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DOJ to Focus on Individual Accountability for Corporate Fraud

DOJ to Focus on Individual Accountability for Corporate Fraud

The U.S. Department of Justice announces that holding individuals accountable for corporate fraud is a top priority. In a seven-page memorandum, released September 9, 2015, Deputy Attorney General Sally Quillian Yates, announced new guidelines focusing on individual accountability for corporate misdeeds.

The Memorandum states that focusing on individuals is one of the most effective ways to deter corporate wrongdoing. Holding individuals accountable will deter further wrongdoing and encourage a corporation to change its culture and behavior, it will also further promote the public’s confidence in the justice system.

DOJ acknowledges that there are substantial challenges in holding an individual accountable for a corporation’s misdeeds. In large corporations the decision making process is often diffused and obtaining the requisite knowledge and intent against an individual can be difficult. In order to accomplish the goal of increasing individual accountability for corporate wrongdoings, DOJ formed a working group of senior attorneys with experience in this area. The Memorandum is designed to provide guidance to all DOJ attorneys regarding corporate misconduct.

The Memorandum provides for six goals designed to increase the focus on individual wrongdoing in a corporate environment.

First, before a corporation will receive any credit for cooperation the company must provide a complete disclosure of all relevant facts regarding individual misconduct, and the company must proactively strive to learn of those facts. After the company provides all relevant facts to the DOJ, it will then be eligible for a cooperation credit. This credit will apply to both civil and criminal matters. The Memorandum specifically addresses the False Claims Act, and states that all relevant facts concerning individuals must be disclosed. Furthermore, pleas and settlement agreement should include a provision requiring a company to provide information about all culpable individuals and that failure to do so will result in adverse consequences.

Second, the Memorandum advises that individuals should be the focus of criminal and civil investigations from the beginning. By focusing on individuals from the beginning, the corporation’s misconduct will be more fully disclosed and it will increase the likelihood of individual cooperation in the investigation.

Third, the civil and criminal assistants assigned to a matter should communicate and cooperate with each other.

Fourth, it should be the basic policy that a resolution of a matter against a corporation should not protect individuals from civil or criminal liability. In the event that a company is seeking the release of criminal or civil liability of an individual, the action must be approved in writing by the United States Attorney, or the relevant Assistant Attorney General.

Fifth, a case against a corporation should not be resolved unless there is a path to resolve individual cases and as stated above a decision not to pursue criminal charges or civil claims against an individual must be approved by the relevant approval authority in writing.

Sixth, the civil attorney should focus on the individuals as well as the company and should not place too much emphasis on the individual’s ability to pay. Although the civil department’s focus should be to return funds to the government, holding individuals responsible for their misconduct will deter others. In deciding to pursue a civil action, the Memorandum advises that the attorneys should look to the seriousness of the individual’s misconduct, whether the evidence is sufficient to obtain and sustain a judgement, and whether there is an important federal interest at stake.

For information, concerning the False Claims Act, or a criminal defense matter, contact, Michael C. Rosenblat, at 847-480-2390 or at mike@rosenblatlaw.com