U.S. Department of Justice Issues New Policies for Prosecution of White-Collar Criminal Offenses

The Department of Justice (DOJ) investigates and prosecutes various matters categorized as “white-collar crimes.” In addition to offenses committed by individuals, this term also applies to a wide range of corporate misconduct, in which an entire business organization might be liable for illegal activity. In response to criticisms that the DOJ is focusing on corporate-level prosecutions to the exclusion of individual officers, directors, or employees, the DOJ issued a memorandum in September 2015, entitled “Individual Accountability for Corporate Wrongdoing” (the “Memo”), which sets forth new policies for the investigation and prosecution of individuals. In November, it announced changes to its written policies regarding prosecutions against corporations and other business entities.

“White-collar crime” is not a formal legal term. Instead, it refers broadly to non-violent offenses that are typically financial in nature and that often involve businesses or government officials. The federal government has jurisdiction over crimes that directly affect matters placed under federal control by the Constitution. This includes bankruptcy fraud, 18 U.S.C. § 151 et seq.; and immigration fraud, 18 U.S.C. § 1546. It also has jurisdiction over offenses affecting interstate commerce under the Commerce Clause. U.S. Const. Art. I, § 8, cl. 3. This includes mail fraud, 18 U.S.C. § 1341; wire fraud, 18 U.S.C. § 1343; offenses related to organized crime, 18 U.S.C. § 1961 et seq.; and securities fraud, 15 U.S.C. § 78j.

Federal law generally includes business entities like corporations and partnerships in its definition of the word “person.” 1 U.S.C. § 1. This enables federal prosecutors to pursue both individuals and business entities. The prosecution of an individual, according to the DOJ, has several advantages over prosecuting an organization. The Memo identifies several, including “ensur[ing] that the proper parties are held responsible for their actions” and “promot[ing] the public’s confidence in our justice system.” The public might find it more satisfying to see a picture or footage of an individual in handcuffs for some financial crime, but we must be careful to consider how much involvement in an alleged crime should lead to criminal liability. Some white-collar offenses occur on an organizational level, where few individuals have enough involvement to meet the legal requirements for guilt.

The Memo identifies six changes needed in DOJ policies for the prosecution of business organizations, which have been made in § 9-28.000 of the U.S. Attorney’s Manual (USAM):

1. The DOJ allows business organizations to mitigate their liability through “cooperation credits,” which the organization obtains by providing information to investigators. USAM § 9-28.700. The Memo states that an organization should not receive any cooperation credits unless it turns over “all relevant facts about the individuals involved in corporate misconduct.”
2. Investigations of corporate misconduct, both civil and criminal, “should focus on individuals from the inception of the investigation.”
3. Civil attorneys and criminal prosecutors handling cases against the same corporation should remain in regular contact about their cases, particularly with regard to issues of individual liability.
4. Any resolution between the DOJ and a corporation should not preclude the civil or criminal liability of individuals within the corporation, “absent extraordinary circumstances.”
5. Any resolution of a corporate case should include a “clear plan” to deal with individual cases.
6. Civil attorneys should focus on both individual and corporate liability, and they should not base decisions on whether to pursue a claim against an individual solely on “that individual’s ability to pay.”

These blog posts are meant to be illustrative only. Unless expressly stated to the contrary herein, these matters are not the result of any legal work of Michael J. Brown, but are used to communicate a particular point of view. Michael J. Brown does not claim credit for any legal work done by any lawyer or law firm either generally or specifically, with respect to the matters contained in this blog.

For more than 20 years, board-certified white-collar crime lawyer Michael J. Brown has fought for the rights of defendants charged with alleged state and federal offenses in West Texas courts. To schedule a confidential consultation with an experienced and skilled advocate for criminal justice, contact us online or at (432) 687-5157 today.

More Blog Posts:

Statute Enacted to Fight Organized Crime Used in Academic Fraud Case, Texas Criminal Lawyer Blog, September 9, 2015

Department of Justice Taking a Softer Approach to White Collar Crime, Texas Criminal Lawyer Blog, July 22, 2011

FBI and White Collar Crime: Beware of Overreach, Texas Criminal Lawyer Blog, April 10, 2011

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