Earlier this week, the Department of Justice Criminal Division released various policy materials relevant to corporate enforcement.
Included in the materials was this memo to Criminal Division Personnel with a subject line “Focus, Fairness, and Efficiency in the Fight Against White-Collar Crime.”
The memo touches upon many issues long the focus of prior DOJ policy memos such as individual accountability, incentivizing voluntary disclosure and cooperation, the goal of efficient investigations, and the use of monitors.
The memo begins:
“The core mission of the Department of Justice (Department) is to do justice, uphold the rule of law, protect the American public, and vindicate victims’ rights. The Department’s efforts to carry out this mission are multi-faceted. Prosecutors and investigators in the Criminal Division are currently working tirelessly to, among other things, pursue the Total Elimination of Cartels and Transnational Criminal Organizations (TCOs), dismantle human smuggling organizations, curb the flow of fentanyl and other dangerous drugs, and neutralize child predators and violent criminals, including by securing significant charges and prison sentences against the worst criminal actors.
White-collar crime also poses a significant threat to U.S. interests. Unchecked fraud in U.S. markets and government programs robs hardworking Americans and harms the public fisc. The deadly activities of Cartels and TCOs are enabled by international money laundering organizations and other financial facilitators. Illicit financial and logistical networks undermine our national security by enabling shadow-banking for and sanctions evasion by hostile nation states and terror regimes. The Criminal Division is committed to rooting out such insidious conduct.
However, overbroad and unchecked corporate and white-collar enforcement burdens U.S. businesses and harms U.S. interests. The vast majority of American businesses are legitimate enterprises working to deliver value for their shareholders and quality products and services for customers. Prosecutors must avoid overreach that punishes risk-taking and hinders innovation. For these reasons, the Division’s policies must strike an appropriate balance between the need to effectively identify, investigate, and prosecute corporate and individuals’ criminal wrongdoing while minimizing unnecessary burdens on American enterprise.
The purpose of this Memorandum is to outline the Criminal Division’s enforcement priorities and policies for prosecuting corporate and white-collar crimes in the new Administration. In investigating and prosecuting these crimes, Criminal Division attorneys are to be guided by three core tenets: (1) focus; (2) fairness; and (3) efficiency. This Memorandum elaborates on these principles and amends several Criminal Division policies …”.
Regarding “focus,” the memo states:
“The Criminal Division must be laser-focused on the most urgent criminal threats to the country. Therefore, consistent with the enforcement policies and priorities of this Administration, the Criminal Division will prioritize investigating and prosecuting corporate crime in areas that will have the greatest impact in protecting American citizens and companies and promoting U.S. interests.
[…]
To combat these harms, the Criminal Division will prioritize investigating and prosecuting white-collar crimes in the following high-impact areas:
1. Waste, fraud, and abuse, including health care fraud and federal program and procurement fraud that harm the public fisc;
2. Trade and customs fraud, including tariff evasion;
3. Fraud perpetrated through VIEs, including, but not limited to, offering fraud, “ramp and dumps,” elder fraud, securities fraud, and other market manipulation schemes;
4. Fraud that victimizes U.S. investors, individuals, and markets including, but not limited to, Ponzi schemes, investment fraud, elder fraud, servicemember fraud, and fraud that threatens the health and safety of consumers;
5. Conduct that threatens the country’s national security, including threats to the U.S. financial system by gatekeepers, such as financial institutions and their insiders that commit sanctions violations or enable transactions by Cartels, TCOs, hostile nation-states, and/or foreign terrorist organizations;
6. Material support by corporations to foreign terrorist organizations, including recently designated Cartels and TCOs;
7. Complex money laundering, including Chinese Money Laundering Organizations, and other organizations involved in laundering funds used in the manufacturing of illegal drugs;
8. Violations of the Controlled Substances Act and the Federal Food, Drug, and Cosmetic Act (FDCA), including the unlawful manufacture and distribution of chemicals and equipment used to create counterfeit pills laced with fentanyl and unlawful distribution of opioids by medical professionals and companies;
9. Bribery and associated money laundering that impact U.S. national interests, undermine U.S. national security, harm the competitiveness of U.S. businesses, and enrich foreign corrupt officials; and
10. As provided by the Digital Assets DAG Memorandum: crimes (1) involving digital assets that victimize investors and consumers; (2) that use digital assets in furtherance of other criminal conduct; and (3) willful violations that facilitate significant criminal activity. Cases impacting victims, involving cartels, TCOs, or terrorist groups, or facilitating drug money laundering or sanctions evasion shall receive highest priority.
Regarding “fairness,” the memo states:
“The Criminal Division has long been a leader in crafting policies to appropriately investigate and prosecute white-collar offenders. For instance, the Criminal Division’s Corporate Enforcement and Voluntary Self-Disclosure Policy (CEP) has applied across the Division since 2018. The CEP’s directives concerning self-disclosure, cooperation, and remediation have resulted in the Department bringing more cases against individual wrongdoers while rewarding good corporate citizens.
The Criminal Division developed these policies because justice demands the equal and fair application of criminal laws to individuals and corporations who commit crimes. The Department’s first priority is to prosecute individual criminals. It is individuals—whether executives, officers, or employees of companies—who commit these crimes, often at the expense of shareholders, workers, and American investors and consumers. The Criminal Division will investigate these individual wrongdoers relentlessly to hold them accountable.
Not all corporate misconduct warrants federal criminal prosecution. Prosecution of individuals, as well as civil and administrative remedies directed at corporations, are often appropriate to address low-level corporate misconduct and vindicate U.S. interests. Prosecutors in the Criminal Division must consider additional factors when determining whether to charge corporations, including whether the company reported the conduct to the Department, its willingness to cooperate with the government, and its actions to remediate the misconduct. Justice Manual (JM) 9-28.300.
It is critical to American prosperity to promote policies that acknowledge law-abiding companies and companies that are willing to learn from their mistakes and provide those companies with transparency from the Department. Companies that enter into agreements with the Criminal Division agree to implement corporate compliance programs, report relevant misconduct, cooperate with the government, and more. These obligations serve important functions for companies that have committed serious wrongdoing. But where corporate criminal resolutions are necessary, prosecutors should consider all forms—non-prosecution agreements, deferred prosecution agreements, and guilty pleas—in making a case-by-case analysis about the appropriate disposition. When applying these policies, prosecutors must conduct an individualized assessment of the facts and evidence in each case and make an appropriate determination based on the application of law to those facts. To ensure fairness and individualized assessments, I have directed the Criminal Division’s Fraud Section and the Money Laundering and Asset Recovery Section to revise the CEP and clarify that additional benefits are available to companies that self-disclose and cooperate, including potential shorter terms. A fair justice system requires that the Department be maximally transparent so that companies—including directors, executives, employees, and counsel—can make appropriate decisions when faced with potential misconduct. We have thus refined the CEP such that its core components—the paths for potential declination, the available fine reductions for a company’s cooperation and remediation, and relevant factors that determine the contours of a corporate resolution—are more easily understandable.
In addition, I have directed these Sections to review the length of terms of all existing agreements with companies to determine if they should be terminated early. Factors that may lead to early termination include, but are not limited to, duration of the post-resolution period, substantial reduction in the company’s risk profile, extent of remediation and maturity of the compliance corporate program, and whether the company self-reported the misconduct. That review is ongoing, and the Criminal Division has determined in multiple matters that companies had met the terms of their agreements, and thus the Criminal Division has ended those agreements early.
Going forward, when entering into a corporate resolution with companies that cooperate and remediate, Criminal Division prosecutors must impose a term that is appropriate and necessary in light of, among other things, the severity of the misconduct, the company’s degree of cooperation and remediation, and the effectiveness of the company’s compliance program at the time of resolution. These terms should not be longer than three years except in exceedingly rare cases, and Criminal Division prosecutors should assess these agreements regularly to determine if they should be terminated early.”
Regarding “efficiency,” the memo states:
“The work of Criminal Division attorneys to investigate and prosecute white-collar crime is essential to the Department’s efforts to advance American interests, protect victims, and strengthen our national security. But federal investigations into corporate wrongdoing can be costly and intrusive for businesses, investors, and other stakeholders, many of whom have no knowledge of, or involvement in, the misconduct at issue. Federal investigations can also significantly interfere with day-to-day business operations and cause reputational harm that may at times be unwarranted. To maximize efficiency in all corporate investigations, I am therefore directing the implementation of the following procedures in corporate investigations in the Criminal Division, effective immediately:
Efficient Investigations
White-collar schemes are complex and often cross borders. As a result, these schemes take substantial time and effort to unravel. Evidence may be located abroad and records can be voluminous. But from the company’s perspective, investigations into corporate crime can linger for years and, at times, with little meaningful progress. While particular facts and circumstances may require an investigation that spans multiple years, prosecutors must take all reasonable steps to minimize the length and collateral impact of their investigations, and to ensure that bad actors are brought to justice swiftly and resources are marshaled efficiently.
Accordingly, I am directing that prosecutors must move expeditiously to investigate cases and make charging decisions. That means that my office will work closely with the relevant Sections to track investigations and ensure that they do not linger and are swiftly concluded.
Narrowly Tailored Use of Monitors
Independent compliance monitors must only be imposed when they are necessary, i.e., when a company cannot be expected to implement an effective compliance program or prevent recurrence of the underlying misconduct without such heavy-handed intervention. When imposed, monitorships must be narrowly tailored to achieve the necessary goals while minimizing expense, burden, and interference with the business.
Therefore, I am announcing a new monitor selection memorandum that (1) clarifies the factors that prosecutors must consider when determining whether a monitor is appropriate and how those factors should be applied; and (2) ensures that when a monitor is necessary, prosecutors narrowly tailor and scope the monitor’s review and mandate to address the risk of recurrence of the underlying criminal conduct and to reduce unnecessary costs. In keeping with these principles, the Criminal Division, in coordination with Department leadership, has undertaken an individualized review of all existing monitorships to make case specific determinations of whether each monitor is still necessary.”
The memo concludes:
“Focused, fair, and efficient white-collar enforcement promotes American economic and national security interests while protecting American taxpayers, investors, consumers, and businesses. Results of the Criminal Division’s efforts in this regard will be measured by the practical benefits brought to bear for all relevant parties, not symbolic resolutions against shell entities or running up the scoreboard. We will foster cooperative relationships with those in industry that align with the Department in this pursuit, and we will root out the criminal element that works against these goals. As in everything we do, we will do so with integrity and in the interests of justice.”
