Featured Expert Contributor, White Collar Crime and Corporate Compliance
Gregory A. Brower is a Shareholder with Brownstein Hyatt Farber Schreck, LLP. He also serves on WLF’s Legal Policy Advisory Board and is a former U.S. Attorney and FBI senior executive.
Over the weekend and just a few days after I wrote here about Boeing’s alleged breach of its 2021 deferred prosecution agreement with DOJ, Boeing reportedly agreed to plead guilty to a single felony count of conspiring to defraud the government. The plea deal is not yet official and neither party has made a new filing in the court docket, but it appears that a deal has been reached, subject to court approval. What then does this mean for Boeing and other current and future DOJ enforcement targets going forward?
First, unlike the deferred prosecution agreement (DPA) the parties entered into in 2021, this plea agreement will mean that Boeing will actually plead guilty to a felony, likely a single count of conspiring to defraud the federal government. This is very different from the original agreement, which included the filing of criminal charges subject to the charges being dismissed at the successful conclusion of a three-year period provided Boeing satisfied all the terms of the agreement. Just how Boeing violated the terms of that agreement in the opinion of DOJ is still unclear; what is clear, however, is that DOJ has voided the DPA and the parties have reached a new agreement which will allow Boeing to enter a guilty plea and thereby avoid a trial.
Second, even though Boeing paid a fine of more than $200 million as a condition of the 2021 DPA, this new plea deal includes an additional $243.6 million fine. However, Boeing could get credit for the previous payment against the new fine. In addition to this new fine, the Boeing will be required to spend at least $455 million in safety and compliance program enhancements.
Third, the agreed-upon sentence will, subject to the court’s agreement, include a three-year term of probation during which Boeing will be subject to a number of conditions, similar to any other corporate defendant that pleads guilty to a felony and is sentenced to probation.
Fourth, the new agreement includes the imposition of a corporate monitor to oversee Boeing’s compliance efforts for a three-year period with the goal of preventing a future similar occurrence. One can expect this monitorship to be robust and expensive, imposing a significant burden on Boeing’s executives and others within the company to work with the monitor and respond to its demands and expectations. And, of course, Boeing will have to pay the entire cost of this expensive effort.
Fifth, the victims, i.e. the families of those killed in the two subject crashes, will be able to submit victim-impact statements for the court’s consideration of the appropriate sentence. This process will likely also include a hearing at which at least some of the victims will be able to publicly address the court and express their opinions on the plea agreement and the appropriate sentence. Attorneys representing some of the victims have already expressed criticism of the deal and will almost certainly ask the judge to reject it.
Finally, as noted above, even though Boeing and DOJ may have reached an agreement, the judge has the final say and it is possible that for any number of reasons, the judge could reject the deal and force the parties to go back to the table and attempt to craft a new agreement that would satisfy the judge’s apparent objections.
Whether or not the Court accepts this deal, the fact that DOJ elected to prosecute a large, respected, historically significant company after concluding that it had breached the terms of a DPA potentially marks a sea change in how the Department sees corporate crime generally. Again, while the details of Boeing’s alleged breach have not been revealed, the decision to prosecute suggests that anything less than 100% compliance by a company fortunate enough to secure a DPA can and likely will result in a voiding of the agreement and a prosecution.