Featured Expert Contributor, White Collar Crime and Corporate Compliance
Gregory A. Brower is Chief Global Compliance Officer for Wynn Resorts. He also serves on WLF Legal Policy Advisory Board and is a former U.S. Attorney.
In a recent speech at the Georgetown Law Center, the Assistant Attorney General for the Criminal Division, Kenneth Polite, introduced the first significant changes to DOJ’s Corporate Enforcement Policy (“CEP”) since 2017. These latest modifications to the CEP are part of the Department’s ongoing focus on corporate crime and specifically on increasing incentives for companies to self-report criminal misconduct and cooperate in investigations.
AAG Polite’s speech provided some anticipated detail to the Deputy Attorney General’s September 2022 announcement of a generally more aggressive approach to corporate criminal enforcement. After acknowledging that existing DOJ policy provides for a presumption that absent certain aggravating factors, criminal prosecution will be declined when a company voluntarily self-discloses, fully cooperates, and appropriately remediates, Polite clarified that companies are not presumed to qualify for a declination and, instead, must earn it.
While Polite’s speech largely reiterated the CEP’s key priorities, he did announce a couple of concrete changes. First, he confirmed a change in policy that allows for a company to obtain a declination despite the presence of aggravating factors if the company can establish:
(1) that it timely made a voluntary disclosure of the criminal misconduct;
(2) that it had an effective compliance program in place at the time of the misconduct which allowed for the discovery of the same; and
(3) that it provided “extraordinary” cooperation with DOJ’s investigation and also undertook “extraordinary” remediation.
Second, Polite announced that under the revised CEP, even companies that don’t quite merit a declination may nevertheless benefit from a more favorable sentencing recommendation by DOJ in certain circumstances. Specifically, federal prosecutors will now recommend at least a 50% and as much as a 75% reduction from the low end of the Sentencing Guidelines fine range. The caveat here is that for recidivist companies, the reduction may not be from the low end of the range with prosecutors having discretion to determine the starting point. And, even in cases where a declination is not warranted, a guilty plea will not always be required, even in cases with recidivist misconduct, thus allowing for deferred or non-prosecution agreements as alternative forms of resolution.
Polite explained that these revisions to the CEP provide incentives for companies to fully cooperate and adequately remediate despite not having voluntarily disclosed in the first place. He also noted that a 50% reduction recommendation will “not be the new norm,” but will be reserved for companies that demonstrate truly extraordinary cooperation and remediation. The meaning of extraordinary in this context was left somewhat vague, with Polite suggesting that DOJ prosecutors will know it when they see it and that “run of the mill” or even “gold standard” efforts will not necessarily be considered extraordinary.
Polite ended his speech by reiterating that these policy changes are intended to send an “undeniable message” that companies should “come forward, cooperate, and remediate.” He further emphasized that he sees DOJ’s job as including not only the prosecution of corporate misconduct but also deterring and preventing it as well by incentivizing companies to be “allies in the fight against crime.”
The take-away message from this speech is that while DOJ is steadfastly committed to bringing individual wrongdoers to justice, it is also focused on incentivizing companies to help prevent corporate crime in the first place and help uncover it and prosecute it when it does occur. In his speech, Polite made clear that DOJ will be closely examining how companies do their part on the front end by prioritizing and adequately investing in compliance.