DOJ Touts Major Investments and New Focus in Corporate Criminal Enforcement

In a pair of speeches delivered by Attorney General Merrick Garland and Assistant Attorney General Kenneth Polite, Jr. to the American Bar Association’s (“ABA”) Institute on White Collar Crime on March 3, 2022, the U.S. Department of Justice (“DOJ”) announced important new investments and commitments in its efforts to combat corporate crime. These include a massive resource request as part of President Biden’s 2022 budget and a focus on placing victims at the center of corporate investigations. 

Greater Resources to Focus on Individual Corporate Defendants and Pandemic-Related Fraud

First, AG Garland focused on increased efforts to hold individual defendants accountable in corporate criminal investigations, describing the prosecution of such individuals as the DOJ’s “first priority in corporate criminal cases.” As he made clear, “it is our first priority because penalties imposed on individual wrongdoers are felt by those wrongdoers, rather than by shareholders or inanimate organizations” leading to greater deterrence.

To this end, AG Garland highlighted commitments to greatly expand DOJ resources for prosecuting pandemic-related fraud, including that the DOJ would be seeking US$36.5m for U.S. Attorneys’ Offices and the Criminal Division as part of the President’s FY22 budget request. These funds will go to hiring an additional 120 attorneys, representing a significant expansion of efforts to root out criminal and civil fraud. To support these efforts, AG Garland also announced US$325m to fund more than 900 FBI agents to support the FBI’s White Collar-Crime Program.

Additionally, AG Garland suggested that he would soon be naming a chief prosecutor to lead a specialized team dedicated to combatting pandemic fraud, building on the existing work of the COVID-19 Fraud Enforcement Task Force, which was established last May.

Another area of increased effort to hold individuals accountable is Russia-related sanctions. It comes as no surprise that efforts to clamp down on Russian assets are peaking at the moment. For example, AG Garland also recently announced the launch of a Task Force, dubbed KleptoCapture, charged with surging resources to hold corrupt Russian oligarchs accountable. AG Garland’s March 3 speech reiterated these commitments, emphasizing the U.S.’s commitment to its Russia sanctions in response to the war in Ukraine.

Through all of this, AG Garland made clear that individual corporate defendants are the focus. In his remarks, he invoked—and emphasized—prior DOJ initiatives announced during a speech by Deputy Attorney General Lisa Monaco at the ABA’s National Institute on White Collar Crime last fall. In that speech, DAG Monaco announced three initiatives aimed at producing fuller cooperation during corporate criminal investigations, including (1) restoring prior requirements to gain cooperation credit; (2) consideration of a company’s full civil, criminal, and regulatory record; and (3) greater use of independent corporate monitors. For more information on those initiatives, you can read Linklaters’ analysis of the changes here.

Echoing DAG Monaco, AG Garland emphasized the DOJ’s commitment to restoring prior DOJ policy requiring more and substantial cooperation for individuals to receive cooperation credit during an investigation. He stressed that this means “all individuals, regardless of their position, status, or seniority, and regardless of whether a company deems their involvement as ‘substantial.’”

Buttressing these stricter terms, AG Garland noted that U.S. Attorneys’ Offices charged 5,521 individuals with white collar crimes in FY21, a 10% increase over the previous year. He also called 2021 “one of the busiest trial years on record” for the Criminal Division’s Fraud Section with prosecutors publicly charging 333 individuals, convicting 296 individuals by plea, trying 23 cases in 18 districts, and securing convictions of 30 individuals at trial. Touting other DOJ sections as well, he noted that the Antitrust Division is trying or preparing to try 18 indicted cases against 10 companies and 42 individuals, including 8 current or former CEOs or company presidents and the Environment and Natural Resources Division is currently trying or preparing to try 11 indicted cases against 11 companies and 34 individuals, including 14 current or former company executives.

Expanded Efforts to Place Victims at the Center of Investigations

Paralleling AG Garland’s speech on individual corporate accountability, AAG Polite—who heads the DOJ’s Criminal Division—focused on placing victims at the center of the DOJ’s white-collar cases. This included highlighting recent efforts by the DOJ’s Fraud and Money Laundering and Asset Recovery Sections in returning fraud proceeds to those from whom they were illegally taken. 

To this end, AAG Polite also announced important new changes, including:

• adding a Victim Coordinator to his Front Office;
• a Criminal Division-wide assessment of litigators’ “tools and resources” to promote victims’ interests, and assist victims in “swiftly and robustly” reporting financial crimes; and
• a policy of asking companies to more fully address victim issues during criminal investigations, including bifurcating corporate plea hearings from sentencing hearings to allow time for victims to come forward.

In outlining these new initiatives, AAG Polite made clear their impact for corporations under investigation and their counsel: “I encourage you to proactively think about potential crime victims and others in the community not only when you are sitting across the table from our prosecutors, but also when your corporate clients first learn of misconduct and during remediation.”

Take-Aways

While both speeches provide important contours to the DOJ’s recent efforts, a significant point not to miss is tone. As AG Garland stated in concluding, “as a defense attorney, prosecutor, and judge, I have also seen the Justice Department’s interest in prosecuting corporate crime wax and wane over time.” This moment, he made clear, “is waxing again.”

As we stated in our previous advice, it is clear that the DOJ is returning to a hard-nosed stance against corporate misconduct. Cooperation during investigations is key, and corporate criminal investigations may quickly increase in size and scope, turning even simple inquiries into major investigations. This is especially true given the increased resources the DOJ is committing to corporate crime. For corporate officers, this means increased individualized pressure to cooperate or face stiff penalties. For all companies, this means more inquiries, more investigations, and more prosecutions.

Corporations under investigation should also note the new area within the expanding scope of DOJ focus. Consideration of potential victims is now an important element to address when prosecutors come knocking, representing a new element of consideration during corporate investigations.

Overall, the DOJ’s request for more resources and major investment in these areas can only be seen as a harbinger of more investigations to come.