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DOJ Prioritizes Prosecutions of Individuals in Corporate Criminal Investigations

By Jeffrey B. Coopersmith
November 2015
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On Sept. 9, 2015, Deputy Attorney General Sally Quillian Yates issued a memorandum (“Yates Memo”) announcing a renewed focus by the Department of Justice on prosecuting and bringing civil enforcement cases against individual directors, officers, and employees rather than just against the companies they serve. The memo contains six key policies designed to lead to more charges and lawsuits against individuals:

  1. in order to qualify for any cooperation credit, corporations must provide to the Department all relevant facts relating to the individuals responsible for the misconduct;
  2. criminal and civil corporate investigations should focus on individuals from the inception of the investigation;
  3. criminal and civil attorneys handling corporate investigations should be in routine communication with one another;
  4. absent extraordinary circumstances or approved departmental policy, the Department will not release culpable individuals from civil or criminal liability when resolving a matter with a corporation;
  5. Department attorneys should not resolve matters with a corporation without a clear plan to resolve related individual cases, and should  memorialize any declinations as to individuals in such cases; and
  6. civil attorneys should consistently focus on individuals as well as the company and evaluate whether to bring suit against an individual based on considerations beyond that individual's ability to pay. 

The head of DOJ’s Criminal Division, Leslie Caldwell, provided further information about the DOJ policy and gave examples of how it is working in practice in a Sept. 30, 2015 speech. Ms. Caldwell stressed the importance of individual prosecutions to the DOJ’s policy goals, commenting that such prosecutions “should send a powerful message to those who would engage in misconduct, as well as to companies that have engaged in wrongdoing and are seeking leniency in exchange for cooperating with a department investigation.”

The DOJ’s policy initiative appears to be a reaction to criticism leveled at DOJ for its failure to hold individuals accountable for conduct relating to the financial crisis of 2007-08.  As Ms. Caldwell stressed in her remarks on Sept. 30, 2015, the policies in the Yates Memo are not necessarily new. Especially in criminal matters, the DOJ has always been interested in prosecuting individuals and seeking prison sentences rather than just fines. Nevertheless, the Yates Memo directives may make it more difficult to negotiate corporate settlements with the DOJ that do not include charges against individuals. 

However, while the Yates Memo is certainly designed to send a message and to mute criticism of DOJ’s past charging decisions, it remains unclear whether the Yates Memo will actually lead to more charges and civil enforcement cases against individuals, directors, officers, and employees. Because company settlements basically involve the payment of money and agreement to remedial measures, decisions companies make to resolve criminal cases with the DOJ are much closer to being pure financial decisions compared to such decisions by individuals. Individuals face potential prison time and therefore are much more likely to go to trial compared to companies. As a result, the DOJ and other government agencies typically need to have more confidence in the evidence to indict or sue individuals, especially in corporate wrongdoing cases where there are more likely to be resources for retaining top notch defense counsel. 

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