DOJ’s Renewed Focus on Individual Accountability in White Collar Criminal Enforcement

White Collar & Corporate Investigations Alert

In a speech to the ABA’s 2021 annual National Institute on White Collar Crime, Deputy Attorney General (“DAG”) Lisa Monaco emphasized that prosecuting individuals accused of white collar crime is a top priority for the Biden administration’s Department of Justice (the “DOJ”).  The directive to vigorously prosecute individuals in addition to (or instead of) the corporations for which they work has ebbed and flowed across recent administrations, and will likely continue to be situational. Nevertheless, it is notable that the DAG has reaffirmed DOJ’s focus on the need to hold individuals accountable for white collar criminal conduct, especially at a forum where white collar defense lawyers from around the country were gathered.

In her remarks, Ms. Monaco stressed that corporate accountability starts with the individuals who are responsible for criminal conduct.  Prosecuting individuals prevents recidivism and improves the overall compliance of corporations.  Indeed, a corporate culture that fails to hold individuals accountable often leads to “bad results.”  DOJ has made clear that prosecuting individuals who allegedly engaged in misconduct is a critical component of accountability. Accordingly, DOJ has announced as its first priority in corporate criminal matters to prosecute the individuals who “commit and profit from corporate malfeasance.” 

Of course, holding individuals accountable has long been DOJ policy.  For years prior to the DAG’s recent speech, Section 9.28-210 of the Justice Manual has provided that:

Prosecution of a corporation is not a substitute for the prosecution of criminally culpable individuals within or without the corporation.  Because a corporation can act only through individuals, imposition of individual criminal liability may provide the strongest deterrent against future corporate wrongdoing.  Provable individual criminal culpability should be pursued, particularly if it relates to high-level corporate officers, even in the face of an offer of a corporate guilty plea or some other disposition of the charges against the corporation, including a deferred prosecution or non-prosecution agreement, or a civil resolution.  In other words, regardless of the ultimate corporate disposition, a separate evaluation must be made with respect to potentially liable individuals.

Absent extraordinary circumstances or approved departmental policy such as the Antitrust Division’s Corporate Leniency Policy, no corporate resolution should provide protection from criminal liability for any individuals.  The United States generally should not release individuals from criminal liability based on corporate settlement releases.  Any such release of individuals from criminal liability due to extraordinary circumstances must be personally approved in writing by the relevant Assistant Attorney General or United States Attorney.

However, DOJ now appears to be adding new elements to this approach.  In her speech, Ms. Monaco urged prosecutors to “be bold” in prosecuting individual corporate executives, even where that “means the government may lose some of those cases.”  And the DAG announced that DOJ is increasing resources devoted to prosecuting individuals – including by embedding a team of FBI agents to work full-time within the DOJ’s Criminal Fraud Section.

Corporate Cooperation Credit Again Requires Disclosure Of All Wrongdoing By Individuals

Another development from the DAG’s recent speech is the apparent restoration of the requirement that corporations do more than selectively disclose information about individual wrongdoing in their ranks. In 2015, then-DAG Sally Yates issued what has become known as the “Yates Memo,” addressing the Obama administration’s focus on individual accountability for corporate wrongdoing.  Among other things, this policy required companies to turn over to DOJ evidence on culpable employees in order to be eligible for cooperation credit.

In 2018, then-DAG Rod Rosenstein changed course, tempering the policy announced in the Yates Memo.  The Trump administration’s policy on individual accountability allowed for more discretion in providing corporations with partial cooperation credit (without requiring the corporations to disclose all individuals involved in the criminal conduct).  Under the 2018 guidance, corporations were required to disclose only individuals “substantially involved” in the misconduct.

Ms. Monaco’s remarks last week make clear that DOJ is restoring its prior guidance that to be eligible for any cooperation credit, corporations must provide DOJ with all (non-privileged) information about individual wrongdoing – not only for those individuals who were substantially involved.  The Biden-era DOJ views the Trump-era guidance as having afforded companies too much discretion in identifying who was (and importantly, was not) “substantially involved” in the misconduct.

Looking Ahead

While the defense bar may view Ms. Monaco’s remarks last week as simply a reinstatement of the Yates Memo and a reversion to the 2015 enforcement landscape, it does appear that the Biden-era DOJ intends to enhance efforts to secure convictions for individuals alongside corporations. 

In addition to Ms. Monaco’s recent remarks, John Carlin – the Acting DAG prior to Ms. Monaco’s confirmation – recently characterized DOJ as “redoubling” its commitment to white collar criminal enforcement.  Mr. Carlin echoed Ms. Monaco’s message that prosecutors should not fear bringing difficult cases, particularly against individuals.  In addition to the embedding of FBI agents, DOJ is also developing its use of data analytics to identify corporate wrongdoing – which is likely to tie into its efforts to prioritize prosecution of individuals as well.

DOJ’s emphasis on individual accountability continues to grow since the financial crisis more than a decade ago and the public criticism of its near-failure to secure convictions of individuals involved in the alleged misconduct. DOJ’s devotion of increased resources to its individual prosecution efforts, as well as its directive to prosecute cases it may not always win, may signal a new era in corporate criminal enforcement.  It also may mean more trials; individuals facing loss of their liberty are traditionally more likely to proceed to trial than corporate entities.  Moreover, corporate executives and other employees should pay even closer attention to corporate compliance, knowing that they may have even more skin in the game under the Biden administration’s DOJ.