Alert: Policy And Personnel Changes At The Department Of Justice

By now, all lawyers involved in federal white collar criminal practice have either heard of, or read in detail, the “Yates Memo” issued by the Department of Justice in September 2015.  Perceived as a response to the financial crisis in recent years and the lack of individual criminal and civil liability, Deputy Attorney General Sally Quillian Yates authored a detailed memorandum outlining a shift in Department policy.  The United States will now seek to hold individuals accountable for corporate wrongdoing.  In years past, all too often the government resolved criminal investigations of corporate entities with a corporate plea or deferred prosecution agreement, a civil settlement agreement, a stiff fine, and perhaps the installment of a compliance monitor within the company.  The civil settlement agreements often included releases of owners, officers, directors, and employees of the same corporations.  Those days are done according to Deputy Attorney General Yates.

In a pair of recent public appearances, top Department Officials have announced important changes in policy and personnel as a result of government’s new initiative.  First, in a speech delivered to the American Bankers Association and the American Bar Association on November 16, 2015, Deputy Attorney General Yates announced that the Department of Justice is revising the stone tablets that comprise the United States Attorney’s Manual.  First, the Department is revising the Principles of Federal Prosecution of Business Organizations (commonly referred to as the Filip factors) to emphasize the primacy in any corporate case of holding individual wrongdoers accountable.  If a company wants any credit at all for cooperating with the investigation, it must provide all non-privileged information about the individual wrongdoing.  The government is now separating what used to be a single factor regarding a corporation’s voluntary disclosure and its willingness to cooperate into two distinct factors: one regarding a company’s timely and voluntary disclosure and one regarding cooperation.  Additionally, the Department of Justice is amending the Manual to instruct its civil attorneys to follow the same factors as its criminal attorneys, and an inability to pay is not in and of itself a reason to decline a civil case: “Just because wrongdoers are judgment-proof doesn’t mean they should escape all judgment.”

Second, in a speech delivered on November 17, 2015 to a seminar for attorneys focused on the Foreign Corrupt Practices Act (“FCPA”), Assistant Attorney General Leslie Caldwell announced that the Department of Justice is seeking to hire 10 prosecutors to add to its FCPA unit.  This represents a 50% increase in its labor force.  Assistant Attorney General Caldwell made specific reference to the principles of the Yates memo when she told the attendees of the seminar, “Companies cannot just disclose facts relating to general corporate misconduct and withhold facts about the individuals involved…And internal investigations cannot end with a conclusion of corporate liability, while stopping short of identifying those who committed the underlying conduct.”  Certainly with the inevitable increase in the number of individual prosecutions, the Department will need more attorneys to review corporate disclosures and try cases.  Assistant Attorney General Caldwell’s comments make that connection clear.