DoJ Promises Greater Leniency for Companies that Self-Report

The Department of Justice has made the first significant changes to the Criminal Division’s Corporate Enforcement Policy (CEP) since 2017, changes that offer companies “new, significant, and concrete incentives to self-disclose misconduct,” Assistant Attorney General Kenneth Polite announced in remarks delivered Jan. 17 at Georgetown University.

On the other hand, companies that “do not self-disclose, meaningfully cooperate with our investigations, or remediate” will face “very different outcomes,” Polite warned.

Declination Considerations

Sometimes, a company and its outside counsel may decide not to disclose misconduct, if aggravating circumstances potentially prevent a company from obtaining a declination. “The revised CEP presents another path for companies facing such a choice—a path that incentivizes even more robust compliance on the front-end, to prevent misconduct, and requires even more robust cooperation and remediation on the backend, if a crime occurs,” Polite said.

In those situations, Polite explained, “although a company will not qualify for a presumption of a declination,” the revised CEP makes it so that a declination may still be the appropriate outcome, if the company can demonstrate that it has met each of the following three factors:

• The voluntary self-disclosure was made immediately upon the company becoming aware of the allegation of misconduct;
• At the time of the misconduct and the disclosure, the company had an effective compliance program and system of internal accounting controls that enabled the identification of the misconduct and led to the company’s voluntary self-disclosure; and
• The company provided extraordinary cooperation with the DoJ’s investigation and undertook extraordinary remediation.

“We are requiring companies seeking the possibility of a declination—even in the face of aggravating factors—to take extraordinary measures before, during, and after a Criminal Division investigation to earn such an outcome,” Polite said. “This possibility is directed squarely at companies that take compliance and good corporate citizenship seriously.”

Criminal Resolutions

In cases which a company voluntarily self-discloses misconduct, fully cooperates, and timely and appropriately remediates, but a criminal resolution is still warranted, “the Criminal Division will now accord, or recommend to a sentencing court, at least 50 percent, and up to 75 percent off of the low end of the U.S. Sentencing Guidelines fine range.”

Criminal recidivists are the exception. With a recidivist, the reduction generally “will not be from the low-end of the fine range, and in all cases, prosecutors will have discretion to determine the starting point within the Guidelines range.  This revision represents a significant increase from the previous potential maximum reduction of 50% off the Guidelines range.”

Additionally, in these circumstances, “we will generally not require a corporate guilty plea—including for criminal recidivists—absent multiple or particularly egregious aggravating circumstances. While relevant and important, criminal recidivism alone will not always mean a plea,” Polite said.

No Self-disclosure

The revised CEP provides incentives for companies that do not voluntarily self-disclose but still fully cooperate and timely and appropriately remediate. In these cases, the Criminal Division will recommend up to a 50 percent reduction off of the low end of the Guidelines fine range, “twice the maximum amount of a reduction available under the prior version of the CEP.”

Polite added that, “while 50 percent off the low end of the Guidelines range is the maximum available (absent a voluntary self-disclosure) under the revised CEP, each and every company starts at zero cooperation credit and must earn credit based on the parameters and factors outlined in the CEP. A reduction of 50 percent will not be the new norm—it will be reserved for companies that truly distinguish themselves and demonstrate extraordinary cooperation and remediation.”

‘Extraordinary’ vs. ‘Full’ Cooperation

Regarding how prosecutors will distinguish between “extraordinary” and “full” cooperation under the revised policy, Polite cited as factors “immediacy, consistency, degree, and impact.”

To expound on this point, he stated, “To defense counsel, recall your days as a prosecutor. In assessing the quality of a cooperator’s assistance, we value when an individual begins to cooperate immediately, and consistently tells the truth; individuals who allow us to obtain evidence we otherwise couldn’t get, like quickly obtaining and imaging their electronic devices, or having recorded conversations; cooperation that produces results, like testifying at a trial or providing information that leads to additional convictions.”

“The differences between ‘full’ and ‘extraordinary’ cooperation are perhaps more in degree than kind,” Polite added. “To receive credit for extraordinary cooperation, companies must go above and beyond the criteria for full cooperation set in our policies—not just run of the mill, or even gold-standard cooperation, but truly extraordinary.”

The “undeniable message” of the newly revised policy is this: “Come forward, cooperate, and remediate. We are going to be closely examining how companies discipline bad actors and reward the good ones. Our number one goal in this area—as we have repeatedly emphasized—is individual accountability.”

This is where chief compliance officers can play an especially significant role. “We need corporations to be our allies in the fight against crime,” Polite concluded. “Your resources, particularly your investment in your compliance function, can help increase your corporate civic engagement and lead to lasting solutions to corporate criminality. 

Jaclyn Jaeger is a contributing editor at Compliance Chief 360° and a freelance business writer based in Manchester, New Hampshire.