (DPA) or non-prosecution agreement (NPA). At the same time, DAG Monaco noted that DOJ would devote significant resources to assist with corporate enforcement, announcing the formation of the Corporate Crime Advisory Group to assist in investigations of corporate crime. These key policy changes offer a clear preview of the DOJ’s enhanced corporate enforcement program.
DAG Monaco stressed the importance of disclosing a complete list of individuals involved in any corporate misconduct, returning to prior guidance from a 2015 memorandum (known as the “Yates Memo”) that premised cooperation credit on providing all relevant facts relating to the individuals responsible for the misconduct. The Trump administration previously limited this disclosure requirement to include only information about individuals who were "substantially involved" in the misconduct, as opposed to all individuals that may have been involved in the misconduct.
DAG Monaco announced that this scaled-back approach was rescinded moving forward, and that companies must provide "all non-privileged information about individuals involved in or responsible for the misconduct at issue." She explained that the previous guidance was "confusing" and allowed cooperating companies too much latitude with reporting requirements. Further, DAG Monaco noted that DOJ’s investigative team was "better suited" to determine the relevance and culpability of those individuals involved in corporate crime.
DAG Monaco also announced that DOJ will consider all types of prior misconduct, regardless of whether the prior misconduct is related to the current issue under investigation. A company's "record of misconduct," whether that be in a civil, criminal, or regulatory space, speaks directly to the company's "overall commitment to compliance programs." In other words, any type of misconduct can signify a weak corporate culture that fails to sufficiently disincentivize crime, regardless of whether the misconduct took place at a state or local level, or even in a foreign country. Although not all instances of prior misconduct are relevant, prosecutors "need to start by assuming all prior misconduct is potentially relevant."
The final key policy change discussed in DAG Monaco's speech promoted flexibility around the use of corporate monitors to reduce the risk of misconduct following DOJ prosecution. DAG Monaco endorsed corporate monitors as an available means to enforce and verify compliance under a DPA or NPA: "To the extent that prior DOJ guidance suggested that corporate monitors are disfavored or are the exception, I am rescinding that guidance." Regarding the selection of monitors, DAG Monaco announced that the DOJ will study how corporate monitors are selected and whether to standardize the process across all DOJ divisions and offices.
Resources and Recidivism
Alongside these three developments, DAG Monaco also announced steps to come that would reinforce DOJ's "commitment to combatting corporate crime." First, DOJ will evaluate deferred or non-prosecution agreements for recidivist offenders across all DOJ enforcement subject matter. DAG Monaco noted that she was concerned about the type of offender with multiple, recent violations: "For example, a company might have an antitrust investigation one year, a tax investigation the next, and a sanctions investigation two years after that."
To that end, DOJ will consider whether NPAs and DPAs are appropriate for companies with a history of violations, and whether such companies under the terms of an NPA or DPA take those obligations seriously. DOJ is seeking to ensure that continued fines and resolutions do not simply become the cost of doing business. Rather, DAG Monaco's speech clarifies that there will be "serious consequences" for violating the terms of a favorable disposition short of a criminal indictment.
Second, DAG Monaco also announced the formation of the Corporate Crime Advisory Group (CCAG) to evaluate a variety of issues previewed in her speech, including monitorship selection, recidivism, and NPA/DPA compliance. The CCAG will also assist the DOJ in prioritizing rigorous enforcement and individual accountability, in addition to developing recommendations and proposing revisions to the department’s policies on corporate criminal enforcement.
In short, DAG Monaco's speech announced significant changes to DOJ's corporate crime enforcement program, rolling back limitations from the Trump administration that arguably limited the investigation and prosecution of corporate crime. DOJ will take a hard line on those corporations or individuals that it determines are complicit in criminal misconduct. In particular, DOJ will likely focus on those with a record of prior misconduct or pre-trial diversion agreements. As such. implementing or reinforcing a robust compliance program that promotes self-disclosure is critical. We will closely monitor any future developments and expect a number of changes in the coming months.