A new post at the Graves Garrett, LLC blog highlights interesting points from a new Department of Justice memo about prosecuting individual executives and employees of corporations:
The Department of Justice has released a memo detailing a new policy aimed at further reducing corporate fraud – one of the DOJ’s top national priorities—by getting more personal with its investigations of wrongdoing. The memo, titled “Individual Accountability for Corporate Wrongdoing,” was issued by Deputy Attorney General Sally Yates and outlined the DOJ’s motives behind the new policy that focuses on prosecuting individual executives and employees, as well as the steps that would be taken to implement it.
Among the reasons for shifting focus to individual accountability, Yates included that “it deters future illegal activity, it incentivizes changes in corporate behavior, it ensures proper parties are held responsible for their actions, and it promotes the public’s confidence in our justice system.”
The document noted that although there would be unique challenges with pursuing corporate misconduct at the individual level, the DOJ will surmount these issues through a renewed partnership between DOJ senior attorneys and U.S. Attorneys who will modify and realign the way they investigate these cases.
The DOJ plans to employ six main strategies in their new approach to handling investigations into allegations of corporate misconduct:
- Require companies to provide any and all information about individual transgressions in order to receive “cooperation credit.” Effectively, this means that companies will have an incentive for outing individuals who may be involved in a fraud.
- Focus on individuals from the beginning in both criminal and civil corporate investigations. By building a case against individuals from the start, the DOJ hopes to encourage corporate workers to share more information about their colleagues, especially those higher up in the hierarchy.
- Encourage criminal and civil attorneys to keep in regular communication during corporate investigations. This step is intended to ensure that guilty parties are held accountable by one type of charge or another following the investigation.
- Establish corporate resolutions as separate from individual criminal or civil liability. By implementing this strategy, the DOJ is further reinforcing its message that individuals will not be protected just because they are within the corporate nest.
- Wait to resolve corporate cases until there is a clear plan for resolving the related individual cases prior to the statute of limitations. This component further encourages DOJ attorneys to make a concrete action plan of how to address parties involved in the corporate misconduct – charge them or provide reasoning for not filing charges.
- Pursue individuals based on considerations other than their ability to pay back the government. Although recovering government money is always a principle objective in an investigation, the DOJ hopes to deter future criminal activity by pursuing all individuals regardless of their financial standing.
The new DOJ policy is raising the stakes in the arena of white collar crime and sending a message that employees and corporate executives will no longer be able to hide under the safety of their employer’s corporate umbrellas. It is each person for him/her self and failure to identify and turn over culpable individuals to the authorities could result in further repercussions to a company. With this is mind, it is critical that companies revise their policies and procedures in regard to internal investigations. Failure to prepare for these new DOJ procedures could have a devastating impact to both a company and its individual employees.
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