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Deputy Attorney General Rosenstein Signals Change Is Coming To DOJ Policy Regarding Corporate Prosecutions

Change

One of the best things ever written about the FCPA was penned by Robert Primoff who stated: “The government has the option of deciding whether or not to prosecute.  For practitioners, however, the situation is intolerable.  We must be able to advise our clients as to whether their conduct violates the law, not whether this year’s crop of administrators is likely to enforce a particular alleged violation.  That would produce, in effect, a government of men and women rather than a government of law.”

As highlighted in this prior post, the above was written in 1982, but it remains true today. Indeed, one disturbing dynamic of DOJ Fraud Section policy making is that it is largely driven by individuals – individuals who stay at the DOJ relatively briefly. Most recently, it was the 2015 “Yates Memo,” before that it was the 2008 “Filip Memo,” prior to that it was the 2006 “McNulty Memo,” prior to that it was the 2003 “Thompson Memo,” and prior to that it was the 1999 “Holder Memo.”

As highlighted in this report, yesterday Deputy Attorney General Rod Rosenstein signaled that change is yet again coming to DOJ policy regarding corporation prosecutions.

According to the report:

“The Justice Department’s No. 2 official indicated Thursday that the federal government’s policy on prosecuting corporate crime is under review and he suggested that changes to the department’s stance on the issue are coming.

“It’s under review and I anticipate that there may be some change to the policy on corporate prosecutions,” Deputy Attorney General Rod Rosenstein said Thursday during a question-and-answer session following a speech at the conservative Heritage Foundation in Washington. “I don’t have any announcement about that today, but I do anticipate that we may in the near future make an announcement about what changes we’re going to make to corporate fraud principles.”

Rosenstein did not indicate what portions of the Yates memo are likely to be overhauled or halted. He also said that he favors prosecutions of individuals in appropriate cases.

“Corporations, of course, don’t go to prison. They do pay a fine,” Rosenstein said. “The issue is can you effectively deter corporate crime by prosecuting corporations or do you in some circumstances need to prosecute individuals. I think you do.”

The deputy AG described the review as commonplace.

“That’s really pretty routine. Every administration I think looks at these issues and determines whether or not the internal guidelines that were written in the last administration are effectively addressing what we think is the crime problem of the present,” he said.”

Returning to the beginning quote and how it is disturbing to have “a government of men and women rather than a government of law,” an irony of Rosenstein’s comments is that they occurred in connection with this speech he gave about the rule of law in which stated: “The rule of law is not merely a feature of America. The rule of law is the foundation of America.” (See here for video of the speech and comments).

In pertinent part, Rosenstein further stated:

“[A]lthough the power of the federal government is vast, it is expressly limited. Those who are entrusted with the exercise of federal authority must be energetic in enforcing the law, but we must restrain ourselves from assuming authority beyond our lawful mandate. Our power is limited by law. And we are obligated to respect the limits – even when no one objects.

[…]

The Department of Justice does not choose sides because of the identity of a party. We do not enforce the law against some people, and ignore others, based on our own biases or other inappropriate considerations.

We follow neutral principles.

The point of the rule of law is to maintain a fair and rational system characterized by universality — that is, it applies equally to each person. Under the rule of law, the people tasked with enforcing the law must do so impartially.

This is active work. To say that we enforce the law impartially does not mean we enforce it mechanically. It means that we enforce it rationally. Different results should be justified by different facts. And the differences need to be objective.

That brings me back to my earlier point about the people who make up the Department of Justice. The ideal prosecutor is dogged, but not an automaton who proceeds at all costs. Nor is the ideal prosecutor a zealot who demands criminal punishment for every arguable violation of the law.

[…]

Robert Jackson, another of our nation’s great Attorneys General, observed: “If the Department of Justice were to make even a pretense of reaching every probable violation of federal law, ten times its present staff would be inadequate.”

Driving the point home, Jackson explained that “no local police force can strictly enforce the traffic laws, or it would arrest half the driving population on any given morning.”

With an ever-growing criminal code, those observations are more accurate today than when Jackson made them in 1940.

Jackson’s point was simple. Violations of the law abound. “What every prosecutor is practically required to do,” he said, “is to select the cases for prosecution and to select those in which the offense is the most flagrant, the public harm the greatest, and the proof the most certain.” As Jackson recognized, the prosecutor necessarily chooses which cases to pursue.

The ability to choose which cases to prosecute is an extraordinary power. Courts exercise the ultimate authority to rule on the strength of the evidence and the meaning of the law. But the decision whether or not to prosecute, as the Supreme Court has ruled, is “ill-suited to judicial review.” Such unreviewable power calls for the exercise of judgment, and the wise use of discretion.

When asked, “Why did you prosecute that case?” it will not do for the prosecutor to respond with, “Because I can,” or “Because I must.” The only right answer is, “Because I should.”

The task of enforcing the rule of law is not devoid of discretion. Discretion is inherent in law enforcement.

When used by lawyers, the word “discretion” means freedom of choice – the power to make a decision according to one’s own judgment. When someone decides to act on a matter that is committed to their discretion, the decision is permissible regardless of whether it is wise.

[…]

By definition, discretion means that the rules allow a range of permissible options. So discretion is the power to make a choice that is wrong, in the sense that it is not the objectively best choice.

But when government officials are vested with discretion, they have a special obligation to take care that they do make the objectively best choice.

That requires wisdom.

A Seventh Circuit opinion described the challenge for federal prosecutors with these words: “The Department of Justice wields enormous power over people’s lives, much of it beyond effective judicial or political review. With power comes responsibility, moral if not legal, for its prudent and restrained exercise; and responsibility implies knowledge, experience, and sound judgment, not just good faith ….”

Not just good faith. Of course, good faith is important. It is often essential in order to avoid doing the wrong thing. And good faith is generally a valid defense to a misconduct complaint.

But the Department of Justice does not measure success by whether we acted with the right motive. Our goal is to make the objectively right choice, based on articulable reasons.

The most difficult management challenges for the Department of Justice are prosecutors who act in good faith but make unwise judgments.

Acting with honor is no substitute for acting with wisdom. It is important to have the right motive, but it is even more important to do the right thing.”

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